BM 007-3-1-IMT Introduction to Management

Group Members: Yan Hui Xin (TP 021174) Saw Kah Chiun (TP 021226) Nadia Nadjib (TP 020298) Wei Ling (TP 023748) Yang Kai (TP 023749)

Lecturers Name: Thilageswary Arumugam Submission Date: 10th December 2010

Table of Contents

1. Introduction .......................................................................................................................3 2. Economical .........................................................................................................................4 3. Legal - Political .................................................................................................................6 3.1 Political ..........................................................................................................................6 3.2 Legal .............................................................................................................................6 3.3 Halal Certification ........................................................................................................7 4. Customer and Clients ........................................................................................................8 5. Competitors .....................................................................................................................10 6. Conclusion .......................................................................................................................12 7. References .........................................................................................................................13

1. Introduction The OLDTOWN story began in 1958, in Ipoh Town Perak, Malaysia. It all started at the White Caf a classic coffee shop. The owner, inspired with a vision and the passion to make and serve fine coffee, created a secret white coffee blend. White Caf can be traced back in 1999, which the co-founder and Executive Directors, Mr Goh Ching Mun and Mr Tan Say Yap produce their own 3-in-1 instant white coffee. Old Town White Coffee currently in November 2010 has 177 outlets which had rapidly increasing Malaysia include in Singapore and planning to have more. Old Town White Coffee tagline is Take Your Time, Savor Every Moment, this idea come from Ipoh, the origin, people living in a small town, which has a slower life beat. Citizen savor every moment just like the way they drink White Coffee, every cup is taken one sip at a time which will positive encounter for consumers who will return over and again. The purpose this assignment is to understand diversity of the scope of management in organizations and concepts and principles related to entrepreneurial activities and their management. This assignment focused in two mega environment; Legal-Political Element and Economic Element, two task environment; Customer and Clients and Competitors. The mega environment is the general environment which reflects the broad conditions and trends in the societies within which an organization operates. The task environment is that segment of the external environment made up of specific external elements (usually organizations) with which an organization interfaces in the course of conducting its business.

Legal-political is about the legal and governmental systems within which an organization must function, and for economic element is about, did Old Town affected if economic crisis and economic activity is governed by market forces. Customer and clients is how Old Town attract customer by giving promotion and how to stay loyal. For competitors is about the S.W.O.T between the companies.

2. Economical Totality of economic factors such as employment, income, inflation, interest rates, productivity, and wealth that influence the buyer behavior of consumers and firms. (www.businessdefinition.com)

Economic How the economy affects a business in terms of taxation, government spending, general demand, interest rates, exchange rates and global economic factors. Some examples include: Figure 1, Economic definition (Self-Made) Old Town White Coffee business was equally focused on its three-in-one coffee mix retail business, which started a decade ago, and the food and beverage chain, which took off in 2005, Being the pioneer white coffee brand with roots in Ipoh, the Old Town White Coffee brand at present has about 40 per cent of the market share for the white coffee mix retail market. The rest is believed to be shared by more than 20 other brands. The expansion of the Food&Beverage business was based on three models -- fully owned outlets, joint ventures and licensing. Their strategy was to expand as fast as possible to capture market share. Economic growth Interest rates Exchange rates Inflation

During economy crisis, Old Town White Coffee is still making money. The price of foods for Old Town White Coffee are cheap and reasonable, as a result the profit is not decreasing. Promotion of breakfast set or set meal help a lot in profit gaining because the price is cheaper than other restaurants The Economic conditions affecting old town white coffee company in easiness or difficulties is to be successful and profitable at any time because its affect both capital availability and cost, and demand, hence, customers play a very important role in organizations in gaining profit.

3. Political and Legal environment As part of the macro forces of the external environment, the political and legal factor affects a business. In Old Town White Coffee, this element is applied through its nature of business and its industry, food and beverage industry. 3.1 Political The basic understanding of the political legal environment is when the government implement's laws and or regulations which affect the way a business operate.(www.answer.com) In Malaysia, competition of the food and beverage industries between local and international industries are high .Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system. It is a component of the marketing environment that consists of laws & their interpretations, requiring firms to operate under competitive conditions and set to protect consumer rights. The political factor does not really have much influence on the company but Old Town White Coffee outlets are situated at politically stabled places. 3.2 Legal All businesses have to abide the laws of the country which includes Old Town White Coffee in Malaysia. The customers are able to savor the original White Coffee in the Old Town White Coffee Food and Beverage Outlets, served fresh and true. In 1998, the launch of the Old Town White Coffee Classic 3-in-1 instant fulfilled their dream to let people bring OLDTOWN back into their homes. The Company has the obligation to submit their annual report of their financial statements every year in order to pay tax which comes under the Sales Tax Act 1972. Besides that, they are ordered to follow the laws within the Employment Act 1981 which includes rights of employees, contract issues as well as working hours.

3.3 HALAL CERTIFICATION In 2008 subsidiaries dynasty confectionery and squire chef obtained HALAL certification from Islamic religious department of Perak for the processing of various food, and the other food processing subsidiary, emperors Kitchen obtained HALAL certification from the IFRC ASIA. In the further affirm old town white coffee adherence to international food safety standards, the subsidiary white coffee achieved ISO 22000:2005 certification and ISO 9001:2000 from BM department of public health, Ministry of health Malaysia in the same year.(http://www.oldtown.com.my/)

Figure 2 Halal Certification (www.oldtown.com.my) In addition to supporting political candidates, old town engages with government officials in all levels on issues that impact at corporation and its operations. In year 2002, white coffee obtained a HALAL certification from Islamic religious department of Perak for the group beverages. This is part of intentions, which is produce beverages in accordance with the Islamic law.

