1.0 Introduction to the Industry
1.1 Description
1.1.1 Description of Food and Beverage Industry
Global market forces are driving the continual evolution of the food and beverage industry. Consolidation, changing customer preferences and increasing government regulations are dramatically impacting manufacturing and business strategy. In this fiercely competitive market place, the manufacturer must offer a greater variety of products to meet consumer demand. At the same time, the manufacturer must consistently and cost-effectively produce high quality products. To be successful, the manufacturer should focus on three key business issues financial performance, sustainability and brand equity. 1. Financial Performance
In today!s global market place, "here gro"th via acquisition is prominent, the key to sustained positive financial performance is the ability to understand and respond to consumer demand and competitive pressures "hile reducing cost of production. 2. Sustainability
#anufacturers "ant to have a positive impact on society and the environment. In addition, they "ant to turn sustainability program is the belief that the corporate investment in environmental and social responsibility must strength business performance to be successful. It must reduce environmental impact, achieve genuine economy in the use of resources, deliver a return on investment and enhance the equity of their company. 3. Brand Equity
Customer loyalty is the key to success of manufacturer business and maintaining customer loyalty is achieved through consistently manufacturing high-quality products, batch after batch. In doing so, the manufacturer need to add value on into their brand.
1.1.2 Description of Key Stakeholders
$efinition of stakeholder is a person, group, or organi%ation that has direct or indirect stake in an organi%ation because it can affect or be affected by the organi%ation&s actions, ob'ectives, and policies. The e(planation belo" establishes that #amee-$ouble $ecker )hd product market stakeholders have the greatest stake in the firm&s strategies and success. *ey stakeholders in a business organi%ation included creditors, customer, directors, directors, employees, government +and its agencies, o"ner +shareholders, suppliers, unions, and the community from "hich the business dra"s its resources. Although stakeholder is usually self-legitimi%ing +those "ho 'udge themselves to be stakeholders are stakeholder, all stakeholders are not equal and different stakeholders are entitled to different considerations. or e(ample, a company!s customers are entitled to fair trading practices but they are not entitled to the same
consideration as the company!s employees. takeholder po"er is an important factor to consider "henever you are asked to "rite about the relationship bet"een a business and its stakeholders. In the conte(t of strategy, "hat "hat is important is the po"er and influence that a stakeholder has over the business ob'ectives. takeholders can be classified in to / main group "hich is product market, capital market and organi%ation stakeholders. 0ach group have their o"n o "n roles, benefits and some might affect company!s ob'ectives. 1roduct market stakeholders are people "ho benefit directly from the business "ithout necessarily investing money, such as consumers, suppliers and host community. )esides, organi%ational stakeholders are employees "ho "ork for the company and depend on survival for income. 2hile, capital market shareholders are the shareholders and lenders "ho e(pect the firm to preserve and enhance the "ealth they have entrusted to the company and returns should be commensurate "ith the degree of risk to the shareholder. 1. Product Market Stakeholders (a !onsumer
As stakeholders, consumer generally demands demands reliable products at the lo"est lo"est possible prices. #amee-$ouble $ecker )hd&s customers "ill ultimately determine if the company succeeds based on satisfaction measures such as product taste, product function or nutrition, interesting packaging, and also level of service. As consumer sentiment gets more favourable in light of the improving improving economic climate, #amee-$ouble $ecker )hd hope to capitalise on it by getting closer to the consumers& minds and hearts so as to better respond to their needs. (b Su""liers
uppliers typically seek loyal customers "ho are "illing to pay the highest sustainable prices for their goods. $riven by the opportunity to to move large volumes of product through through the distribution chain, suppliers have accepted #amee-$ouble $ecker )hd&s rigid terms and continuous pressure to reduce costs to support its lo" price strategy. 3o"ever, supplier reaction to company&s 4strong-arming4 should be monitored, and they need to understand the types of actions required by suppliers to meet its demands. )eside, #amee-$ouble $ecker )hd needs to measure successful relationships "ith suppliers not by cost alone and minimi%e the unintended consequences of its relentless r elentless quest for lo"er prices. )y partnering more closely "ith "ith suppliers, #amee-$ouble $ecker )hd can help them achieve mutually-beneficial goals "ithout the abuse of resources or damage to the environment. (c #ost community
#amee-$ouble $ecker reiterates their Corporate ocial 5esponsibility values and goals in helping to create a better #alaysia for all. 2hile the needs of the less fortunate "ill al"ays remain their priority, "ill also look at "ays and means in "hich the y can improve the lives of
consideration as the company!s employees. takeholder po"er is an important factor to consider "henever you are asked to "rite about the relationship bet"een a business and its stakeholders. In the conte(t of strategy, "hat "hat is important is the po"er and influence that a stakeholder has over the business ob'ectives. takeholders can be classified in to / main group "hich is product market, capital market and organi%ation stakeholders. 0ach group have their o"n o "n roles, benefits and some might affect company!s ob'ectives. 1roduct market stakeholders are people "ho benefit directly from the business "ithout necessarily investing money, such as consumers, suppliers and host community. )esides, organi%ational stakeholders are employees "ho "ork for the company and depend on survival for income. 2hile, capital market shareholders are the shareholders and lenders "ho e(pect the firm to preserve and enhance the "ealth they have entrusted to the company and returns should be commensurate "ith the degree of risk to the shareholder. 1. Product Market Stakeholders (a !onsumer
As stakeholders, consumer generally demands demands reliable products at the lo"est lo"est possible prices. #amee-$ouble $ecker )hd&s customers "ill ultimately determine if the company succeeds based on satisfaction measures such as product taste, product function or nutrition, interesting packaging, and also level of service. As consumer sentiment gets more favourable in light of the improving improving economic climate, #amee-$ouble $ecker )hd hope to capitalise on it by getting closer to the consumers& minds and hearts so as to better respond to their needs. (b Su""liers
uppliers typically seek loyal customers "ho are "illing to pay the highest sustainable prices for their goods. $riven by the opportunity to to move large volumes of product through through the distribution chain, suppliers have accepted #amee-$ouble $ecker )hd&s rigid terms and continuous pressure to reduce costs to support its lo" price strategy. 3o"ever, supplier reaction to company&s 4strong-arming4 should be monitored, and they need to understand the types of actions required by suppliers to meet its demands. )eside, #amee-$ouble $ecker )hd needs to measure successful relationships "ith suppliers not by cost alone and minimi%e the unintended consequences of its relentless r elentless quest for lo"er prices. )y partnering more closely "ith "ith suppliers, #amee-$ouble $ecker )hd can help them achieve mutually-beneficial goals "ithout the abuse of resources or damage to the environment. (c #ost community
#amee-$ouble $ecker reiterates their Corporate ocial 5esponsibility values and goals in helping to create a better #alaysia for all. 2hile the needs of the less fortunate "ill al"ays remain their priority, "ill also look at "ays and means in "hich the y can improve the lives of
their most precious resource, and employees. Creating better "orkplaces and giving them opportunities to give back to the community "ill feature in their Corporate ocial 5esponsibility plans moving for"ard, and they look for"ard to sharing their progress. 2. $r%ani&ation Shareholders
(a Em"loyees
)asically, employee are e(pecting in a dynamic, stimulating and re"arding "ork environment. )esides, they are satisfied by a company that is gro"ing and actively developing their skills. #amee-$ouble $ecker )hd employees& development programme is seen as a strategic investment for the future success of this company. In year 6778, they have been constantly challenging the status quo by b y conducting various ongoing activities from e(ternal and internal best practices based on our employees& development programme as above. #amee-$ouble $ecker )hd shall continue sourcing for talented graduates and professionals through various career programmes, such as #alaysia tudent Internship 1rogramme, #anagement Trainee 1rogramme, Trainee 0(ecutive 1rogramme and Applied kills $evelopment 1rogramme. If employees! got the ability, company company must have the opportunity to success. (b Board of 'irector (B$'
The #amee-$ouble $ecker )hd!s board has overall responsibility for the Group&s system of internal control and for revie"ing it!s the role of management is to implement the board&s policies on risk and control. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business ob'ectives. In pursuing these ob'ectives, internal controls can only provide reasonable and not absolute assurance against material is statement or loss. The board confirms that there is a continuous process for identifying, evaluating and managing the significant risks threatening the Group during the financial year under revie" and prior to the date of approval of the annual report and financial statements. (c nternal )udit
The #amee-$ouble $ecker )hd Group&s internal audit function "as outsourced to an independent audit firm "ho report directly to the Audit Committee. The outsource audit firm perform regular revie"s of business processes to assess the effectiveness of internal controls and highlight significant risks impacting the Group.
