Business Analysis Project - Analysis of Eco World Development Group Berhad

This report offers a critical analysis of Eco World Development Group Berhad and compares the company’s performance with the SP Setia Berhad and MAH Sing Group Berhad. The report discusses the competitive issues that are faced by the Eco World Development Group Berhad by benchmarking the company with the competitive firms SP Setia Berhad and MAH Sing Group Berhad.

Running head: BUSINESS ANALYSIS PROJECT
Business Analysis Project
Name of the Student
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1BUSINESS ANALYSIS PROJECT
Table of Contents
Introduction:...............................................................................................................................3
Purpose:......................................................................................................................................3
Case Analysis:............................................................................................................................3
Company background:...............................................................................................................4
Key issues:.................................................................................................................................4
Comparative Value Proposition:................................................................................................5
Rationale of my choice of company:.........................................................................................6
Financial Analysis:.....................................................................................................................6
Ratio Analysis:...........................................................................................................................7
2.1.1 Profitability: Return on Invested Capital%:......................................................................7
Net profit margin%:...................................................................................................................8
Return on Assets:.......................................................................................................................9
Liquidity: Current Ratio:..........................................................................................................10
Quick Ratio:.............................................................................................................................11
Financial health: Financial Leverage:......................................................................................12
Solvency: Cash Flow per sale%:..............................................................................................13
Strategic Analysis:...................................................................................................................14
Business Environment Analysis:..............................................................................................14
PESTLE Analysis.....................................................................................................................14
Competitive Force Analysis:....................................................................................................16

2BUSINESS ANALYSIS PROJECT
Porter’s five forces:..................................................................................................................16
New forces in the industry:......................................................................................................18
Operations and organizational analysis:...................................................................................18
Key success factors:.................................................................................................................18
Balance Scorecard:...................................................................................................................19
Ansoff’s matrix:.......................................................................................................................20
Limitations of financial models and conventional analysis:....................................................21
Conclusion:..............................................................................................................................21
Recommendations:...................................................................................................................22
Recommendations modelling...................................................................................................22
Model Scenario Forecasting:....................................................................................................23
Outcomes:................................................................................................................................24
Scenario Description................................................................................................................24
Outcome:..................................................................................................................................25
Reference List:.........................................................................................................................26

3BUSINESS ANALYSIS PROJECT
Introduction:
Purpose:
The objective of the study is to conduct a critical analysis relating to the competitive
position of Eco World Development Group Berhad and compare the company’s performance
with the SP Setia Berhad and MAH Sing Group Berhad. The report would be discussing the
competitive issues that is faced by the Eco World Development Group Berhad by
benchmarking the company with the competitive firms SP Setia Berhad and MAH Sing
Group Berhad. The analysis would be critical it offers a transparent picture and understanding
of the main issues that would be influencing the business and the management. Besides, the
study would be offering appropriate recommendations that would be addressing the vital
business faced by the Eco World Development Group Berhad and improving its productivity
as well.
Case Analysis:
Eco World Development Group Berhad has kepts its brand spread across the three
key economic regions in the Malaysia that includes 18 development of projects in total
(Ecoworld.my 2018). It also comprises of the new townships, integrated commercial
development, luxury high-rise apartments and business parks. The company has expanded its
operations both across the local and international markets. Over the years the company the
company has grown in the form of well-known and respected industry players in the property
sector of Malaysia. The expansion of company is facilitated by the vital developments in the
commercial development since the government backing has resulted in company’s expansion.

