BPME 2023CREATIVITY AND INNOVATION

Acknowledgement

In performing our assignment, we had to take the help and guideline of some respected
persons, who deserve our greatest gratitude. The completion of this assignment gives us
much Pleasure. We would like to show our gratitude to our lecturer, Dr Lily Julienti Abu
Bakar, and Universiti Utara Malaysia for giving us a good guideline for assignment
throughout numerous consultations. We would also like to expand our deepest gratitude to all
those who have directly and indirectly guided us in writing this assignment. We would like to
thank to our lecturer of this course (BPME 2023 Creativity and Innovation), Dr Lily Julienti
Abu Bakar, for the valuable guidance and advice. She inspired us greatly to work in this
assignment. Her willingness to motivate us contributed tremendously to our assignment. We
also would like to thank her for showing us some example that related to the topic of our
project. Besides, we would like to thank the authority of Universiti Utara Malaysia for
providing us with a good environment and facilities to complete this assignment.
In addition, we would also like to thank Mr. Tengku Abdul Samad from Fairy Food
Industries Sdn. Bhd. which provide us valuable information as the guidance of our
assignment. Many people, especially our classmates and team members itself, have made
valuable comment suggestions on this case study which gave us an inspiration to improve our
assignment. We thank all the people for their help directly and indirectly to complete our
assignment.

Table of Contents

Acknowledgement......................................................................................................................1
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Table of Contents......................................................................................................................2
1.0 Background.........................................................................................................................3
2.0 Description..........................................................................................................................3
2.1 Industry.........................................................................................................................3
2.2 Company.......................................................................................................................4
2.3 Management..................................................................................................................5
3.0 Involvement in Creativity & Innovation..........................................................................5
4.0 Rationale..............................................................................................................................6
5.0 Process..................................................................................................................................7
5.1 What led to this good practice?.....................................................................................7
5.2 Steps were followed in order to establish and continue this good practice..................7
5.3 Key element..................................................................................................................8
5.3.1 Good Customer Service......................................................................................8
5.3.2 Well management in cash flow...........................................................................8
6.0 Resources required...............................................................................................................9
6.1 What resources involved? How many human and financial resources were needed,
and who was involved in order to set up and continue this good practice/activity?...........9
7.0 Facilitating factors..............................................................................................................10
7.1 What factors enabled this good practice to happen?...................................................10
8.0 Challenges..........................................................................................................................11
8.1 What challenges you are facing and how to overcome this problem?........................11
9.0 Lessons learned..................................................................................................................12
9.1 What worked particularly well?..................................................................................12
9.2 What would be do differently next time?....................................................................12
10.0 Additional Information.....................................................................................................12
10.1 What is the future plan for business? Will open a new outlet?.................................12
10.2 What is the hope or expectation of the organization?...............................................13
10.3 What are the barriers to creativity and innovation? Are we can manage them?.......13
10.4 How about main power machine which does better?...............................................13
Appendix..................................................................................................................................14
References................................................................................................................................15
1.0 Background
In Malaysia, we have found out that Industrial Production Index grew by 5.2% in February
2015 compared to the same month in previous year. (Source : Department of statistics
Malaysia, Official Portal). It reflected our development of industry had grew up and
increases of new entrants of industry. It is means the requirement of creativity and innovation
are significant. Mostly industries in a market, we choose bakery industry as our investigation
because they need to be attractive because it involve arts and skills of a pastry chef.
2.0 Description
2.1 Industry
Fairy was founded in 1983 by the Tan brothers. Its base of operation then was at No. 66, Jalan
Ibrahim, Sungai Petani, Kedah under the name of Fairy Hot Bread & Cake House. Their main