The Audit Committee conducts annual revie"s on the adequacy of the internal audit firm&s scope of "ork and resources. The Audit Committee regularly revie"s the internal auditor&s reports and discusses the highlighted issues "ith the #anagement to ensure every issue has been properly resolved. 3. !a"ital Market Shareholders (a Shareholders
hareholders and lenders e(pect financial returns that e(ceed industry performance and the potential returns from alternative investment opportunities. A look at #amee-$ouble $ecker )hd financial performance helps to identify measurements that determine the success of #amee-$ouble $ecker )hd strategy for capital markets 9 :et profit of 5#;/.< million, an 8;.=> increase from the 5#6/.< million in the preceding year. 9 5evenue "as at 5#;??.@ million in 677, up from 5#/=.7 million previously. 9 In 677, ?7.6> improvement in sales contributions from the domestic market to 5#68@./ million in sales, from 5#6@.7 million in the previous year. 9 :et 1rofit to hareholders in 677 "as increase from ?7,6
. 9 0arnings per share +01 for the quarter ended /? $ecember 677 "as ??.8= cent. This brought the yearly 01 up to @7./? cent in 677, a =/.7> increase from 6.7@ cent in the previous financial year.
1.2 Segments 1.2.1 Demographic Segment
According to a survey, #amee-$ouble $ecker has invested in football fans. There are more than five million #anchester Bnited football fans and they have a similar profile to its target consumers, mainly young adults and families. #amee-$ouble $ecker strongly believed that football is a "holesome event that brings friends and family together. They cheer for their team together and "hen their team "ins, they celebrate together. o, #amee-$ouble $ecker "ant to be the favorite snack to "atch football "ith, and become part of the special moments only #anchester Bnited can provide. They also believe that #amee product "ill be elevated by #anchester Bnited partnership and the football fans "ill love #amee product 'ust as they love #anchester Bnited. And also, sports "as one of the key elements that promotes unity among the people and as a responsible #alaysian company, #amee-$ouble $ecker "ishes to use the event to bring the different races and families together in a "holesome "ay. #amee-$ouble $ecker +# )erhad, an investment holding company, engages in the manufacture and marketing of food and dairy products, and soft drinks. It products include instant noodles, snacks, dairy products, chilled products, beverages, and confectionery. The company also provides information systems management and motor vehicle rental services.
It has operations in #alaysia, #yanmar, and other Asia countries. The company "as incorporated in ?=? and is headquartered in Ayer *eroh, #alaysia. Bnder income distribution, #amee-$ouble $ecker e(pects to see e(port sales contribution improve to as much as @7> from some /7> currently over the ne(t fe" years on the back of its sponsorship deal "ith #anchester Bnited td. 1.2.2 conomic Segment
In a filing to )ursa #alaysia today, #amee-$ouble $ecker said the profit reduction "as caused by the increase in ra" material and other commodity prices, as "ell as higher advertising and promotional e(penditure. #ean"hile, the increase in revenue "as contributed by higher sales from the foreign markets "ith better pricing structure. 4The board "ill continue to strengthen its operations, not only by implementing continuous improvements in selling and distribution channels, but also by investing capital e(penditure to increase and enhance the group&s production capacity,4 the group said. D )ernama. rom the economic segment, #amee also has a strong balance sheet. :et cash and short-term investments totaled 5#=/.? million as at end-67?7. This and the e(pected cash flo" from operations "ould allo" it to comfortably fund the planned e(pansion and maintain a @7> profit payout. Indeed, "e forecast the company "ill stay in a net cash position, albeit marginally so, after paying for its planned capital e(penditure this year. They estimate single-tier dividends totaling ?@ cent per share, "hich translate into a net yield of ;.6> based on its pre-announcement price of 5#/.<7. #amee!s latest privati%ation proposal appears to highlight the fact that the market does, at times, fail to fairly value stocks for their underlying fundamentals. This has been one of the factors prompting controlling shareholders to take their companies private in recent years. 1.2.! "olitical # $egal Segment
In political or legal segment, #amee is facing Greening program "hich launch by the government and also the :GEs. This program has restricted the usage of plastic in industrial. ince plastic is the main ra" material for #amee to produce bottle for :utrigen, #amee has to think of other "ay to reduce using of plastic in the company. Ether than this, #amee also may face some environmental care policy. 1.2.% Socio&'ultural Segment
#alaysia is a multi cultural country "hich built up by multi nations.#ameehas to be focus on different nation!s customers. There are / main and others nations in #alaysia "hich is the #alays, Chinese, India, Iban and more. #amee has to produce a suitable taste of products in order to gain more market shares. #amee found that #alaysian are getting health concern no" a days, so #amee starts to diverse it product line by having healthier snacks "hich is :utrigen, ite Feo yogurt and so on. This may gain more market shares on #amee products. #amee produce :utrigen "ith various kinds of tastes to suit the #alaysian!s multi nation!s demand.
1.2.( )echnological Segment
#amee has invested in the integrated A1 applications. #yA1, a product of the German soft"are company A1, is an e-business soft"are integration tool that delivers content to the user based on their roles in the enterprise. This system enables them to analy%e their costs in a "ay that "as not possible before. They can report on all the cost components of each product from ra" ingredients through to the proportion of overheads allocated. All could be done in less than three days. The data is convenient to them by highlighting areas "here costs are rising, sho"ing them the effect of administration costs, and allo"ing them to calculate the volumes that they need to sell. The A1 solutions have removed the delay in production planning, as they automatically prompt the sales teams for regular, updated figures. A1 has improved in forecasting accuracy and the production plans help them to identify likely manufacturing bottlenecks that could prevent them from fulfilling a customer order on time. imilarly, the quality management process has been fully transferred to the A1 applications. hould a quality issue arise, #amee is able to track and trace every ingredient, manufacturing and delivery stage. This is an essential capability "hen selling internationally, since most customers require full audit data. 1.! 'aveat
1.!.1 *lo+al
In global, the #amee have to face a problem "ith the environmental issues "here the ma'ority of the company product packaging is using a plastic. :o"adays government and ma'ority of the country in this "orld are trying to reduce the usage of plastic bag in order to keep the health environment due to the plastic are very difficult to be destroy.
1.!.2 "hysical
In physical, #amee have to pay more for the cost of electricity consumption per tonnage of steel and the natural gas that currently used in the rolling mill operations. #amee also must concerned "ith petrol price increases as it "ould affect the price of plastics, a by-product of petrol "hich they use a lot for bottles of beverage products and other products. )esides, they must also manage "ell to settle the garbage from their production to keep the environment clean and leave no environmental footprints. Ether than that, #amee have difficulties to create an a"areness of their "orkers to encouraging their "orkers to protect the environment by save the usage of electric current and also "ater.
2.0 Socio& conomic
2.1 ,elevant *overnment or nvironmental Factors
2.1.1 Infrastructure and Support Services
laughter, processing and support facilities for halal products "ill be e(panded and upgraded. This "ill include the establishment of centrali%ed slaughter facilitiesH "ith veterinary supervision to replace the current "et slaughter marketH. There "ill also be infrastructure at entry points for e(porting and importing halal products including storage systems.
Cold rooms, "arehouses, and containers "ill be built and better transportation system "ill developed for proper distribution purposes.
killed manpo"er "ill be developed through accredited training schemes. Industry funded training programs "ill be encouraged to complement training provided by Government institutions and the academia.
2.1.2 ,-D and Food "rocessing )echnology
Government involvement in 5$ "ill be strengthened and consolidated to increase overall institutional capacity and efficiency to support the industry. The 5$ are carried out by several institutions, especially #A5$I, $J, B*# and B1#, on ne" product development, food biotechnology, halal food ingredient, disease diagnostic, and prevention and control on livestock.