4BUSINESS ANALYSIS PROJECT
Figure 1: Figure illustrating Residential property price by categories
(Source: Ecoworld.my 2018)
Company background:
Eco World Development Group Berhad is the Malaysian public listed company that is
primarily engaged in the property development. The company’s operation is spread across the
three economic regions in Malaysia having 18 development projects (Ecoworld.my 2018).
The company currently has approximately 8,052.7 acres of land bank with total gross
development value of RM 87.5 billion. With the help of Eco World International, the brand
has expanded its operations to London, United Kingdom and Sydney & Melbourne,
Australia.
Key issues:
The current report is based on the discussion of the competitive scenario of Eco
World Development in comparison to its benchmark companies. Eco World is faced with
intense competition from the other companies both in the domestic and international markets.
Presently, Eco World faces competitions from SP Setia Bhd and MAH Sing Group BHD in
the Malaysian markets. In spite of the intense competition Eco World is driven by the mission

5BUSINESS ANALYSIS PROJECT
of creating a better tomorrow which is powered by the team of experience and dynamic team.
The brand of Eco World is expected to attain growth in the coming years.
Comparative Value Proposition:
Value Points Eco World BHD SP Setia MAH Sing Group
BHD
Target Customer Eco World BHD
targets the customers
from the Melbourne
and Sydney in
Australia.
The target market
for SP Setia is
primarily the Asian
markets.
The target customers
for MAH Sing
Group BHD is the
professional and
multinationals that
demands green
office.
Benefits Offers virtual design
benefits along with
construction of
commercial property
with the computer
aided designs and
technology of
modelling.
Benefits provided by
SP Setia includes a
unique design
ranging 2300 to
3000 square foot
having lift lobby as
well.
MAH Sing Group
BHD provides its
customers with the
integrated designs
for constructions
through technical
aid.
Price Eco World VHD
offers 10 per cent
price discount to its
premium customers
SP Setia offers 15
premium price to its
customers
MAH Sing BHD
gives 20 per cent
premium discount to
its customers.
Customer Value Building Long term SP Setia holds the MAH Sing BHD

6BUSINESS ANALYSIS PROJECT
customer value with
its customers.
integrity and
safeguards
customer’s privacy
with the help of
company’s
confidential
information policy.
provides long term
its customers with
the long term
outlook for
residential property
market.
Table 1: Table depicting Customer Value Proposition
(Source: As Created by Author)
Rationale of my choice of company:
The primary purpose of selecting Eco World Development Group Berhad is because
the company has been growing and attaining new heights. The company is helmed as the
most renowned and respected players in the Malaysian property industry. In spite of the
strong international presence, Eco World faces intense competition from the other industry
players. The rationale for my choice of company is primarily because of its market presence
for more than 15 years. This helps in analysing the company’s present market trend and a
comparative market position with other industry participants.
Financial Analysis:
Financial analysis can be defined as the evaluation of the profitability, stability and
viability of the organization from its financial statement (Deegan 2013). Ratio analysis refers
to the quantitative analysis of the information that is contained in the financial statement of
an organization.

7BUSINESS ANALYSIS PROJECT
Ratio Analysis:
2.1.1 Profitability: Return on Invested Capital%:
The return on invested capital represents the percentage of sum that an organization is
making for every percent over the cost of capital (Robson, Young and Power 2017).
Return On Invested Capital 2015 2016 2017
Eco World Development BHD 0.97 2.42 3.3
SP Setia BHD 6.77 5.55 5.39
MAH Sing Group BHD 8.17 6.15 5.49
Profitability: Return on Invested Capital %
2015 2016 2017
0
1
2
3
4
5
6
7
8
9
0.97
2.42
3.3
6.77
5.55 5.39
8.17
6.15
5.49
Return on Invested Capital
Axis Title
Figure 2: Figure representing Return on Invested Capital
(Source: As Created by Author)
Considering the ROIC of Eco World the company has reported a relatively lower
ROIC than its peers. Over the last three years the ROIC has improved gradually but less than
the industry participants. SP Setia BHD reported a ROIC of 6.77 in 2015 though declined to
5.55 and 5.39 in 2016 and 2017 respectively. While MAH Sing Group BHD reported a ROIC
of 8.17 in 2015 but declined to 6.15 and 5.49 in 2016 and 2017 respectively. In spite of the