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business includes the manufacturing and distribution of cakes, various bread sorts, pastries
and other foodstuffs which it maintained till today. The business has grown in strength and
capabilities since its early days and a two-storey shop house at Jalan Ibrahim, Sungai Petani
was purchased in 1986 to house the production and retailing of Fairy products. FAIRY
GROUP CORPORATION SDN. BHD. and FAIRY FOOD INDUSTRIES SDN. BHD. were
incorporated in 1994 as the holding company and production / marketing arms of the group
respectively. Overwhelming response by the customers to their products and services
encouraged the group to purchase one unit light industrial factory building with modern
facilities in the Sungai Petani Light Industrial Estate in early 1995With this development and
foreseeing the potential business growth, the production activities of the group was taken
over by Fairy Food Industries Sdn. Bhd. in 1997. The group further expended its distribution
outlets by opening new retail cake houses in the states of Kedah and Penang.Currently the
flagship distribution outlet for the group is located at Lagenda Heights, Sungai Petani. The
latest retail outlet was set up at Jalan Dua, Kompleks Tok Arau, Arau, Perlis in June 2013. A
new cake house is to take place at Taman Patani Jaya, Sungai Petani by August 2013.The
group envisaged to open additional new retail outlets in the Northern Region in the near
future.

2.2 Company
Company Name

Fairy Food Industries Sdn Bhd

Business Registration Number

315430-P

Address

Plot 6491, Jalan Ayam Didik 2/2, Kawasan

Perusahaan Ringan, Taman Ria Jaya, 08000
Sungai Petani, Kedah.

Telephone

04 441 4163 , 442 8000

Fax

04 442 2286

Official Website

Http://www.fairy.com.my

E-mail

fairyfood@fairy.com.my

Retail Outlets

Fairy Pastri & Kek (Tesco Sg.Petani)

Fairy Pastry (Penang) Sdn Bhd
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Fairy Hot Bread & Cake House ( Alor

Setar)
Fairy Hot Bread & Cake House ( Jitra )
Fairy Pastri & Kek (Alor Setar)
Fairy Cake Center Carefour (Seberang Jaya)
Incorporated on

13th September 1994

Directors

Mr Tan Ah Kiang , Madam Tang Lee Hiang

Business Activity

Producer and distributor of cakes, pastries,

breads, buns and other foodstuffs.
The company also provides management,
technical supporting services to food chain
outlets under their FRANCHISE operations.

Type of Business

Manufacturer

Products and services

Bun , Cakes,
Sandwich Loaf

Halal Certified

Yes

Halal Certification Authority

Halal Certificate (Malaysia) by JAKIM

Malaysia

Food Safety and Quality Division

Certified MESTI by Ministry of Health

Malaysia

Main Markets

North area of West Malaysia

Special Achievement & Awards

1.Golden Bull Award 2003 - Malaysia 100

Outstanding SMEs

Cookies,

Puff

Pastry,

2.3 Management
In an effort to achieve perfection, Fairy has been working diligently towards new
breakthroughs to bring about changes in the competitive market. The group is headed by the
Managing Director, Tan Ah Kiang who is backed by 35 years experience in the business. The
directors are assisted by a Senior Executive, Tengku Abdul Samad, a former Senior Manager
of a Commercial Bank who has more than 20 years of experience in management capacity.
The management team is supported by a group of highly capable dedicated staff headed by
Mr. Josh Tan Shu Huan, a graduate from Curtin University of Australia. Team spirit and cooperation elevate production. Fairy provides training for its staff to ensure that they meet the
required standards in skills and professionalism.

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3.0 Involvement in Creativity & Innovation

Fairy Food Industry Sdn. Bhd. had been survive more than 30 years in a food industry
market. In others word, Fairy Bakery gained trust and build a good reputation from their
customer. According to Tengku Abdul Samad, to survive in a market for long years, not just
an simple way. The most significant must business owner know is quality of the product.
Fairy use quality ingredients and materials on their product based on valuable prices. For an
example, Fairy had refused a lorry of orders from supplier because of the quality of product
did not meet the of their demands. By the way, as a business owner must know to gained
bargaining power from supplier. Tengku added, mostly industry nowadays failure to bargain
to supplier. Thus, shortage of raw materials, stock reached late, lack of quality and so on may
occur. This is because it is depends to management of business on how they manage their
company's finance to enable settlement of credit payment run smoothly. That means we pay
suppliers on basis time. Relationship between supplier and company must be built however is
the root of everything to make our business run.
Marketing strategy based from Tengku, theory in the book however cannot fully
applied in a real life. The fact where they wanted to build a retail outlets at Kulim, Kedah was
failed a few years ago. It was not all about a geography factors, competitive advantage and
others. But, it is because of natural causes that they cannot identify even though they pull all
effort to push the publicity and promotions of the outlets. This outlets in the end had closed.
Tengku taught us that brief visual imaginary that Penang's citizen, their man food is food that
something like culture and traditional style and original taste of food. For example, tambun
biskut, egg tart and so on. Penang people more prefer homemade food than franchise food.
Then, we have to brief to positioning our market.
To sum up, Tengku said creative must be have in every part of the organisation. No
matter marketing segment, production, management and so on.

