Genting Berhad: The Story of a Malaysian Conglomerate
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Case Code: BSTR108 Case Length: 22 Pages Period: 1964 – 2004 Pub Date: 2004 Teaching Note: Not Available |
Price: Rs.500 Organization: Genting Berhad Industry: Diversified Countries : Malaysia Themes: Business Environment |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Good Work Receives Good Support
Genting Highlands soon emerged as one of Malaysia's most accessible and popular hill resort. Impressed by Lim Goh Tong's efforts to develop the resort without any government support and its contribution to the tourism industry, the Malaysian government gave Genting Highlands the license to operate a casino. Casino gaming in Malaysia and in many countries of the world, was prohibited because of its links to criminal activities/elements and to the damaging effects gambling inflicted on people's lives. However, it was a well-known fact that casino operations generally attracted a lot of people and were a good money-spinner. By granting a casino license to Genting, the government achieved the twin objectives of helping Genting's business prosper and attracting a larger number of tourists (domestic as well as international) to the country. With this, Genting Highlands became the first and the only casino license holder in Malaysia. In 1971, Genting Highlands began operations by commissioning its first property, the Highlands Hotel...
Expanding Operations
Genting decided to become much more than a tourist resort with a casino. The company wanted to develop the resort as an entertainment hub containing several hotels and theme parks. In line with this philosophy, two new hotels, the Genting hotel and the Theme Park hotel, were added in the next few years. To accommodate the increasing number of tourists and visitors to Genting Highlands, the company opened Awana Genting Highlands, another resort located mid-way up the hill to the Genting Highlands Resorts in 1985. Soon, the resort became popular for its year-round cool weather, eco-sports like mountain biking, jungle trekking, rock climbing, children's workshops, kite flying and rope courses, to name a few. In 1989, Genting underwent a major restructuring exercise and set up Resorts World Bhd (RWB), a subsidiary company, to take control of the management of all tourism activities under the Genting Group. The restructuring of the company was undertaken to transform the company into an investment holding and management company...
Genting's Diversification Strategy
Though Genting was well established in its traditional leisure and hospitality businesses, it had adopted the diversification approach towards growth since the 1970s. This was done to reduce its dependence on the leisure and hospitality businesses as an income source. The company established operations in areas like plantations, power generation, paper manufacturing, oil and gas exploration, property development and IT and e-commerce.
PLANTATIONS
In September 1977, Genting established Asiatic Development Sdn Bhd (Asiatic), a private limited company to spearhead its plantation business. In February 1980, Asiatic was made a wholly owned subsidiary of Genting. To grow in the plantations business, the subsidiary adopted the route of acquiring similar businesses. In 1980, Asiatic acquired Rubber Trust Group, a group of three Hong Kong based rubber companies owning around 13,700 hectares of plantation land in peninsular Malaysia. In 1982, Asiatic was listed on the Kuala Lumpur Stock Exchange. In 1983, Asiatic acquired 676 hectares of oil palm plantations and oil mills. These acquisitions proved to be of great value in the years to come, considering the development potential of the land and its capital appreciation...
Expanding into the Pleasure Cruising Business
Genting expanded its leisure and hospitality businesses into cruise line operations by establishing Star Cruises Limited (Star Cruises) in 1993. Launched through RWB, Star Cruises was listed in the Singapore Stock Exchange in April 1998 and in the Stock Exchange of Hong Kong in November 2000. Launching a cruise company in the Asian market was considered an audacious idea by many analysts. This was because at that time, the concept of pleasure cruising was not very popular in the region. Though occasionally foreign vessels cruised the region for small durations in winter, they carried passengers mostly from Europe, America and Britain. Initially, the company operated a couple of small European car ferries (Star Aquarius and Star Pisces) running short cruises, catering mainly to the Chinese markets. Industry observers felt that Star Cruise helped build the cruising industry in Asia. Since gambling was a popular recreation activity in Asia, Star Cruise took this as a starting point and promoted the idea of overnight gambling cruises in the early 1990s...
Tackling the SARS Threat & Beyond
In 2003, Genting fared well in all of the business segments it operated in, except its leisure and hospitality business. This was attributed to the SARS epidemic and the global economic slowdown. Though Malaysia was affected relatively mildly by the outbreak of the illness, with two deaths among five (all of whom were infected overseas), tourists were unwilling to travel to this region because of the fear of contracting the disease. Genting's decline in the FEER rankings in 2003 was seen as a direct fallout of the fear of SARS...
Exhibits
Exhibit I: Genting Berhad - Corporate Structure
Exhibit II: Genting Berhad - Ten-Year Financial Highlights (1993 - 2002)
Exhibit III: Awards and Recognition Received by Genting (1996-2004)
Exhibit IV: A note on Malaysia's Tourism Industry
Exhibit V: Asiatic Plantations and Property
Exhibit VI: Star Cruise - Fleet in Operation
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