According to the director of #A5$I, $r. Abu )akar 3ussin +?, #A5$I has a very strong team of food specialists and technologists contributing to the food processing technology, such as creating a ne" supplement for halal ingredient such as the vegetable-based gelatine to substitute the meat-based gelatine. The advancement of food biotechnology has instigated ne" issues to halal food production.
or e(ample, if the s"ine $:A is transplanted to the yeast cell for producing a kind of protein, is the ne" protein halal or non-halal. The fermentation of soy sauce, "hich produces very lo " level of alcohol in the final product, is it halal.
These types of issues "ill be for"arded to the #a'lis at"a of KA*I# to determine the halal status of the product. #A5$I is trying to develop proper processing methods, ne" technology, ne" ingredients, and material that are safe, clean, healthy, and halal.
2.1.! $as and ,egulations
#inistry of $omestic Trade and Consumer Affairs has some authority to regulate halal food in #alaysia. Trade $escription ?=6 +Bse of 0(pression 3alalH Erder ?=@ and the #arking of ood Erder ?=@ has stated clearly the condition of using the halal e(pression and the labelling of halal food, as "ell as the penalty of misuse of the halal e(pression and marking.
3o"ever, as e(plained by 0ncik #ohd. 5abani of #inistry of $omestic Trade and Consumer Affairs, the use of halal and the marking of halal are voluntary, "hich mean that halal products do not need to be marked halal. 3o"ever, if a manufacturer uses the halal e(pression and the halal logo and the products are found to be non-halal, they "ill be penali%ed.
2.1.% 'apital and Financial Support
1ublic and private financial institutions are helping halal food manufacturers to get adequate funding in investing to be halal food producers. According to #s ily"ati +?, $eputy $irector, Agro Industries $ivision of #I$A, several banks such as )ank :egara, )ank Islam, and Agro )ank have special packages to help manufacturers get sufficient funding
In addition, suitable incentives for automation investment "ill be provided, and import ta( on speciali%ed livestock farm and processing equipment "ill be abolished. The main incentives for the investment in manufacturing and agriculture sectors are provided for in the 1romotion of Investment Act, ?8< and the Income Ta(, ?<=.
#I$A is also providing incentives to food processors and manufacturers in the form of import duty e(emptions for ra" ingredients and ta( incentives to encourage investments in infrastructure development to attract local and foreign investors.
The :A1/ comes "ith 5#/6.; billion 1lan of Action for a ?/-year period +ingh, ?8. ince promoting #alaysia as an international halal food hub is under the medium-term measure, sufficient amount of fund is e(pected to be allocated in this action plan.
2.1.( Institution of /ccreditation and Standards
)esides KA*I#!s official logo, the Jeterinary 3ealth ogo is another accreditation to enhance the halal product. This $J logo ensures the meat and meat product is safe to consume and disease free.
The food quality division of #E3 is the agency in charge of the 3ACC1 accreditation in #alaysia. The Guidelines for 3ACC1 Certification cheme +?8 is ready and available to assist food manufacture to oversee the food manufacturing and practice the G#1.
2.1. "romotion
#AT5A$0 is the agency responsible for promoting #alaysian halal food under the #alaysia brand name. #inistry of International Trade and Industry +#ITI is also playing an important role in the international arena to promote #alaysia as an international halal food hub.
)oth these agencies also conduct trade e(hibitions, seminars, and conferences to promote and Lsell! our halal food "orld"ide especially to Bnited tates, 0uropean :ations, #iddle 0ast, and EIC countries "here there are substantial #uslims populations. #ITI also facilitates efforts in identifying ne" halal e(port markets such as Common"ealth of Independent tates +CI and 5ussia.
2.2 conomic indicators relevant for this industry
(a Producer Price nde*
It is a "eighted inde( of prices measured at the "holesale, or producer level. The producer price inde( sho" trends "ithin the "holesale markets, manufacturing industries, food and beverages industries and commodities markets. It does not represent prices at the consumer level.
(b 'urable +oods
$urable goods reports provides data on ne" orders received, "hich are generally defined as higher priced capital goods orders "ith a useful life of three years or more. This data provides for"ard looking data such as inventory levels and ne" business, "hich count to"ard future earnings.
(c !onsumer !onfidence nde*
Consumer Confidence Inde( +CCI is a monthly release from the conference board "hich is a non-profit business group that is highly regarded by investors and the ederal 5eserve. It is a unique indicator designed to gauge the relative financial health, spending po"er and confidence of the average consumer.
!.0 "orters Five Forces /nalysis
#amee $ouble $ecker +# )hd is mainly focus on snack and food products since ?=?. Those products are #amee monster snack, instant noodles, #amee $ouble $ecker 1ra"n Cracker and so on. ater on ?<, #amee-$ouble-$ecker started taken significant steps to diversify its product range and develop more functional food and healthyH snack options for their customers. They targeting on children bet"een ages ?7-?@ and also the adult. o they try to enter in the range of beverage product like :utrigen, :utri Fo Foghurt, Foghurt drink, :utrigen IM/ and so on. #amee $ouble $ecker +# )hd may face challenge in this ne" field since there are many barriers of entry in the market.
!.1 )hreat of e ntry
1lastic is the main ra" material using to produce products like bottles, plastic "rapping, labels and more. In the controlled of government policy, #A#00 is currently facing greening program "hich set up by the government and also the non government organi%ation. The greening program has been enforced to be use in beverage manufacturing industry.
The consumption of plastic in each industry has been limited. 1lastic "hich use to make bottles for :utrigen or yogurt drink couldn!t be produce in a large quantity. In order to support the
market demand, #A#00 has changed the thickness of the bottle for their beverage products. This may reduce the needs of plastic use in the company in order to fulfill the requirement "hich setup by the government and :GE.
)esides, any food and beverage that sell in #alaysia should be certified by 3AA. 3AA foods are foods that are allo"ed under Islamic dietary guidelines. :utrigen "ill have to get a 3AA certificate to gain market share on #uslim consumers. )esides, there are several act and regulations like 1revention of ood Adulteration Act, IE and I5I# approval and more rules should be follo"ed by food and beverage manufacturer. This is not only to sho" the quality of the company!s products but also to build a good reputation for the consumers.
#amee $ouble $ecker +# )hd has invested equipment on processing their ne" products in million. The most significant investment is #r. 1ang, managing director of #amme company has invested a 67773A land to plant fruit tree in Indonesia for getting fruit 'uice and e(tract to make produce beverage drink like :utrigen, yogurt drink and so on. #r. 1ang has also invested on latest IT system to be more fle(ible to access information on their operations to be better understanding the market and address subtle changes in industry.
This may be the cost for manufacture a ne" product in the market. Ether than government policy controlled and capital requirement of the company to enter a ne" market, #A#00 also facing products differentiation. There are several competitors "hich is Jitagen and also $utch ady Foghurt drink. The consumers may believe that drinking Jitagen or $utch ady Foghurt drink may good for their health rather than a ne" brand, :utrigen "hich is consider a ne" comer in the industry.
To overcome this problem, #A#00 has set a lo"er price than their competitors. )esides, #A#00 also invest some in advertising in television "ith animation advertisement to target on young children consumer. #A#00 also hired some buses to go along the primary school to introduce their products to the primary school children. They let the children try their ne" products and also having promotion for their parents to purchase in a lo"er price compare to shopping comple(.
!.2 Bargaining "oer of Suppliers
In bargaining po"er of suppliers, #A#00 is facing problem "hile they are trying to look for ne" land for fruit tree plantation. This may consider the supplier!s good are critical to buyer!s marketplace success since fruit 'uice and e(tract is one of the main ingredients for producing beverage products.
According to #r. 1ang, he said that it is difficult to acquire a ne" land in peninsular or abah and ara"ak. ince there are many land o"ner sell their land in a higher price and also most of the land "ere already "ith other company!s plantation for e(ample ime $arby. This has caused #A#00 having problem to produce their product since they are lack of fruit e(tract and also the puree. #r. 1ang turned his target in Indonesia to search for ne" land to invest. 3e finally get it in Central *alimantan as the area "as less densely populated "ith many large tracts of lands still available for plantations, unlike other provinces in *alimantan and umatra.
#oreover, the price also lo"ers than the price in #alaysia. This may be a 2in 2in condition for #A#00 since they got their land in lo"er price and could also cut do"n their cost of manufacture in the company. )esides, #A#00 also facing shortage of milk to produce cultured milk products in #alaysia because the supply of milk couldn!t meet the demand. #A#00 have to buy this ra" material from the neighbor country, Australia.