4.0 Rationale
According to interview of Mr. Tengku, the inspiration of Fairy Bakery to undertake in
creativity and innovative activity is the needs of customers. He was knowing and
understanding customers needs is at the centre of every successful business included Fairy
Bakery. If customers do not need of the product, however good of the product also is nothing
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value. When clearly understand what it is the customer really want, then the business
planning can run as well as possible.
Nowadays, creativity and innovation is important to all companies to strengthen their
businesses. Without the creative and innovative, the company will be eliminate by the market.
The customer only emphasize on the taste of cakes but also care about the packing and design
of the product. In the opinion of Mr. Tengku, the main customers of Fairy Bakery is the
young generation. In fact, he needs this good practice to attract the customers and make sure
they become the loyalty customer to his shop. Due to the market segment is different, the
needs of every customer is also not the same. For instance, the young generation is more
prefer to the fashion design of the cakes while the female customers tend to choose low fat
and low calories cakes. So, the creative and innovative is practice in the process of ingredient
to fulfil the needs of customers. Besides that, Fairy Bakery also making customize wedding
cakes and transfuse a creative element such as three phases wedding cakes.
Moreover, one of the inspiration to involve in creativity and innovation is influence
by the environment. Environment will affect the creativity and innovation that need to apply
of a company. Until 2015, there have 10 branches under Fairy Food Industries Sdn. Bhd.
These branches have to compete to other shop which is in the same industry such as Secret
Recipe and Kek Sayang. The competition environment keep changing in the industry had led
the Fairy to make the creative and innovative to enhance their position in the market. The
Fairy started to seek the solution which is to make some new products with different flavours
and different types of cakes such as cupcakes and pancakes.

5.0 Process
5.1 What led to this good practice?
A management team which is effectively and efficiency will make sure the business running
according to the plan. For the Fairy Food Industries Sdn. Bhd., the management team is
supported by a group of highly capable dedicated staff headed by Mr. Josh Tan Shu Huan, a
graduate from Curtin University of Australia and the team spirit and cooperation which is
highly will improve the flow of production. The management team that is understanding
deeply about the flow of operation and management can lead the other workers to do their
best to achieve the target. Fairy also Fairy provides training for its staff to ensure that they

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meet the required standards in skills and professionalism.

5.2 Steps were followed in order to establish and continue this good practice
Firstly, the Fairy had been get the MeSTI certification undertaken by the Ministry of Health
(MOH). This is the minimum requirement to the company who is under the food industry.
The objective of MeSTI is a system for the maintenance of food hygiene and process control
which includes food safety and traceability. Thus, MeSTI compliance will serve as a building
block Small and Medium Enterprises (SMEs) in Malaysia to be a major producer and
exporter of food products by facilitating food safety and quality compliance.
The other important certification to Fairy is Hazard Analysis Critical Control Point
(HACCP) certification. The management team of Fairy is applying for the recognition of
HACCP. HACCP is a management system in which food safety is addressed through the
analysis and control of biological, chemical, and physical hazards from raw material
production, procurement and handling, to manufacturing, distribution and consumption of the
finished product. Through this certification, the product of Fairy will get the trust of
customers and it also recognise by all of the world. Besides that, the Fairy can be expand
their business to the foreign country and ensure their products are achieve world standard.
Next, the Fairy has been implemented the creative and innovative in their
management. They started to apply a new computer system which is Online Real Time
system. They can monitor the transaction of the job through this system. So, the operation of
the production can be easily to control to prevent any negative effects for the productivity.
Besides that, the ability of the workers can also measure by this system. Then, the training
will be provide for who is poor performance.
5.3 Key element
5.3.1 Good Customer Service
A successful business could not without loyalty customers. When a company want to exist
their own loyalty customer, they need to put a lot of effort to build up their reputation. One of
an approach is to provide a good customer services. Good customer services can be define as
when a company is willing to give their customers anything and everything that they want
and remember the customer is always right approach. The Fairy considered a good customer
service as their main strategic. This is because the shop of Fairy most of all are opened in the