8BUSINESS ANALYSIS PROJECT
lower ROIC Eco World BHD generates better returns and has used its capital effectively
while SP Setia in spite of generating attractive returns on the invested capital has failed to
capitalize in the later years. MAH Sing Group BHD has represented a better performance on
its return however its stocks are witnessing a decline due to the fluctuating market demand.
Net profit margin%:
Net profit margin represents the percentage of revenue that is leftover following the
operating expenditure, interest, taxes and preferential stock dividends that has been
subtracted from the organizations total revenue (Beatty and Liao 2014).
Net Profit Margin % 2015 2016 2017
Eco World Development BHD2.57 5.08 7.17
SP Setia BHD 13.61 16.3 19.69
MAH Sing Group BHD 12.55 11.04 10.46
Net Profit Margin%
2015 2016 2017
0
5
10
15
20
25
2.57
5.08
7.17
13.61
16.3
19.69
12.55 11.04 10.46
Net Profi t Margin %
Axis Title
Figure 3: Figure showing Net Profit Margin%
(Source: As Created by Author)
SP Setia BHD is ranked at the top in terms of the net profit generated by the company
while Eco World have represented a better position in net profit margin as there has been a

9BUSINESS ANALYSIS PROJECT
steady rise in net margin over the last three years. MAH Sing Group has kept a relatively
stable net profit margin and it is generating better net margin over the total sales revenue
(Henderson et al. 2015). Eco World reported a lower net profit margin during 2015 with
figures standing 2.57% however it gained strength in 2016 and 2017 as the net profit margin
improved to 5.08% and 7.17% respectively.
Return on Assets:
Return on assets is referred as the indicator of the company is earning profits from its
total assets (Macve 2015). The ratio provides an idea how efficiently the management is
using its assets to generate earnings.
Return On Assets % 2015 2016 2017
Eco World Development BHD0.63 1.64 2.24
SP Setia BHD 5.59 4.6 3.84
MAH Sing Group BHD 6.49 5.06 4.53
Return On Assets
2015 2016 2017
0
2
4
6
8
10
12
14
0.63
1.64 2.24
5.59 4.6 3.84
6.49
5.06 4.53
Return on Assets
Axis Title
Figure 4: Figure representing Return on Assets
(Source: As created by Author)

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Eco World is standing in the lower position in converting its investment from its net
profit in comparison to its competitors. The ROA for MAH Sing Group BHD stands better in
throughout the three years. SP Setia BHD is ranked second behind the MAH Sing group from
2015 to 2017. At the time of studying the ROA of Eco World the management has done a
better job in making the judicious choice in allocating the resources. Alternatively, it is
understood that the company is making a better profit with lower amount of investment.
Liquidity: Current Ratio:
The current ratio refers to the liquidity ratio which measures the organization’s
capability to pay the short-term and long term obligations (Khan 2015). The understand this
capability, the current ratio takes into the account the current total assets of the company
relative to its current total liabilities.
Current Ratio 2015 2016 2017
Eco World Development BHD 1.51 1.4 1.22
SP Setia BHD 1.94 2.17 1.43
MAH Sing Group BHD 3.43 3.1 3
Current Ratio
2015 2016 2017
0
0.5
1
1.5
2
2.5
3
3.5
1.51 1.4 1.22
1.94 2.17
1.43
3.43
3.1 3
Current Ratio
Axis Title
Figure 5: Figure representing Current Ratio

