10Case Study

MYDIN MOHAMED
HOLDINGS BERHAD
“Transformational
Leadership”
 TRANSFORMATIONAL LEADERSHIP

163

Transformational
Leadership

Mustapha Sufaʼat
Ab. Razak Omar
Mohd. Wafi Arip

“Low price with acceptable quality products is the business strategy

when we decided to diversify Syarikat Mydin Mohamed to Mydin
Mohamed Holdings” said Dato’ Hj. Ameer Ali, Managing Director of
Mydin. Our business motto is “WHY PAY MORE, BUY AT WHOLESALE
PRICE”. This is in line with the lower and medium income group’s
purchasing habits of looking for lower price items. This strategy is also
focused to attract small wholesalers and petty traders in getting
cheaper supplies. It has also contributed to the business expansion and
is reflected by an increase in the number of wholesalers and petty
traders who have registered as their frequent buyers.

In addition, Dato’ Hj. Ameer said, “Mydin Holdings not only changes the
way of managing its business as emporium and hypermarket operators
but also maintains the same low price business strategy”.
 Introduction
MYDIN was incorporated on 23 July 1991 under the Companies Act,
1965, as a private limited company under the name of Melati Makmur
Sdn Bhd. The reason in incorporating the business was to take over the
business of Syarikat Mydin Mohamed, a sole proprietorship, founded in
1956 by Mydin Mohamed and Syarikat Mydin Mohamed Brothers, a
partnership formed between Mydin, Rowshan Bhai a/p Kassim Bhai,
Murad Ali Mydin Mohamed, Dato’ Hj. Ameer Ali Mydin, Ahimmat Mydin
Mohamed and Salim Mydin Mohamed. On 17 January 1992, the
Company changed its name to Mydin Mohamed & Sons Sdn Bhd.
Subsequently on 25 June 2001, the company became Mydin Mohamed
Holdings Sdn Bhd and is presently known as Mydin Mohamed Holdings
Bhd.

MYDIN’s first store was introduced by Mydin Mohamed in 1956. The first
store started by selling toys imported from Thailand in Kota Bharu,
Kelantan. The second branch was opened in Kuala Terengganu in
1979 by Murad Ali, the eldest son of Mydin. In less than 10 years, the
third of MYDIN branch which marked MYDIN’s presence in the Klang
Valley was opened at Jalan Masjid India by Dato’ Hj. Ameer Ali.

MYDIN MOHAMED HOLDINGS BERHAD has grown steadily and at a

commendable pace with a market share worth RM1.3 Billion. MYDIN’s
vision is to be the leading Malaysian Wholesale Hypermarket in
Malaysia. With its headquarters opened in 1991 in WISMA MYDIN at
Jalan Masjid India, its Board of Directors have worked towards the

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company’s vision and mission with their 44 outlets nationwide consisting

of three Hypermarkets, 18 Emporiums, two Superstores (Bazaar), 10 Mini
Markets (MYMydin ), five Convenient Stores (MyMart) and six Mydin Mart
which is part of its franchise programme.

MYDIN MOHAMED HOLDINGS BERHAD has a total of 5500 employees,

led by 20 top management and 100 middle management. It has a
large number of customers throughout Malaysia and had an outreach
of more than one million customers .

Performance of Mydin Mohamed Holdings Berhad

a) Mydin Financial Performance
Mydin Mohamed Holdings Berhad’s performance is based on the
continuous belief of hardwork and teamwork as well as strong
customer relationship that are fundamentals to a successful business.
This belief led to the opening of MYDIN WHOLESALE HYPERMARKET in
USJ 1, Subang Jaya on 19 August 2006. Far from resting on its laurels,
MYDIN is still forging ties with the guide of its vision and the next
MYDIN wholesale hypermarket is already at the final stage.

Based on the financial performance from 2004 to 2008 MYDIN had

been able to show a tremendous positive trend of revenue and
profit. In 2008, Mydin’s sales had increased by 59% to RM1.06 billion
as compared to RM669.5 million in 2004. Gross Profit increased in 2008
to RM 203.3 million compared to an operating costs of RM173.5 million in
the same year.

The stockholding ratio of the company ranged from 1.5. to 2.18 per
month. This showed that the inventory turnover of the company
ranged from 5.5 to 8 times a year. It is also supported by a low
percentage of slow moving stock as compared to fast moving stock.
The Return on Investment (Earning Before Income Tax/shareholders
funds) as at 31 Mac 2009 for MYDIN HOLDING was 22.63% .

b) Mydin Retailing and Wholesaling Development & Strategies

MYDIN has a strategic advantage over other retailers as it sourced its
products directly from manufacturers and bulk purchases. This had
enabled them to get special discounts from the manufacturers, thus
making it possible to fulfill its business philosophy of selling to their
customers at wholesale prices. Their customers include end-users,
 wholesalers and petty traders. MYDIN sources its merchandise both
locally and abroad from countries such as Bangladesh, China, France,
Hong Kong, India, Indonesia, Korea, Pakistan, Singapore, Taiwan,
Thailand, Turkey, United Arab Emirates and the United Kingdom.