This may increase the cost of producing since the e(change rate is not good for #alaysian and also the freight cost is high. In addition, #A#00 also facing plastic bottles shortage from the plastic producer cause of greening program "hich set up by the government and the :GEs. #A#00 and the bottles producer have taken action to produce a bottle "hich is thinner to reduce the plastic consumption.
#A#00 also organi%ed /5 program "hich is 5ecycle, 5educe and 5euse in their company to minimi%e the use of ne" bottle. They use recycle plastic to produce bottles and also plastic "rapping or label in their products in order to reduce the consumption of plastic.
!.! Bargaining "oer of Buyers
Consumers are playing the main role in bargaining po"er of buyers, #A#00 has lo"ered their beverage prices in the market to gain more market share. The prices are as Table ?.?
)rand :utrigen Fakult Jitagen iteFo :estle Foghurt Foghurt 1rice 5#/.? 5#; 5#/. 5#?.@ 5#?.=
TA)0 ?.?
rom the table above, "e can see that price offered by #A#00 is far cheaper than its
competitors. Consumers are bargaining for lo"er price, higher quality and greater level of service. #A#00 has done one of the conditions "hich are the lo"ered price to attract more consumers. )esides, for greater level of service, #A#00 has "ide range its retailer. There are many places to that sell its products. or e(ample, "e can see :utrigen selling in = 0leven, mini mart, Giant, Tesco and so on. This may ease the consumers to buy "hat they "ant from #A#00.
In addition, they also hired part time promoter to promote their products besides their product in the shopping centre in order to e(plain the benefits of drinking their products and "hat are different compare to their competitors products. In higher quality of products, #A#00 has offered 7> at iteFo Foghurt $rink in the market to deliver a healthier yogurt drink for diet consumers and also cultured drinks for kids and also health concerned consumers. #A#00 also use gift toy to promote its :utrigen and other beverage for kids! consumers.
!.% )hreat of Su+stitute "roducts
There are tons of substitute products for #A#00 beverage products in the market especially Jitagen from #arigold Company "hich establish since ?==. It has had built up its reputation in the market for young children and also adult "ho have health concern. #A#00 has fight for more cultured milk market share "ith Jitagen in #alaysia market by using promotion and advertising.
:utrigen is setting in a lo"er price compare to Jitagen, it may attract price savvy customer to purchase :utrigen. )esides, #A#00 also invest lots on TJ advertisement on golden hour. Animation advertisements and toys have attracted kids! consumers. ince kids are not concern about "hat they purchase, they are more attracted to the toys "hich included in the :utrigen pack.
#ean"hile, there is a ne" competitor e(isting in the market fe" years ago "hich is Fakult. It "as set up in Kapan since ?/@ and starts selling in #alaysia fe" years ago. In 'ust a short time, Fakult has s"itch from ne" comer to be a main competitor because it has a strong supporting firm from Kapan "hich is an advance nation. )esides, Fakult also invest lots in media advertising and promotion. Consumers start s"itching from drinking :utrigen to Fakult. #A#00 has encountered this problem by developing its products. #A#00 labeled they have improved their formula, no" they add in good live bacteria in :utrigen.
#A#00 also invest their advertisement on #anchester Bnited partnership to attract more football fans to consume their products. They believe that #amee product "ill be elevated by #anchester Bnited partnership and the football fans "ill love #amee product 'ust as they love #anchester Bnited. port is one of the key elements that promote unity among the people and
as a responsible #alaysian company.
!.( Intensity of 'ompetitive ,ivalry
In the structure of competition for :utrigen, it is very intense since there are many competitors in the market. The main competitors are Jitagen, Fakult and :estle Fogurt $rink. Jitagen is a product under #alaysia #ilk dn. )hd. since ?==. It is very old brands in #alaysia "hich can be considering an e(perienced competitor for ne" cultured drink. It is a first cultured drink introduce to #alaysian consumers.
Jitagen has built a strong reputation in the consumer!s mind by telling the consumers they are certified by the health ministry of in ingapore because ingapore is strict on food and beverage products. It "as al"ays the first choice for the consumer during that time because there is no appearance of substitute products. everal ne" cultured drinks try to enter the market but they couldn!t sustain long time enough. It is because they couldn!t differentiate their product clearly to the consumers like "hat Jitagen does.
ince then, #A#00 try to enter this field "ith the name :utrigen in the year ?<. #A#00 has placed a lot of effort to gain market share by media advertising. or e(ample, :utrigen advertise them in golden hour, it is bet"een @pm to 8pm in the television "hen everyone is going for dinner.
:utrigen has to place more effort to differentiate them because it is competing "ith a e(perienced brands "ith good reputation in the market. They try to differentiate them by telling the consumers they are a better cultured drink "ith live cultured bacteria. )esides, they also offer more flavors to the consumer. :utrigen offers original, grape, orange, green apple, lychee, ki"i and also stra"berry. Compare to Jitagen, Jitagen only offer ; favors to the consumers. Consumers "ho like the favors of tra"berry may s"itch to drinking :utrigen.
Ether than this, :utrigen also try to gain market share by promoting their products to the school children "ith buses travel along the primary school and let the students to taste their products free. They also offer promotion for the primary school student!s parents. Toys are offer upon purchase of :utrigen to attract more young customers.
ater in year 677;, a strong foreign brand, Fakult cultured drink 'oined in the market in #alaysia. Fakult can be considering a strong competitor because this cultured drink "as discovered and set up in the year ?/7 by Kapanese professor. Fakult has been selling throughout the "orld for a long time and come in #alaysia = years ago.
Fakult doesn!t offer much favors like "hat :utrigen does. It on ly offers 6 favors "hich is the original and the less sugar. Fakult is more focus on consumer!s health other than targeting on other segment. Fakult clearly differentiate them by telling the consumers they are brands "hich chosen and trusted throughout the "orld and they are more concentrated "ith live cultured bacteria. Fakult claims that in each bottle of Fakult contains /7 billions of live cultured bacteria.
#oreover, Fakult also invite live consumers to share their e(perience of ho" they feel and "hat has changed in their health "hile drinking Fakult. Fakult challenges the consumers to drink their product continuously in 6 "eeks time and say goodbye to constipation. 3ealth concern consumers have attracted "ith all this information given b y Fakult and start s"itching to drink Fakult. In addition, Fakult put more effort on gaining market share by providing delivery service to their customers house by house. 2ith all this advertisement and services has turn Fakult from a ne" comer to become a strong competitor in a short time.
In order to gain more market share, several actions has been taken by Jitagen and :utrigen. Jitagen starts provide several of favors other than the old favors. Jitagen reali%e people no"adays are concern on aging, so they start provides Jitagen collagen to attract more consumers "ho care for the "rinkles on the face. )esides, Jitagen also copy its competitor, Fakult by providing less sugar Jitagen drink to target on those customers "ho having high blood sugar. :utrigen has changed their packaging "ith more attractive colour and clear label. #A#00 has placed effort on 5$ in :utrigen. :utrigen is no" "ith more live cultured bacteria in each bottle. This may attract their customers "ho are s"itching to Fakult since Fakult claimed that each bottle of Fakult contains /7 billions of live cultured bacteria.
In the field of yogurt drink, :utri Fo yogurt is facing international competitors from the :estle yogurt. :estle is considering a strong competitors for :utri Fo yogurt since :estle is an international brands "hich set up since ?8<=. :estle has a good reputation throughout the "orld for a long period. Consumers are more confidence to purchase :estle products other than the ne" brands.
)esides, :estle also offer a "ide range of products. Ether than chilled dairy, it also offers cereals, ice cream, culinary products and more. Consumers "ho used to consume :estle products may choose :estle yogurt "ithout other thought of trying ne" products. This may let :utri Fo yogurt facing great pressure since it is competing "ith an e(perienced international competitor.
In order to survive in this competition, :utri Fo offer a much lo"er price compare to :estle yogurt. :utri Fo offer a price of 5#?.@ each cup in the market "hile :estle yogurt is offering
5#?.= each cup. This action may help :utri Fo yogurt to grab some price savvy consumers in the market. Ether than this, :utri Fo yogurt also hires promoters to promote :utri Fo yogurt in the shopping comple(. 1romoters are taught provide service to ans"er health questions ask by the consumers upon :utri Fo yogurt. It may let consumers to understand clearly "hat :utri Fo yogurt may help them.