11BUSINESS ANALYSIS PROJECT
(Source: As created by Author)
Eco World BHD is ranked in third position in comparison to the industry rivalry. This
represents that SP Setia BHD and MAH Sing Group has reported a better current ratio and
are more capable of paying their obligations. The current ratio for Eco World BHD reflects
that the company’s operating cycle is moderately efficient and is able to pay its current
liabilities with reduced inventory turnover. While the liquidity of MAH Sing Group BHD is
stronger reflecting that the company has stronger efficiency cycle. The liquidity for MAH
Sing Group has relatively been strong and stable among the others.
Quick Ratio:
The quick ratio represents the measure of how well the company is able to meet its
short term financial obligations (Hoskin, Fizzell and Cherry 2014). The ratio measures the
dollar amount of liquid assets is available for each dollar of the current liabilities.
Quick Ratio 2015 2016 2017
Eco World Development BHD0.51 0.5 0.43
SP Setia BHD 1.15 1.34 0.94
MAH Sing Group BHD 1.5 1.23 1.34
Quick Ratio
2015 2016 2017
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
0.51 0.5 0.43
1.15
1.34
0.94
1.5
1.23
1.34
Quick Ratio
Axis Title
Figure 6: Figure representing Quick Ratio

12BUSINESS ANALYSIS PROJECT
(Source: As Created by Author)
The quick ratio for Eco World is ranked in the third place as MAH Sing BHD and SP
Setia has reported a higher quick ratio during the span of three years. The liquidity position of
Eco World cannot be termed as the best among its competitor. The above stated figure
explains that MAH has better ability of meeting its short term obligations with the company
having most amount of liquid assets in comparison to Eco World and SP Setia.
Financial health: Financial Leverage:
The financial leverage represents that how well an organization is able to manage its
assets in relation to its equity (Mullinova 2016). A higher financial leverage ratio represents
that the company uses higher debt and liabilities in managing its finance.
Financial Leverage 2015 2016 2017
Eco World Development BHD 2.2 2.33 2.31
SP Setia BHD 2.05 1.9 2.67
MAH Sing Group BHD 1.8 1.62 1.54
Financial Leverage
2015 2016 2017
0
0.5
1
1.5
2
2.5
3
2.2 2.05 1.9
2.67
1.8
1.62 1.54
Financial Leverage
Axis Title
Figure 7: Figure representing financial leverage
(Source: As Created by Author)

13BUSINESS ANALYSIS PROJECT
Eco World BHD is having the moderate financial leverage while SP Setia degree of
financial leverage is the highest. MAH Sing Group leverage is the lowest. Eco World is not
very highly leveraged and with appropriate amount of financial leverage the company
increase the returns for the shareholders. MAH Sing Group financial leverage is decreasing
over the span of 2015 to 2017 while the SP Setia financial leverage is increasing over the
years. Eco World has managed to stabilize the financial leverage as the ratio remained 2.33
and 2.31 for both 2016 and 2017.
Solvency: Cash Flow per sale%:
The cash flow per sale represents how efficiently the business is operating in terms of
its net sales or revenues (Mullinova 2016). This provides the investors with the idea of a
company’s capability in turning the sales into the cash.
Cash Flow Per Sale % 2015 2016 2017
Eco World Development BHD -98.51 7.61 8.8
SP Setia BHD 24.15 6.52 12.4
MAH Sing Group BHD -9.54 14.23 7.16
Cash Flow Per Sale %
2015 2016 2017
-120
-100
-80
-60
-40
-20
0
20
40
-98.51
7.61 8.8
24.15
6.52 12.4
-9.54
14.23 7.16
Cash Flow Per Sale
Axis Title
Figure 8: Figure representing Cash flow per sale:\

14BUSINESS ANALYSIS PROJECT
(Source: As Created by Author)
Eco World can be ranked in the middle position in terms of cash flow over sales. The
cash flow ratio of Eco world during the span of three years have reported a fluctuating trend.
The sales for Eco World BHD grew without the similar growth in the operating cash flow
from the year 2011 to 2013. The company though reflected its ability of turning the sales into
the cash following the negative slump in 2015. SP Setia is better placed in this aspect while
the MAH Sing Group BHD is not in the favourable position with the cash flow per sale
representing a declining trend.
Strategic Analysis:
Strategic analysis is used to assess the micro and the macro environment that
comprises of business environment analysis, industry analysis, competitor analysis,
operations and organization analysis (Robson 2015).
Business Environment Analysis:
PESTLE Analysis
PESTLE Analysis is regarded as the analytical business tool used in strategic business
planning (Hill 2017). It is regarded as the strategic framework for understanding the external
influence on the business.
Political:
Malaysia is ranked 12th in Asia and 39th in world in respect of the political stability.
To keep up the pace with the rapidly growing neighbours, the government of Malaysia has
undertaken a FDI friendly occurrence (Hill, Jones and Schilling 2014). The Malaysian
investment development authority provides incentives to overseas owners which includes
both the tax and non-tax incentives such as grants and soft loans.