MYDIN had developed its own strategies in the retailing and wholesaling
business. The unique strategy developed known as STRATEGIC FOCUS,
focuses on large scale, high volume, highly visible and modern enterprise.

This STRATEGIC FOCUS emphasises on two areas, namely, retailing and

wholesaling. Retailing consists of the hypermarket, supermarket cum
departmental store, mini market/convenience store chains and shopping
centers. Wholesaling comprises food, beverage, household goods,
construction materials, builders hardware, plumbing and heating
equipment and supplies, telecommunications equipment, electrical &
electronic components and wiring accessories.

The rationale for the STRATEGIC FOCUS is as follows:-

• These formats are the future of distributive trade – customers are
keen to shop under one roof.
• Consumers lifestyle especially for medium and poor customers who
are looking for convenience, comfort and value for money.
• Fill the current gap of supplies in the Bumiputera business networks.
• Assisting Bumiputera Entrepreneurs to market their products.

Transformational Leadership
a. Quality of the Leaders
The success of MYDIN is attributed by the quality of its leaders,
namely, the Board of Directors. Mydin’s family is very hardworking
and willing to push themselves beyond the limit. They have a mixture

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of different skills. Their good habit that is cultivated from young

developed the family to have good character and excellent
personality. They have strong family ties and are united. They are
committed to their business and are directly involved in negotiations
with suppliers, purchasing of inventories and choosing of franchisees.
These qualities which were nurtured since from young and supported
by Islamic values has created leaders which are able to bring the
venture to greater success.

The Islamic value that they practice are:-

• Hardworking
• Honesty and Integrity
• Spendthrift
• Accountability
• Fardu Kifayah
• Halal products
• Charity work

Management of MYDIN focused towards business excellence by

adopting new wave management such as using Key Performance
Indicators (KPI) for every department, empowerment, collective
decision by Board, Exco and Council. Common practices such as
space rental, block display rental and advertising space rental are
used to generate extra income.

b. Customers Comes First

The success of a company is dependent to how the business manages
and satisfies its customers. MYDIN is persistently monitoring the
company motto “ Why pay more, buy at wholesale price” is really
fulfilling. Comparing price with competitors, negotiating for better
terms with suppliers, buy in bulk and systematic inventory management
is the key to success.

Listen to our customers and provide them the best in customer value
that MYDIN HOLDINGS continuously propagates to all the employees.
Management and staff are adding value to the current services
rendered in order to create its uniqueness with the objectives of
providing something extra to customers.

As Malaysia has more foreign owned hypermarkets and superstores,

MYDIN is proudly promoting MYDIN as business that is “Born in Malaysia
and still Malaysian”.
 c. Our People are our Greatest Asset
• We’re a family “The Mydin Family”
• Listen, support and develop our people
• Deliver to the best of our abilities
• Care and share amongst ourselves
• Work with pleasure and rejoice with success

d. The Corporate Social Responsibility

Corporate Social Responsibility (CSR) is a commitment to improve
community well-being through discretionary business practices and
contributions of corporate resources. CSR means that a corporation
has an obligation to consider the interests of clients, employees,
shareholders, communities and ecological concerns in all aspects of
business operations through various activities and initiatives.

MYDIN had incorporated CSR as a distinctive component of strategic

management. Specifically, it is at the heart of strategic management.
This philosophy had enhanced both internal and external
organisational functions and its strategic development especially in
key functional areas such as stakeholder relations, reputation
management, corporate governance, corporate social responsibility
and community relations.

Among the CSR activities carried out include:

• Donations to orphanage homes,
• Providing school uniforms for poor families, and
• Providing necessities during festive seasons and others.

MYDIN HOLDINGS had allocated an annual budget of RM300,000 for

this purpose.

e. Suppliers/Vendors are Our Partners

In order to maintain and fulfill the business strategy of selling at
wholesale price, Mydin strategically meets their suppliers/vendors by
working with them on a “win-win” situation through:-

a. Reducing cost for both parties such as minimised damaged/

expired products.
b. Initiate online ordering to reduce waiting/lead time for delivery.
c. Ensure proper delivery/handling and receiving to avoid damage
in transit/receiving.

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d. Ensuring payment to suppliers are on time (as per trading terms).

e. MYDIN allows merchandise to be returned if the goods received

are defective or does not meet quality standards.

f. Appointing local agent for the country that supply our

merchandise. The local agent will normally conduct further
discuss for better terms after MYDIN management has met the
suppliers.

The end result of these initiatives is reduced costs which will be passed
as savings to customers who will enjoy cheaper prizes.

f. Control of operational cost

MYDIN Holdings does not do excessive advertising especially in the
media in order to reduce its operation cost. Advertising in the media
is only during certain months of the year and flyers will be prepared
and distributed to potential customers before festive seasons and
when school term is about to start. Membership drives among petty
traders and wholesalers and word of mouth promotion from their
satisfied customers have enabled MYDIN Holdings to be what it is
today.

g. IT Systems
i. Implementing Specialised Solutions for Application Deployment
and Workforce Mobility

In order to assist the business operations to stay on top, Mydin IT

Department has chosen Microsoft products as they are easy to
deploy and manage. The infrastructure solutions are evaluated
internally by the technical unit together with the solution providers
while the business-related applications are evaluated together with
the business users to determine the right solution for the company.