%.0 'ritical Success Factors
%.1 *lo+al epansion for food and +everage industry
#alaysia!s food and beverage industry are kno"n as halal food. This is muslim peoples need in their daily life. #alaysia Government itself had planned to e(pand halal food to the global market. o, any muslim peoples especially from #alaysia can easily find the halal food at the non-muslim countries such as America, Australia and many more. According to the :e" Nealand Trade 0nterprise blog, "hen #alaysia "ants to e(pand their food and beverage industry globally, it can provide the opportunity to the :e" Nealand!s e(porters to cooperate "ith #alaysia and participate in this plan too. To e(pand this industry globally, the industry itself must make sure they produce a good quality food so that our industry!s product can get nice market place.
%.2 Food 3uality
ood quality is the quality characteristics of food that is acceptable to consumers. This includes e(ternal factors as appearance +si%e, shape, color, gloss, and consistency, te(ture, and flavorO factors such as federal grade standards and internal +chemical, physical, microbial. ood quality is an important food manufacturing requirement, because food consumers are susceptible to any form of contamination that may occur during the manufacturing process. #any consumers also rely on manufacturing and processing standards, particularly to kno" "hat ingredients are present, due to dietary, nutritional requirements or medical conditions. ood quality also deals "ith product traceability, e.g. of ingredient and packaging suppliers, should a recall of the product be required. It also deals "ith labeling issues to ensure there is correct ingredient and nutritional information. In #alaysia, food processing is an important sector "ithin the healthcare industry. The ood afety and Muality $ivision, #inistry of 3ealth "as established to ensure that food processing activities are managed according to the required hygiene and safety standards
(.0 'urrent Situation (.1 Firm history and financial performance
(.1.1 4istory
#amee $ouble-$ecker "as incorporated in ?=? "ith production commencing on the follo"ing year. #amee is currently listed on the )ursa #alaysia. They began "ith a single product but have consistently gro"n to the current range of around @7 products and the number keeps on gro"ing. #any of their products are already household names, including #amee #onster, #amee Instant :oodles, #ister 1otato Chips, :utrigen, Fogurt and also IM/.
(.1.2 Financial "erformance
#amee-$ouble $ecker "ill continue to gro" core businesses and focus on talent management. Today, #amee-$ouble $ecker "orks as a strong team and all the employees are given clear direction to e(ecute business plans and strategies. #amee-$ouble $ecker e(pect every business unit to under promise but to over deliver.
Comprehensive human resource plans are developed to nurture and attract talented people "ho are passionate about their "ork. #amee-$ouble $ecker hire and build employees to link "ith the internal culture "inning value I.e. the four I!s D Integrity, Intensity, Innovation and Involvement. Continuous employment and retention program shall bring fresh set of ideas in pursuit of nurturing innovation at "ork.
Ever the ne(t three to Pve years, #amee-$ouble $ecker believe that it "ill be "ell positioned to increase market share and continue delivering double-digit gro"th both in turnover and return on equity.
#amee-$ouble $ecker are committed to deliver attractive and sustainable value to shareholders, and conPdent that this Pnancial performance, coupled "ith attractive dividend payout, "ill result in consistent, double-digit returns to shareholders. #amee-$ouble $ecker are invested some of earnings in Pnancial year 677< to fund the research and development, products innovation and consumer-directed marketing. Indeed, overall advertising e (penditure of the Group in Pnancial year 677< had increased signiPcantly, including a surge during secondhalf media support for #amee llrrrp and #ister 1otato brand.
In financial year 677<, #amee-$ouble $ecker had invested 5#?8 million in capital pro'ects to support future business gro"th and productivity initiatives and believe these investments strategy "ill help to sustain momentum in the Pnancial year 677= and "ill underpin consistent good gro"th and returns in the years ahead.
(.2 Strategic "osture
(.2.1 5ision and 6ission
The #amee Company has set up their vision and mission in order to achieve their goal. The vision is #amee-$ouble $ecker is to be recogni%ed as the provider of nutritious and tasty food products that everyone loves, everyday, the "orld over "hile their mission of this company is #amee-$ouble $ecker is committed to build long-term gro "th in volume and profit and to enhance its leadership position.
(.2.2 'urrent "orter7s *eneric Strategy
#amee D$ouble $ecker strategy is to be the number one or t"o brand in every market segment in "hich their operate by providing nutritious food products of superior value and taste and offer a trendy, innovation, yet sensational eating e(perience "ith emphasis on very high quality products. #amee- $ouble $ecker "ill accomplish this through their strong management and employee commitment in order to satisfy their ever-changing consumer needs and e(pectations
Porter,s Fi-e +eneric Strate%y
1. !ost eadershi" Strate%ies (/y"e 1 and /y"e 2
#amee-$ouble $ecker have striving to be the lo"-cost producer in an industry can be especially effective "hen there are fe" "ays to achieve product d ifferentiation, "hen buyers do not care much about differences from brand to brand, or "hen there are a large number of buyers "ith significant bargaining po"er.
#amee-$ouble $ecker produces the lo"est cost goods tend to be cost leader and get the most profit. It is undeniable that consumers tend to be attracted by lo" prices.
In this case, #amee-$ouble $ecker are able to produce goods "hich are at least meet the
general market standard or that of competitor, consumers tend to choose the cheapest ones.
3o"ever, it does not mean that #amee-$ouble $ecker implements cost leadership strategy "ill have the lo" price product all the time. It 'ust reduces the as much cost as possible in producing the products.
0(ample #amee instant noodle are lo"er price than #aggi instant noodle.
2. 'ifferentiation Strate%ies (/y"e 3
$ifferentiation strategy idea is contrast to cost leadership. 2hile cost leadership aims to set the lo"est prices as possible for the product "hile differentiation aims to offer consumers goods "hich are unique in term of quality and characteristics more than lo"est price.
The company "ill be able to charge premium prices for premium products "hich satisfy the specific need of the consumer. The price must e(ceed the total cost of the pr oduct.
#amee-$ouble $ecker is doing many "ays to differentiate their products to compete "ith the rival and the strategy should be not easily imitated by the rival. The purpose of differentiate are to attract the consumer attention or to attract buyers.
#amee-$ouble $ecker diverse the buyer needs, uses and do more differentiating features into a unique product that features the desired attributes.
A successful differentiation strategy allo"s a firm to charge a higher price for its product and to gain customer loyalty because consumers may become strongly attached to the differentiation features.
0(ample #ister 1otato come out "ith many flavour such as barbeque, tomato, hot spicy, original, union, vegetables, grill, and crispy.
3. Focus Strate%ies (/y"e 0 and /y"e
A successful focus strategy depends on an industry segment that is of sufficient si%e, has good gro"th potential, and is not crucial to the success of the success of other ma'or competitors. ocus strategies are most effective "hen consumers have distinctive preferences or requirements and "hen rival firms are not attempting to speciali%e in the same target segment.
The focus strategy of #amee-$ouble $ecker are concentrates on a narro" segment in order to completely understand and satisfy its market "ell and "ithin that segment attempts to achieve either the cost advantage of differentiation. #amee-$ouble $ecker believed that if each group of consumers is focused and understood, so it "ill be able to better produce products and services "hich ans"er their needs. #amee-$ouble $ecker are focuses on the consumers or buyers! needs, "ants and preferences in order to give them the best in term of prices and quality.
0(ample #amee #onster are the first product of #amee-$ouble $ecker on ?? and still have the high demand until today.
.0 ternal nvironment 89pportunities and )hreats:
.1 Socio&'ultural
#alaysia is a multi cultural country "hich built up by multi nations. #amee has to be focus on different nation!s customers. There are / main and others nations in #alaysia "hich is the #alays, Chinese, India, Iban and more. #amee has to produce a suitable taste of products in order to gain more market shares. #amee found that #alaysian are getting health concern no" a days, so #amee starts to diverse it product line by having healthier snacks "hich is :utrigen, ite Feo yogurt and so on. This may gain more market shares on #amee products. #amee produce :utrigen "ith various kinds of tastes to suit the #alaysian!s multi nation!s demand.
