TB0249
Copyright © 2010 Thunderbird School of Global Management. All rights reserved. This case was prepared by Professor Andrew
Inkpen for the purpose of classroom discussion only, and not to indicate either effective or ineffective management.
Andrew Inkpen
Jextra Neighbourhood Stores in Malaysia
In October 2010, Tom Chong was on his way to his office and thinking about several issues he would have to deal
with in the coming weeks. Chong was Jextra Stores (Jextra) country manager for the Neighbourhood Markets
Division in Malaysia. One issue involved a conversation with the mayor of Klang, a town near Malaysia’s capital
city of Kuala Lumpur. Chong had been seeking to expand to Klang for some time. The mayor surprised Chong
with an offer to help with land zoning if Jextra would help finance a new primary school (or at least Chong
thought that was what he had been asked for).
The second issue involved the job performance of Arif Alam, Jextra’s top-performing buyer. Alam, a buyer
of fresh fruit and vegetables, consistently negotiated better contracts than Jextra’s fifteen other buyers and, Chong
believed, better than Jextra’s competitors. The contracts negotiated by Alam certainly contributed to the excellent
financial performance of Jextra Malaysia. Nevertheless, Chong could not help wondering if there was more to the
picture than he was aware of. The retail industry in Malaysia was notorious for buyers accepting money and gifts
from suppliers. A few days ago, Chong had accidentally overheard two of his accounting employees speculating
that Alam must be accepting gifts, or even taking bribes—how else could he get such good contracts?
Chong was not sure what to do. Should he confront Alam? Or, to use one of his English colleague’s favorite
expressions, should he let sleeping dogs lie? Chong knew that his boss expected him to aggressively grow the
business, so perhaps it would be best to accept the mayor’s offer and deal with Alam later.
Jextra Malaysia
Jextra Stores, a large Asian retailer, was based in Hong Kong and was owned by Sim Lim Holdings, a large pub-
licly traded industrial group. Sim Lim Holdings was traded on the Hong Kong and London stock exchanges.
Jextra operated retail stores in Hong Kong, China, Philippines, Viet Nam, Malaysia, Thailand, and Singapore.
The company operated supermarkets, hypermarkets, and convenience stores.
Jextra entered Malaysia, a stable and prosperous nation of 28 million multi-ethnic people, in 2005 and
was very successful. The company operated supermarkets in Malaysia using the name Neighbourhood Markets.
There were now ten Neighbourhood Markets, and breakeven had been reached quickly. Jextra was planning to
enter the Malaysian convenience store sector in a few years. Although other Asian and European retailers were
entering Malaysia, Tom Chong saw plenty of growth opportunities for supermarkets, and his boss in Hong Kong
had approved an aggressive five-year investment strategy.
Tom Chong
Tom Chong, a Hong Kong native, had been in his position for eight months, and expected to remain there
for another two to three years. Malaysia was Chong’s first assignment as country manager. Prior to moving to
Malaysia, Chong held various positions in corporate headquarters in Hong Kong, and then moved to Malaysia
as finance director. After two years in finance, he moved into his current role as country manager for Neighbour-
hood Markets. His new assignment in Malaysia was his first experience with real operational issues and profit
and loss responsibilities.
Do Not Copy or Post
For the exclusive use of M. Hossain
This document is authorized for educator review use only by Md Safayat Hossain University of Dhaka until July 2015. Copying or posting is an infringement of copyright.
Permissions@hbsp.harvard.edu or 617.783.7860
Chong reported to a Regional Operating Officer responsible for Singapore, Malaysia, and Thailand, and
was in constant contact with the CEO and the CFO of the Supermarket and Hypermarket Divisions of Jextra in
Hong Kong. Chong was evaluated based on various financial measures, including Economic Value Added. As a
country manager in a young market, the number of new stores opened was an important element in his overall
evaluation, and a factor in determining his career prospects. In a fast-growing market like Malaysia, a failure to
open new stores would be viewed negatively at corporate headquarters. The number of new stores opened would
also be a factor in determining his discretionary bonus. In recent years, Chong’s performance had been among
the best for Jextra managers of his age and experience.
A New Store in Klang
Jextra was doing well in Malaysia and actively seeking to expand. Chong and his team had identified a potential
site in Klang for a new Neighbourhood Market. Klang, a town located about 30 km west of Malaysia’s capital,
Kuala Lumpur, was growing and was viewed as an attractive location for a new store. Although the potential
site was not zoned for retail and commercial purposes, it had good road access and plenty of space for parking.
Chong knew that several other retailers were also interested in expansion in Klang, especially with the opening
of a new highway connecting Klang to the southeastern edge of Kuala Lumpur.
At a recent meeting between Chong and the mayor of Klang:
Chong: As you know, we have identified Klang as one of the most attractive cities in Malaysia
for Jextra investment. We are interested in opening a Jextra Neighbourhood Market there.
Mayor: We are pleased that you are considering our city for your next investment. Klang is a
growing community, and the new highway makes our city much more attractive as a place for
families to live and commute to the capital. Where does your investment analysis stand?
Chong: We have done some preliminary work. We have identified some potential sites. There
is one site of interest near the new sports arena, and we have had some conversations with your
For the exclusive use of M. Hossain