With the philosophy of offering its customers with low price on daily
basis, MYDIN must relentlessly pursue bargains and take advantage
of short-lived promotions from suppliers. Therefore, to improve its
communications between branches and headquarter as well as
between merchandisers and suppliers, MYDIN has invested in
centrally-managed data centre and network architecture. With this,
the branches data can be captured instantaneously and central
 merchandising and replenishment can be executed in timely manner.
MYDIN IT Department also leverages on the technology adopted in
order to minimise operating cost. For instance, data collected from
branches are sent electronically to the top management for reporting
purpose. Further to that, MYDIN also encourages its suppliers to take
advantage of B2B service of transacting purchase orders electronically.

In general, with the cooperation and good team work from all
relevant parties, MYDIN and its business partners have benefited
from the IT implementations done so far.

ii. Improved Employee Productivity and Rapid ROI

The benefits resulting from the implementation of the specialised

solution had gone beyond application access. According to Mr.
Malik Murad Ali, IT Manager of MYDIN Mohamed Holdings, the
solutions have solved major problems for their IT personnel in terms of
maintenance and application deployment. The solution has slashed
the time taken to update a new software patch across 750 desktops
by 500 times, from over 120 man-hours previously to just 15 minutes. In
addition, MYDIN is able to provide application support and remotely
training, using the session shadowing component of the Presentation
Server.

Productivity among MYDIN’s employees in charge of managing

purchase orders had also improved. Previously, this task was a
manual process and required going to Subang each time a system
purchase order is to be issued. Using the technology, these
employees simply log on to the Web server from their own locations
to complete the process.

MYDIN hsas achieved ROI on their investment in the solutions within

the first two months of implementation. For example, MYDIN was
almost immediately able to identify errant suppliers that were
double-delivering products totaling over US$50,000. MYDIN expects
more savings both in terms of business and IT management costs.

h. Creating platform for SMEs

MYDIN is actively helping and nurturing SME entrepreneurs and is
continuously coming up with promotional activities to help promote
SME products from time to time to achieve competitiveness. A
complete aisle is located at MYDIN Mall USJ specially to promote
local products from all cities in Malaysia.

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On the other hand, "Produk Malaysia, Citarasa Kita" Campaign for

instance, is a joint effort between the Ministry of Domestic Trade and
Consumer Affairs (KPDNHEP) and MYDIN. It is part of Ministry's effort in
enabling SME entrepreneurs to promote, market and sell their
products to consumers.

i. Pilferage Monitoring
Among the challenges faced by hypermarket and superstore
operators is high rate of pilferage. According to Mr. Hussain Karim
Ally, Project Manager “the shrink due to pilferage accounted for
0.25% as compared to 0.7% among its competitors”. MYDIN managed
to reduce pilferage as a result of :

• Measurable security systems whereby each security officer would

record at least 4 pilferage cases daily,
• Every employee is scanned by officers at every entry and exit point,
• Allowance of RM100 are paid to cashiers whose records tally with
the daily collection,
• Items which are small but valuable are placed behind the cash
counter for easier monitoring,
• Daily and highly consumed items such as Milo and Nescafe are
kept in a locked rack.
• CCTVs and alarm pedestals in key strategic areas on the sales floor
as well as storage area.

Future Challenges and The Way Forward

a. The Challenge: Efficient, Accurate Application Access
MYDIN manages over 100,000 unique items in its product range and
the company processes more than RM90 million worth of purchase
orders on a monthly basis. The challenge for MYDIN was to gain
access into its huge volume of transactions effectively, to be able to
not only track the volume of goods flowing in and out of the company,
but also gain a detailed understanding of exactly what products
were involved in these transactions.

Although MYDIN had implemented an off-the-shelf ERP package

from Technology One Australia to capture the transactional data, its
database and applications resided only at its IT centre in Subang,
Kuala Lumpur. This system prevented MYDIN’s employees, who are
spread throughout its 15 branches across Malaysia from gaining
access to critical information.
 For MYDIN’s managers and senior executives who travel frequently,
another challenge is providing secured access to corporate
applications from more remote locations anywhere in the world.

b. Future Plans
The company is in the process of actively opening new hypermarkets
and superstores (bazaar) throughout Malaysia. This would be
achieved by forging a close win-win-win relationship with their
suppliers (trade and non-trade) and working closely with the
respective local authorities/state governments in respect of the
affirmed Distributive Trade practices.

Key Learning Points

a. Leadership is key to organisational excellence
b. Strategic Focus
c. Visionary Leadership for Transformation

Questions for Discussion

1 Prepare a SWOT analysis of the company and comment on
its strengths, weaknesses, threats and opportunities.

2 How can the company strategies to meet future challenges?

3 How do you see the future of this hypermarket?

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