15BUSINESS ANALYSIS PROJECT
Economy:
The prediction for 2017 GDP growth ranges from 4.3% to 4.7% reflecting a faster
growth than in 2016. The Malaysian GDP per capita is determined to rise in 2017 which also
brings a rise in consumption (Tradingeconomics.com 2018). The GDP in Malaysia was worth
314.50 billion USD for the year 2017. The increase in the rate of inflation impacts the price
of the products which ultimately impacts the purchasing power of the consumer and also
alters the demand supply models of the economy.
Figure 9: Figure representing GDP of Malaysia
(Source: Tradingeconomics.com 2018)
Social:
The active working population of Malaysia is anticipated to grow by 1.6 percent in
the next decade. With the rate of literacy standing 95 per cent and ever rising number of
education graduates Malaysia provides a significant pool of talent for potential investors
(Aithal 2016). The affirmative action policies favours the ethnic Malaysian population

16BUSINESS ANALYSIS PROJECT
seeking opportunities. Apart from the increasing population, foreign employees and overseas
student in the country have increased the market segment and potential market share.
Technological:
The technological environment of Malaysia represents that the e-commerce is being
pushed as the major drivers of economic growth to increase the income status of Malaysian
(Hillson and Murray-Webster 2017). The government and the private sector are investing in
the technological and digital structure.
Environmental:
The issue concerning green surrounding of late has attracted the intention of citizens
more widely. Construction organization has undertaken goal of waste minimization by
undertaking bio-composting facility (Fozer et al. 2017). Pollution controls and energy
consumption is regarded as the factor that creates an impact on the business process of a firm.
Legal:
The companies act 2016 came into the existence and it is applicable for all the
industries in Malaysia. The newer regulations are bought into the action to reduce the costs of
conducting business and improving the flexibility in management of company affairs.
Factors Low Medium High
Political 
Economical 
Social 
Technological 
Environmental 
Legal 

17BUSINESS ANALYSIS PROJECT
Competitive Force Analysis:
Porter’s five forces:
The porter’s five forces analysis is used to assess the structure of the industry to
understand the attractiveness of the industry (Belton 2017). The porter’s five forces is
employed to create strategy on several issues identified by the company;
Competitive Rivalry: Eco World BHD appears to be very high since there are some industry
players that are competing with the company (Moon et al. 2014). Eco World BHD faces
direct competition from the companies such as SP Setia and MAH Sing Group BHD that
offer luxurious houses in Malaysia.
New entrants threat: Eco World BHD recognized that the threat from the entry of new firm
is lower or in other words the threat is medium (Ouma and Oloko 2015). There are several
regulations and rules that should be dealt with the new companies.
Threat of substitute: For Eco World BHD the threat of substitute is lower. It is difficult for
other competing firms to bring substitute products since there are very few companies
involved in commercial construction (Panwar et al. 2016).
Bargaining power of buyers: Presently the purchasing power of the purchasers varies
however the bargaining power currently for the purchasers seems to be high as there is good
demand for high-end residency and luxury offices (Dawes 2018).
Suppliers bargaining power: The suppliers bargaining power appears to be higher because
deriving profit in the commercial construction industry is a time taking element. The long-
time taken for getting the supplies with higher costing of labour results in higher prices.
Five Forces Level of Forces Impact on Industry