4. Customer & Clients Organization today builds customer relationship and ensures customer satisfaction so that they stay close to a customer to build rapport and receive continuous buying. In order to gain customer loyalty, Old Town White Coffee provides a lot of promotion and facilities, for example every outlets of Old Town White Coffee provide free Wi-Fi connection. It has different range of customer but businessman seems to favor to go Old Town White Coffee because they can hold a meeting there as it is a very cozy place and easy access to internet.

Type Of Customers (Old Town White Coffee)

9%

18%

Businessman

44%

Students Families Foreigners

29%

Figure 3 Categories of Old Town White Coffee customers. (self-made) Old Town White Coffee has a whole day promotion that attracts customers, which is set meals such as My Breakfast, My Lunch, My Tea and My Dinner. Every set of meal has time limit, for example, My Breakfast is available to 11am during weekdays.

Figure 4 Menu of My Breakfasat (www.oldtown.com.my) Not all kopitiam operates 24 hours, but certain branches of Old Town White Coffee does. The main reason Old Town White Coffee open 24hours is to get more customers and satisfy their needs.

Figure 5 Old Town White Coffee that operates 24hours (www.oldtown.com.my) To maintain customer loyalty, Old Town White Coffee offers membership card. The advantages of members privileges includes members get 50% discount for 2nd main meal dinner order, every Monday from 6pm to 9pm. Old Town White Coffee Day falls on every last Thursday of the month and members will get one free white coffee with any purchase of rice or noodle meal.

5. Competitor Old Town White Coffee is part of the food and beverage industry and the competitor have already created rivalry between them, whether in term of products or services. Its main competitor is PappaRich. They compete with Old Town White Coffee with their coffee varieties and local delights. Both serve Malaysia local delights. Old Town White Coffee on the other hand is famous with their ready 3-in-1 instant white coffee and white coffee can drink.

Figure 6 Old Town White Coffee Can Drink (www.oldtown.com.my) Old Town White Coffee successfully commercialized instant 3-in-1 white coffee in 1999, and slowly spread to Singapore, Hong Kong and China. Old Town White Coffee believes that it is easier to hit the market by releasing instant white coffee and can drinks. As their target market is white-collars, they release can drinks that are available solely or in dozen. Old Town White Coffee slowly immersed to the market after releasing instant white coffees and can drinks. It is known that Old Town White Coffee has a high rivalry because of high competitors in the industry. It is important to identify, due to the varieties of food served and services offered by competitors are equally same. Competitors between existing players are likely to be high when: There are many players of about the same size, Players have similar strategies There is not much differentiation between players and their products, hence, there is much price competition
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 Low market growth rates Barriers for exit are high. On the other hand, PappaRich still remain its target as local consumers with tight budgets on food and beverage. Both of the caf have similar menu but the taste varies accordingly. PappaRich thinks that its better to remain to the olden recipe when first started its business. Customers compare and contrast menus, taste and prices of both caf and decide which to go base on their own preference.

Foreigners

Families

Students

Businessman 0% 10% 20% 30% 40% 50%

Figure 7 Categories of Old Town White Coffee customers (provided by Old Town White Coffee, Sri Petaling Branch)

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6. Conclusion Old Town White Coffee has gone through a rapid growth and immerges to the market rapidly. Using local delights as their main dishes has attracted more customer and foreigners. Base on Old Town White Coffee 2009 financial analysis, they expect 25% business increment. Although in earlier stage, Old Town White Coffee failed to obtain Halal certification, there are still Muslims customers as the food served does satisfied Halal conditions. Refer back to Figure 7, majority of Old Town White Coffee customers are businessman due to comfortable environment and wireless connection. Both Old Town White Coffee and its competitor have the same customer scope. Do you think the chosen organization will be successful under the current leader in the future? Why or why not? We think that Old Town White Coffee will be successful under the lead of Mr. Goh Ching Mun. As of now, after 11 years of operation, they did not report any financial loss nor need of further investment from public. Furthermore, it can be seen that Starbucks is spreading within Asia after opening their first branch in Singapore. Likely, Starbucks merchandises, instant white coffee and canned white coffee has successfully immerge to Singapore, China and Hong Kong. They successfully embark in Asia Coffee industry, just like their mission to be Asia Pacifics Leading White Coffee Producer providing high quality products to customer globally.

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7. References 1. Customer satisfaction, W.M. hughes R.J. kapoor. 2009. 2. Economic environment. Available at: www.businessdefinition.com. [Accessed on 1st December 2010] 3. Elements of the Mega Environment. Available at http://googledefinition.com/definitionof/elements-of-the-mega-environment [Assessed on 8th December 2010]

4. Management, W. Heinz, 2009 5. Old Town White Coffee official website. Available at: www.oldtown.com.my [Accessed on 15th November 2010] 6. Old Town White Coffee Thread. Available at

http://www.joomcool.com/forums/showthread.php?8665-OLDTOWN-White-Coffee-Thread [Assessed on 8th December 2010] 7. Old Town White Coffee children fund care. Available at www.oldtown.com.my [Accessed on 2nd December 2010] 8. Old Town White Coffee. REINFORCES BEST HALAL PRACTICE IN ALL OUTLETS. Available at: http://malaysia.news.yahoo.com/bnm/20100812/tts-old-town-whitecoffee-993ba14.html. [Accessed on 4th December 2010] 9. The Task Environment and Its Elements. Available at http://googledefinition.com/definitionof/the-task-environment-and-its-elements [Accessed on 7th December 2010]

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