.2 )ask nvironment
Corporate ocial 5esponsible is the greatest value of a company is its image and brand. )y attempting to fulfill the needs and "ants of many different people ranging from the local population and customers to their o"n employees and o"ners, companies can prevent damage to their image and brand, prevent losing large amounts of sales and disgruntled customers, and prevent costly legal e(penses. 2hile the stakeholder vie" has an increased cost, many firms
have decided that the concept improves their image, increases sales, reduces the risks of liability for corporate negligence, and makes them less likely to be targeted by pressure groups, campaigning groups and :GE.
;.0 Internal nvironments 8Strengths and
S<9) //$=SIS
(a Product Market Stakeholders
In general, product market shareholder is satisfying the needs of customers, suppliers, host communities, and unions in the product market. This means that the needs should receive the company&s full attention to define their e(pectations and meet their measures of success. In this 2ET analysis product market shareholder, "e focus on a specific product "hich is :utrigen. :utrigen is a cultured milk brand introduced by #amee-$ouble $ecker )hd in ?<, targeted at children bet"een ?7 to ?@ year old and adults "ho are health conscious in the vision to create more cultured milk consumption rate in #alaysia.
Stren%ths
#amee $ouble $ecker has achieved many a"ards and certificates previously such as 3alal and I5I# certification, IE 776 and China A"ard certificates. In 677/, this company "as a"arded the chief #inister A"ard for 1romising ocal Company A"ardH in recognition of #$$!s contribution to local industries. In addition, the main biggest a"ard that #amee-$ouble $ecker )hd is #alaysia #ost Jaluable )rand in 677=. )ased on the product namely :utrigeniteyo, it "as a"arded the #alaysian tar A"ard 677/ by ederation of #alaysian #anufacturer 1ackaging Council of #alaysia.o, this achievement "as building the good reputation and create brand image for #amee-$ouble $ecker )hd.In 677<, #amee-$ouble $ecker )hd introduced :utrigen IM/, a cultured milk product and it claimed to be the first synbiotic cultured milk in #alaysia market. )ecause of this development, :utrigen became more recogni%e by the consumer and this product became the main choice of the user.
3ealth seemed to be the main focus "ithin cultured milk industry due to the consumer!s a"areness to"ards healthy product. The shape of the industry for cultured milk in #alaysia is e(pected to gro" as cultured milk considered as a healthy drink, not only for children but adults as "ell. In term of the preferences of the customer health lifestyle, :utrigen "as achieved high value of customer satisfaction because of the product the y produce "as completely obtain all
the customer!s needs, such as :utrigen rich of the nutrition and feature diversity of flavour. )esides, in term of pricing strategy, #amee-$ouble $ecker )hd set up their price in a lo"er price to attract customer loyalty.
Ene of #amee-$ouble $ecker!s strength lies in its e(tensive distribution net"ork, "hereby the Group!s fleet of ?@7 vans make deliveries from ?/ distribution centres to about ?,777 points of sales. Its local manufacturing facilities are held under / companies according to their respective lines, for e(ample snack food and chilled products, instant noodles, and beverages. The Group has a centrali%ed marketing and distribution system, "ith domestic sales handled by #amee$ouble $ecker )erhad $istribution dn)hd and #ilk pecialities $istribution dn )hd. )esides, this company a "ell-established distribution net"ork comprising modern trade +hypermarkets, supermarkets, convenience chain store as "ell as lo"er trade +mom-and-pop shops and single retail outlets.
#amee-$ouble $ecker )hd!s emphasis on 5esarch $evelopment +5$ has al"ays been of strategic significance in establishing its position a market leader in the food industry. #ore than 5#6 million is invested in 5$ annually. The ultimate ob'ective is to improve the e(cellent quality of their current range of products and to innovate ne" products that meet "ith changing consumers! taste in order to stay ahead of their competitors. 5$ activities are mainly focus on using natural ingredients in developing ne" products, "hich offer specific functional benefits. 5$ team has al"ays been committed and dedicated to ensure steady stream of ne" developments. In the chilled division, the team developed functional cultured milk "ith ne" formulation enriched "ith $3A +ma'or substance in Emega/, "as proved in their :utrigen cultured milk. This company firstly introduced, :utrigeniteFo yoghurt and yoghurt drink in 677/, and after / years, they released a ne" product named :utrigen IM/. This product containing $3A and Inulin "hich can stimulate mental development, vision and improve the digestive system. In 677, :utrigen "as ne"ly improved cultured milk, :utrigen1lus Choline. :utrigen1lus Choline is a local brand of cultured milk "ith improved formula that contains Choline to enhanced healthy lifestyle.
eaknesses
Although the cultured milk industry is in the gro"ing stage, but the :utrigen1lus Choline is currently e(periencing a sales decline in the cultured milk market compared to the previous year "hich results in lo"er market share compared to other competitors. The company realise that e(ternal market forces, largely increase of competitor factors and the change of consumer behaviour that may be affecting this issue. The three ma'or brands that are competing under the same industry are Jitagen +;/>, Fakult +6;.8> and olivite +?7.>. o, due to the high market share in the industry, #amee-$ouble $ecker)hd "as faced a sales decline in a short term period.
In term of their marketing, promotion that they "ere implements of cultured milk is not really successful because of the lack of consumer a"areness created todays. In 6778, #amee$ouble $ecker )hd invested about 5#;7million in advertising and promotion, and this is a main impact on the marketing, because over =/.@> of the customers in #alaysia are not really concern about to their healthy lifestyle.
$""ortunities
:utrigen has long been in #alaysia and received encouraging response from customers. :utrigen #amee $ouble $ecker "as e(ported to foreign countries such as Asia countries, such as 3ong *ong and )runei. They actually bold enough to penetrated e(port market to increase their sales in long term to achieve their goals and ob'ectives.
Industry trend up"ard :utrigen is based on market trend no"adays because of the customer preferences to enhanced healthy lifestyle. #arket trend is a putative tendency of a financial market to move in a particular direction over time. Traders identify market trends using technical analysis, a frame"ork "hich characteri%es market trends as a predictable price tendencies "ithin the market "hen price reaches support and resistance levels, varying over time. o, this is a good opportunities for #amee-$ouble $ecker )hd to develop their company in future.
/hreats
#amee $ouble-$ecker facing the rival branding such as Jitagen, olivite and Fakult that occupy significant shares of the culture milk in #alaysia. These companies have the advantage of familiarity "ith dietary and cultural preferences along "ith sophisticated, locally tailored marketing and packaging. or e(ample, Jitagen!s strength supported by an efficient distribution and sales net"ork covering key market centres located throughout the country. pecial refrigerated delivery trucks and vans travel the length and breadth of #alaysia to ensure products reach retail outlets as fresh as the day they leave the #alaysia #ilk plant. This is in keeping "ith commitment to quality. In additions, Jitagen success in #alaysia and include )runei and ingapore. )esides, Fakult is a high quality probiotics in the form of a cultured milk drink. Fakult contains the probiotic bacteria 4actobacillus caseihirota4 +popularly kno"n as the 4hirota strain4. )orn from the research of a doctor in ?/@, "e have over =@ years of research e(perience. Fakult has spread around the "orld, and is loved by 68 million people from /6 countries and regions.
ometimes, the situation around causes disruption to the environment and the potential to affect operation during the manufacturing :utrigen process. or e(ample, the factory e(perienced black out that may affect the manufacturing :utrigen until the last process. This can cause the quantity of production to decrease and "ill delay the distribution to distributors. )esides that, damage to the machines also had an impact. uch incidents cannot be e(pected and should al"ays be prepared for the possibility.
#amee $ouble $ecker must follo" all policies set by the government before making any decision on the nation. These policies should be follo"ed to avoid some negative effects that have been noted in the organi%ation. $ue to the strict policy, it can cause the product e(port of :utrigen "ill be slo" until get approval from the government.