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Attractiveness
Competitive Rivalry High Neutral
New Entrants Threat Low to Medium Favourable
Substitutes threat Low Neutral
Buyers bargaining power Medium to High Favourable
Suppliers bargaining power Medium to High Neutral
The analysis above provide that two forces are favourable to the construction
industry. Conclusively, the construction industry is moderately profitable.
New forces in the industry:
Apart from the porter’s five forces analysis there are certain integrated computer
designs that have led to Digitalization and forming the new forces of the construction
industry. The process of Digitalization has resulted in forefront value chain in commercial
property that comprised of both the designs and locations (Panwar et al. 2016). Digitalization,
has resulted in the competitive market environment and customers are able to compare the
quality and price through speedy progress in technologies.
Operations and organizational analysis:
Eco World have undertaken the initiatives and strategies which the company has
undertaken to improve the sustainability across the operations. The company complies with
the necessary business standards to make sure that all the process and systems are in place in
administering its daily business operations for creating the quality development. The
company has constantly promoted the safety work culture for a conducive work environment.
It strives to attain excellence in every aspect of its operations. The management assures that
sufficient resources and talents that are available to administer the operations of business.

19BUSINESS ANALYSIS PROJECT
Taking into the considerations the issues the company faces the issues relating to the
delegation of responsibilities to the committee of the board. The issues related to the internal
control of the management committee as well and reporting regarding the significant matters
requires common understanding of improving the current system.
Key success factors:
The success factors for Eco World BHD is largely because of the succession planning
for the board of directors and senior executives by taking into the consideration the
challenges and opportunities that is faced by the company and its subsidiaries. Another
success factor for Eco World is its partnership expansion as the company acquired 27% stake
in the Eco World International after the successful listing in Bursa Malaysia Securities
Berhad.
Balance Scorecard:
Balance Score
Card
Industry
Specific KPI
Eco World SP Setia BHD MAH Sing
Group BHD
Learning and
Internal Growth
Training of
Employees
Number of new
products
80%
On regular basis
75% 65%
Process or
Operations
New computer
aided designs
Innovations
Regular quality
control
Regularly
On continuous
basis
Medium
Irregular
Always
Good
Often
Infrequently
Poor

20BUSINESS ANALYSIS PROJECT
Perspective of
consumers
Extent of
consumer
satisfaction
Reputations in
market place
High
Very good
Medium
Average
Infrequent
Medium
Financial
perspective
Return on asset
Liquidity:
Current Ratio
4.53
1.22
3.84
1.43
2.24
3
Ansoff’s matrix:
The Ansoff’s matrix is employed to provide strategic alternatives to Eco World in
defining the business strategy;
Market Penetration: The market penetration strategy for Eco World is in the direction of
gaining greater market share to help its current project gain wider share of customers in the
Asian markets (Yin 2016). The schemes for customer reward for membership with the
discounted price would help in penetrating the market for the company.
Product development: Eco World can undertake the strategies for developing new product
in order to increase the profit and the market share (Dawes 2018). Research and development
in the present project would offer the consumer with the wider choice.
Market development: Eco World BHD is required explore the Asian market and target the
potential customers in different geographical areas with other sections of Malaysian market
(Howson 2016).

21BUSINESS ANALYSIS PROJECT
Diversifications: Diversification refers to the strategic alternatives however it is risky
strategy. Similarly, for Eco World BHD new designs in the property and newer marketing
strategy can be undertaken to enter in the Asian markets (Arnold and Yildiz 2015).
Figure 11: Figure depicting Ansoff Matrix:
(Source: As Created by Author)
Limitations of financial models and conventional analysis:
Financial models are created on the countless assumptions leading to grossly
imprecise forecast of figures and misguided decisions for investment. Therefore, financial
model is hardly regarded as the tool for investment analysis and it aggravate investor’s
biasedness (Modarres 2016). Conventional analysis such as porter’s five forces and PESTLE
analysis are traditional tools. The porter’s five forces are out of date and in certain industries
it is unable to meet the business goals. While PESTLE analysis is only limited to macro
environment and ignores the internal capabilities of the company.
Market
penetration
Product
development
Market
Development Diversification

22BUSINESS ANALYSIS PROJECT
Conclusion:
On a conclusive note, the financial analysis of Eco World BHD suggest that the
company has reported a positive solvency and current ratio, demonstrating a stable financial
position. Consistency in net profit and revenues portrays a positive trend in the direction of
future growth in the competitive business market. The strategic analysis segment provides an
explanation that the delegation of authority in committee management is problematic for the
company. However, the Eco World has placed its focus on the technology related product to
satisfy the consumer demand.
Priority Matrix
Higher Schedule Priority Lower
Required (P1)
Work Stoppage Regulatory Audit Finding Program Directives
Work stoppage
may take place
or contractual
requirement may
not be met
Significance (P2)
Higher impact
on the
construction
Cost
reduction
through
present
expenditure
workaround
Stopping
construction
may create
greater
impact
System
replacement
Higher cost of
resources
Moderate (P3)
No Risk,
moderate benfit
Lower Risk,
moderate
benefit
Medium
Risk,
moderate
benefit
Higher Rsks,
Moderate benefit
Moderate impact
on resources and
increase in time,
cost and
resources
Minor (P4)
No Risk, minor
benefit
Lower Risk,
Minor benefit
Medium
Risk, minor
benefit
Higher risk, minor
benefitMinimum impact
on resources or
cost of resources
Low (P5)
Administrative
change
System or
Procedure
nuisance
Cost
prohibition
Not feasible
technologicall
presently

23BUSINESS ANALYSIS PROJECT
Recommendations:
There are certain recommendations that are provided below for Eco World BHD;
a. Implementing product diversity through technological advancement and product
development together with the exclusion of projects that contributes less on the
profitability.
b. Increasing the efficiency of the lean manufacturing and quicker payback investment is
required for Eco World.
c. Eco World should offer extra importance on rebuilding the customer as well as the
consumer loyalty with greater focus in dealing with the threats of growing
competition in the current market.
A recommendations modelling is stated below that measures the anticipated outcomes
based on the three variables namely the sustainability, acceptability and feasibility of
recommendations.
Recommendations modelling
Recommendation
s
Impacted
Area of
Business
Expected
Outcomes
Suitability Acceptabilit
y
Feasibilit
y
Diversity in
product: Creating
product with the
help of new
product
development.
R&D Increasing
customer
contentment.
Considering
consumer
spending
power.
85%
Appropriat
e for
business
that
address
competitio
n
95%
Consumers
prefers
diversity
100%
Requires
approval
of CEO
Consumer Loyalty Consumer Sales 75% 85% 95%

24BUSINESS ANALYSIS PROJECT
service
support:
Sales and
marketing
departmen
t
augmentatio
n
Expanding
profitability
Would be
offering
business
with better
market
advantage
Flexibility in
management
to implement
policy
Strong
capital
structure
can force
policy
applicatio
n
Model Scenario Forecasting:
To forecast the financial performance of Eco World scenario modelling is used to
offer strategic implementation of the decisions in future. The key assumptions and outcomes
usually comprises of accounting, finance, economics and philosophy of business. Financial
spreadsheet modelling offer the forecasted scenario based on three variability which includes
best case, moderate case and worst case.
Financial Indicator 2015 %Change 2016 %Change 2017 %Change
Net Margin 2.57 -83% 5.08 98% 7.17 41%
Return on Assets % 0.63 -87% 1.64 160% 2.24 37%
Return on Invested Capital % 0.97 -92% 2.42 149% 3.3 36%
Current Ratio 1.51 -26% 1.40 -7% 1.22 -13%
Quick Ratio 0.51 -27% 0.50 -2% 0.43 -14%
Financial Leverage 2.2 44% 2.33 6% 2.31 -1%
Free Cash Flow/Sales % -98.51 -609% 7.61 -108% 8.8 16%
Free Cash Flow/Net Income -38.37 -3170% 1.07 -103% 0.44 -59%
Scenario Analysis
Eco World Development BHD