(b !a"ital Market Stakeholders
Stren%ths
The determinants of #amee-$ouble $ecker )hd!scorporate performance - strategic, managerial, and organi%ational, are comple( and interrelated, and in the last decade other determinants may have cancelled the positive effect of board activism. Additionally, from outside the corporation looking in, it is difficult to determine "hether active boards have actually been making decisions that could improve managerial performance. An active and independent board of directors "orking for shareholders clearly "ould seem to benefit the corporation by reducing the losses from misdirected 4agency4 inherent in the separation of o"nership from control that is fundamental to the modern corporation.
eaknesses
The rise in euro against B $ollar also has a slight impact on #amee-$ouble $ecker!s earnings given some of its ingredient for products such as #ister 1otato crisps are imported from 0urope. The increase in vegetable oil, starch and flour has added pressure on profit margins to the company. oreign currency may give a big impact to"ard #amee-$ouble $ecker sales and profits. +c Ergani%ational takeholders
Stren%ths
Good in the company!s management team can affect the success of a business. eader plays an important role to determine the direction of the company. eaders need to kno" ho" to manage the company. 0ffective leadership is based upon ideas, but "ill not happen unless that idea can be communicated to others in a "ay that engages. 1ut even more simply, the leader is the inspiration and director of the action. 3e is the person on the group that possesses the combination of personality and leadership skills that makes others "ant to follo" his direction.
$""ortunities
Corporate ocial 5esponsible is the greatest value of a company is its image and brand. )y attempting to fulfil the needs and "ants of many different people ranging from the local population and customers to their o"n employees and o"ners, companies can prevent damage
to their image and brand, prevent losing large amounts of sales and disgruntled customers, and prevent costly legal e(penses. 2hile the stakeholder vie" has an increased cost, many firms have decided that the concept improves their image, increases sales, reduces the risks of liability for corporate negligence, and makes them less likely to be targeted by pressure groups, campaigning groups and :GE. ummary Ef ituation Analysis In summary, #amee is analy%ed as a company "hich heavily depended on its product market stakeholders. Although organi%ational and capital market also plays an important role in shaping #amee!s achievements and strategies, their core competencies "hich allo"s them to strive in the industry for @7 years has been the product-oriented marketing.
>.0 Firm 'ritical Success Factors
>.1 /daptation to $ocality
#amee-$ouble $ecker are using marketing net"ork to ensure their products adaptation to the locality. #arketing "ill do customer analysis, planning on ho" to selling their productsQservices, pricing, distribution, research and opportunities analysis. urthermore, marketing "ill help #amee-$ouble $ecker to anticipating customer!s needs, "ants and preferences that fulfilling the desired. o, by having this, #amee-$ouble $ecker has no problem on acceptance or adaptation of their products to the locality.
>.2 "lace
Apart from being the largest snack player in #alaysia, #amee also actively e(ports its products to more than 87 countries, of "hich the top five in 67?7 "ere Australia, ingapore, 5ussia, 3ong *ong and :etherlands. #amee!s manufacturing facilities are located in five locations in #alaysia, and one in #yanmar, all of "hich have IE777s, 3ACC1 and R3alal certifications. #amee intends to focus on strengthening its distribution net"ork in neighbouring countries such as Thailand and Indonesia. It is also planning increase advertising and promotional activities to support sales in these countries. ‟
?.0 Strategic "ro+lem
nacks and candies producer #amee $ouble $ecker +# )erhad found that paper-based production planning and quality management processes "ere error-prone, "asteful and relatively slo". To ma(imi%e efficiency and manufacturing throughput, the company "anted to introduce the latest edition of A1 051 and implement ne" components D but the e(isting infrastructure "as not capable of supporting the e(panded "orkload. The company needed a trusted advisor to help them integrate their systems more fully
#amee engaged "ith I)# Global )usiness ervices to roll out ne" A1 functionality, most importantly A1 051 production planning, to link up the manufacturing plants and their beverages arm. In phase t"o, I)# also helped the company implement costing and quality management components, roll out A1 051 to the beverages plant in *uantan, and implement A1 :et2eaver )usiness 2arehouse.
10.0 Strategic /nalysis and /lternative
)ased on the organi%ation!s internal, e(ternal and current environmental conditions of #amee, "e proposed three +/ options on "hich their organi%ation can consider to opt for their future strategies. The strategies are product line e(tension, 'oint venture and acquisition. ?7.? 1roduct line e(tension )asically one of the strategic options that is appropriate for #amee to implement in order for a better gro"th is to e(tend its product line. )asically , a product line is a group of products that are closely related because they function in a similar manner and are sold to the same customer groups , are marketed through the same types of outlet and also fall "ithin a given price range . or e(ample #amee $ouble $ecker offers various kinds of snacks ranging from #r 1otato , #amee #onster and etc.
)asically , the managers of #amee should analy%e their product lines periodically in order to assess each items sales and profits in order to understand ho" each item "ould contribute to the line!s overall performance. Company should also take in consideration in terms of its ob'ectives and resources available . #amee can e(pand its product line by line fillingH or line stretchingH . ine filling involves adding more items "ithin the present range of line . )asically , the reasons for this move is in order to reach for e(tra profits and satisfying dealers and also encourage the company to use it!s e(cess capacity. An e(ample of line filling is that #amee has increase in product variety of #r potato ranging from #r potato Casava chips , #r potato #e(ican 2ave and also #r 1otato 5ice Crisps. )asically those items falls "ithin the same price
range but it is noticeably different .
1roduct ine tretching occurs "hen the company lengthens its product line beyond it!s current range . Company can stretch line do"n"ards , up"ards or both "ays . It can stretch do"n"ards in order to form a market hole or other"ise attracting ne" competitors . o" end products can be added in order to find for a faster gro"th in the lo" segments. $uring the past , #amee had been producing various snacks and beverages but right no" they are releasing products that are healthier approach such as :utrigenH , ruit :ation and also #r 1otato 5ice Crisps that is 67 > lo"er in fats and also cholesterol free.
As a "hole , in order to sustain gro"th and increase it!s market share value . #amee can e(tend it!s product line by releasing "ith more range of healthy beverages and snacks that are lo" in trans fats and cholesterol free as globali%ation during this era has lead to many consumers being more health conscious . :o doubt , organic products are being very common no"adays among consumers . As to fit in this general environment , #amee could utili%ed this opportunity by producing 1otato Chips that are made of organic potatoes . #amee should consider producing beverages and 'uices that are made of organic fruits and etc .
)asically for every action , there! definitely a cost to consider . In order to implement a strategy such as to e(tend a product line , Cost , Time , and Capacity should be put into consideration. In our opinion , it is a must for #amee $ouble $ecker to cough up certain amount of cost for the purchase of ne" technologyQequipment and also 5:$. :e"er equipments and better research and development "ould anticipate the company in producing better e(tended products and thus leading to high customer value and satisfaction . Ence customer!s value and satisfaction are met , e(cess purchase and demand "ould lead to a higher revenue that "ould lead the company to a break-even cost in the investments on 5:$ , ne" equipment , marketing campaigns, advertising and etc. In the long run of the product gro"th , profit gains "ould lead to a better company gro"th.
)asically the time frame in implementing this strategy "ould not be that long as company "ould 'ust have to acquire better equipments and technology and also ne"er supplies for the e(tended products . In the short term company "ould have to also develop a good marketing and advertising campaign in order to reach for the customers regarding the ne" product released. #ore or less , the company "ould have to undergo and open tender in order to attain the best supplies of ra" material and ne" equipmentQtechnology at it!s best price.
Cost - 1urchase of 0quipment , 5esearch and $evelopment , :e" supplies , Advertising of ne"
products , #arketing and 1romotions.
Cost are assumed to be slightly costly but someho" , 5eturns on investments+5EI are able to breakeven the costs if the product could gain high customers satisfaction. Time rame -Takes a short time to implement as company "ould 'ust have to search for ne"er equipments and supplies , the 5:$ department "ould "ork in order to make a slight modification in the products . #arketing efforts "ould be run in the short term in order to reach for customers and also for promotional reasons.
)esides , there!s an e(ception . It "ould take slightly longer period of time for the company to create a ne" product line instead of stretching it . or e.g it "ould take a shorter time for #amee to release a ne" range of snacks that falls in the same product line but a longer time "ould be taken if #amee "ere to try to develop a ne" 3ealthy Cereal 1roduct "hich they are not familiar "ith yet. Capacity -#amee e(ports to more than 87 countries, making them "idely accessible to target markets. #amee is optimist that they "ill @ folds in the @ year plan through the implementation of various gro"th strategies "hich "as "ith full support of the Group&s staffs, including enhancing their distribution channel locally and overseas, developing and launching ne" products, as "ell as undertaking marketing efforts to build their brands
3ence, this "ould enable ne" product line to be distributed and e(ported easily . 1resence of accessible market allo"s product to meet it!s customers easily.