25BUSINESS ANALYSIS PROJECT
5%+ Trend 2018 2019 2020 Keep Trend 2018 2019 2020 2018 2019 2020
15.52 16.30 17.85 18.62 15.52 19.56 21.42 22.35 20.35 21.23 19.33
4.95 5.20 5.69 5.94 4.95 6.24 6.83 7.13 6.49 6.77 6.16
11.49 12.06 13.21 13.79 11.49 14.48 15.86 16.55 15.06 15.72 14.31
2.05 2.15 2.36 2.46 2.05 2.58 2.83 2.95 2.69 2.80 2.55
0.7 0.74 0.81 0.84 0.70 0.88 0.97 1.01 0.92 0.96 0.87
1.53 1.61 1.76 1.84 1.53 1.93 2.11 2.20 2.01 2.09 1.91
19.34 20.31 22.24 23.21 19.34 24.37 26.69 27.85 25.35 26.46 24.09
1.25 1.31 1.44 1.50 1.25 1.58 1.73 1.80 1.64 1.71 1.56
Scenario Forecasting
SP Setia BHD Moderate Trend 5% Below Trend
The average percentage change +5% represented the forecasted change in percentage
with the best case scenarios and it is held as the appropriate depending upon the stable
financial status of Eco World for continuous growth in revenue and profits.
Outcomes:
Eco World has derived net profit margin over the span of three years. Therefore, on
the best case scenario the company would make profit in future and an improved strategy
implementation would result in both long and short run business outcomes. While the worst
case scenario is obtained by using -5% change and it is unlikely that in future any abrupt
change would take place. Under the moderate case situation, the company may consider
implementing necessary measures to improve competitive position in the market.
Nevertheless, changes in the market environment can be reviewed regularly to realign the
organizational strategies with the opportunities and threat.
Scenario Description
Most Likely Worst Case
Financial
KPI’s
Worst Case
Scenario
Description Best Case
Scenario
Forecast
Description
Profitability:
Net Profit
Margin %
2018: 16.30
2019:17.85
2020:18.62
It is not likely to
take place and
would continue
in the difficult
environment
2018:20.35
2019:21.23
2020:19.33
There is a
record of
growth over the
period of three
years and the
company may
positively

26BUSINESS ANALYSIS PROJECT
increase its
value
Liquidity:
Current Ratio
2018:2.15
2019:0.74
2020:1.61
Even though in
the worst case
the company
may have the
capability of
maintaining
strong
resources.
2018:2.69
2019:2.80
2020:2.55
Company
maintains the
ability of paying
its debt and it’s
in better
position of
meeting its debt
obligations
Financial
Health:
Financial
Leverage
2018:1.61
2019:1.76
2020:1.84
It is
recommended
to work safely
since there are
numerous
uncertainty.
2018:2.01
2019:2.09
2020:1.91
The company is
conservative
and its
favourable to
shareholders.
Solvency:
Free Cash per
Net Income
2018:1.31
2019:1.44
2020:1.50
There is a
stability of
growth and
future
represents that
the company
may maintain
its stability of
cash flow.
2018:1.64
2019:1.71
2020:1.56
The growth
stability would
result in better
flow of cash
and would
increase the
ability of paying
its debt.
Outcome:
The Eco World Development BHD has generated better net profit during the period of
three years and in the best case situation the company would be generating better returns
from its sales. The worst case scenario is forecasted based on negative five percent. It is not
likely to happen in the upcoming future. The moderate case follows the average percentage
trend and if applied the new strategy of Eco World BHD would face challenge.

27BUSINESS ANALYSIS PROJECT
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