10.2 @oint 5enture
Koint venture is the cooperation of t"o or more individuals or businesses in "hich each agrees to share profit, loss and control in a specific enterprise. )esides of that, it is to share some of their resources and capabilities to develop a competitive advantage. It can also involve any type of business transaction and the personH involves can be individuals, groups of individual, companies, or corporations. #amee-$ouble $ecker )hd should 'oint venture "ith organi%ation "hich is doing the healthy product. This is because different organi%ation has different kno"ledge about the health y, it can improve and innovation the product and attract more different background of customers.
The advantages of 'oint venture are to provide the companies "ith the opportunities to gain ne" capacity and e(pertise. Koint venture is also allo"ing the company to enter related business or geographic markets or gain ne" technological kno"ledge. )esides of that, it is sharing of risks "ith a venture partner and access to greater resources, including specialised staff and technology. #oreover, 'oint ventures can be also fle(ible. or e(ample, 'oint venture can have a
limited life span and only cover part of "hat you do, thus limiting both your commitment and the business! e(posure.
This is "hy #amee-$ouble $ecker )hd should 'oint venture "ith any other relating organi%ation. This is also the reason and it can improve the "eaknesses such as lack of promotion, sales decline due to high market share and customer a"areness. In addition, 'oint venture also can have fe" opportunities to make the industry trend up"ard, penetrate ne" market and established local taste and distribution channel. urthermore, 'oint venture is kind of sharing of risk and cost "ith a partner.
Cost hare the same cost "ith the partner Timeframe imited to a specific time frame. Capacity 3elp to further optimi%e the manufacturing net"ork, and increase production capacity and satisfy rapidly gro"ing demand.
10.! /c3uisition
Acquisition is a firm!s strategy of buying another firm!s shares in order to have a total control of the buyout firm or "ith the intent of making the acquired firm a subsidiary business "ithin its portfolio. There are many reasons for acquisitions "hich bring along advantages and disadvantages to"ards it. ome advantages of acquisition includes the increase in the acquirer market po"er, ability to overcome entry barriers for ne" upcoming firms, reduced cost of ne" product development and also increased speed of earning profitable return. 3o"ever, acquisition alone is not the ultimate strategy that every firm should pursue. 5esearch sho"s that some <7 percent of acquisition strategy produces disappointing results and some "hich end up "ith failures. The reason behind it is partly because of integration difficulties "hich includes resource sharing, different "orking culture and ineffective vertical and hori%ontal chain management. Apart from that, the large debt that a target firm "ithheld can serve the acquiring firm "ith big liabilities and also possible bankruptcy. Acquiring firms may also face difficulties in achieving synergy "ithin "orking units. If there is no synergy "ithin a firm, it is likely the employees overturn is high.
En |
rom this acquisition, #amee obtained ?7777 hectares of land. The land "ill allo" #amee to invest in assets such as factories, plantations, 5$ facilities and also leasing revenues. )esides that, the acquisition of land from Charmille allo"s them to save thousands of dollars in terms of property ta(es, agreement fees and such.
Apart from that, the board of directors +)E$ "ere also pleased to announce earnings, net assets, gearing, share capital and substantial shareholders& shareholding of the Company has increased by <7 percent. This simply means that their capital and marketing po"er is no" greater. All supply chain under Charmille no" "ill have ne" sets of agreement "hich put them under #amee!s supply chain management. In simpler "ords, former Charmille supply chain is no" "orking for #amee.
Charmille 1te td. is a subsidiary firm of Golden eed 3olding Company D also a snack and beverage company like #amee. 2ith the acquisition of the subsidiary firm of a competitor, #amee has proven its dominance "ithin its industry by acquiring its rivals before they became a threat to #amee. 3ence for #amee, this acquisition also serves as a purpose to establish its brand positioning in the customers perspective. Thus, "henever #alaysians ought to think of snacks, they "ill think of #amee.
In order to understand if #amee!s acquisition strategy "ill serve them better for the long run, it is important to measure / factors "hich is the cost, the timeframe and the capacity of its operation.
Cost 9 #amee 'ust made a @7> #amee dividend payout ratio policy. #amee had financial assets more than 5#?77 million in 67?? 9 hare price "ent up. A stock no" +as of Kune 67?7 cost 5# ;./ 9 To fund the capital e(penditure, the group may need to incur higher bank borro"ings and this may result in higher borro"ing costs "hich "ill then affect the dividend payment capability of #amee in the immediate term Timeframe 9 @ years plan starting from 67?7 9 The privatisation plan may take about < months time Capacity 9 #amee is undergoing a capital reduction and repayment e(ercise under ection <; of the Companies Act, ?<@ 9 #amee )E$ members "ere concerned about the trend of increasing ra" material prices as "ell as the foreign e(change volatility amidst the uncertain economic environment. 9 #amee e(ports to more than 87 countries, making them "idely accessible to target markets. #amee is optimist that they "ill @ folds in the @ year plan through the implementation of various gro"th strategies "hich "as "ith full support of the Group&s staffs, including enhancing their distribution channel locally and overseas, developing and launching ne" products, as "ell as undertaking marketing efforts to build their brands
11.0 ,ecommendation
If "e looked at #amee!s history, they did all strategies mentioned above, and have been successful in maintaining the happiness of their stakeholders of )E$ members, suppliers and also their customers. 3o"ever, the one strategy that #amee has yet to implement is 'oint venturing "ith another company. The many benefits of 'oint venture have been highlighted above. rom any 'oint venturing, #amee "ould definitely be able or in fact is a must for them to e(tend their product line.
A company "hich is likely to have a strategic partnership "ith #amee can be any company at all since a 'oint venture al"ays opens ne" market opportunities. And on top of it, #amee has its o"n investment company "hich is the 1acific Bnited Group Jenture imited. 1acific Bnited has been sealing deals for #amee including the recent acquisition of Charmille. If #amee "ere to consider a 'oint-venture "ith another company, they could do so thru 1acific Group, and the best company for the 'oint venturing is non-other than Fakult Kapan.
The recommendation of 'oint venture "ith Fakult 3onsha imited has been our highest recommendation after much deliberation on the path that #amee has started to undertake follo"ing their product line e(tension of healthy drinks, including :utrigen iteyo and IM/. 2ith more than =@ years of research "hich initially "as meant to treat contagious disease from 2orld 2ar II, the production and sales of Fakult has reach nation"ide of /6 countries.
Fakult strengths include a number of core competencies on "hich #amee can utili%e or set to e(ploit if the 'oint venturing plan is e(ecuted. irst of all, Fakult is already an established name "hich pioneered the probiotic health drink. A probiotic health drink is a cultured drink filled "ith over /7 billion hirota strainH that helps to improve intestinal environment. 2ith such e(pertise and kno"ledge, #amee "ill save much cost on doing research and developments on its healthy products. #amee can capitali%e and further enhance the market for its :utrigen and IM/ product. They could also come up "ith a ne" product line if they "ish so.
)esides that, all members of Fakult group has their o"n "orking culture named h irota-ism, "hich strive for the ideas of preventive medicine, longer life and committed to provide products at affordable prices. or all this, Fakult has been "orking "ith the leading scientists in Kapan and 0urope for more than /7 years. #amee on the other hand could use this opportunity to e(pand its net"orking in terms of drugs and health field or even marketing field in 0urope. Fakult has penetrated the market of more than /6 countries of "hich most of them are
0uropean nations. 2hilst #amee has been championing the outh 0ast Asian and Australian region market in food industry, #amee has yet to set a firm ground in 0urope. This is because the barrier of entry and stiff competition from the e(isting competitors in 0urope itself. 3o"ever, if #amee and Fakult have a 'oint venture, both of them "ill be able to reach even broader customer segment and each company "ill have opportunity to promote their brand and products to each other customers.
The 'oint venture of Fakult and #amee also serve to benefit Fakult too. Fakult has been facing difficulties in acquiring land assets to set up factories, laboratories, and plantation for themselves. 3o"ever, #amee, "ith the acquisition of certain companies in Indonesia especially in *alimantan through a couple of basic agreement +)A, have been able to acquire thousands of hectares of land thru investments of 5#67 million. The land are meant for palm oil plantation, ho"ever Fakult should be able to use some of the land as their o"n under leasing terms.
?6.7 )ibliography
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