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small towns such as Jitra and Changlun, the expensing power of customers is limited. If their
customers as one time customers, the sales of Fairy will be very low. So, a good customer
services is provided to attract customers purchase their products in repeated.
5.3.2 Well management in cash flow
Cash flow need to manage as well as possible for a company to maintain their good business
operation. Cash flow is cash in hand to do the payment to supplier, salary and so on. Cash
flow as lifeblood of business, if it could not be manage well, the business will not be success.
The Fairy is care about their cash flow to make sure their operation is running properly. The
financial department of Fairy will be in charge of the cash flow of company to ensure the
marketing strategic will be plan properly too.
6.0 Resources required
6.1 What resources involved? How many human and financial resources were needed, and
who was involved in order to set up and continue this good practice/activity?
According to Mr. Tengku, the most important resources that support creative and innovative
activity are the manpower and the financial planning of the organization.
Numbers of staff in Fairy Bakery are important because of the huge demand of the
customers. According to Mr. Tengku, the factory of Fairy Bakery needs to produce 80 tons of
cakes per period to fulfil all the north part outlets. The outlets of Fairy Bakery are not
producing cakes, those cakes that are produced 100 percent by the factory. The cakes, buns
and frozen dough all are being delivered by a cold truck. After the cakes are delivered to the
shops, then the shops will do some decoration to make it more attractive. Thus, to fulfil this
large amount of demand, Fairy Bakery has to overcome many manpower problems such as
staff turnover. Mr. Tengku mentioned that there are many methods to overcome high staff
turnover, and one of the strategics is high salary payment strategic, but this will increase the
costs of the company. The increasing of cots cannot be transferred to customers because it
will decrease the demand of customers. Thus, the Fairy Bakery needs many workers in the
business process, so that the company can allocate more people involve in creativity and
innovation activities.
In addition, Mr. Tengku also mentioned that the standard of the workforce also
important to Fairy Bakery. The factory and shops need difference rate of the employee from
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operating activities to the monitoring activities. Thus, they always look for the workers,
especially the people who have experience in food industries. According to Mr. Tengku, the
people who have experience in food industries can help companies in many aspects, also, the
company can reduce the costs to train the new employee because of the knowledge of the
worker is enough for their working field. Furthermore, the knowledge of worker is one of the
elements to ensure the success of creativity and innovation activities, so that the Fairy Bakery
always hope to increase the knowledge level of the staff.
Other than that, Mr. Tengku said that the financial planning also important in the
organization. In opinion of Mr. Tengku, a company can gain a bargaining power from
suppliers when they have good financial planning. When the ability to purchase the raw
material in lump-sum is increased, then the company can refuse the low quality items that
come from suppliers. Then, the company can improve or maintain their product quality by
this way and they can make sure the success of creativity and innovation activities that
implemented by the company.
The important resource to improve or doing the creativity and innovation activities are
the numbers of workers, the standard of workers and the capital planning of a company. The
Fairy Bakery hopes to improve their company with these elements.

7.0 Facilitating factors

7.1 What factors enabled this good practice to happen?
Mr. Tengku told that, the factor that makes the good practices happen is the members of the
company, especially the management team and the employee.
According to Mr. Tengku, the director is important to implement the good practice,
this is because the management team members are the one who make decisions and do
motivation to the staff in the organization. Without the management team, the company may
not improve and the product of the company may in low quality. When a creative project is
implemented, it requires a higher monitoring level in several parts of the process, because the
creativity project may be unsuccessful because of only one mistaken. According to Mr.
Tengku, the management team of Fairy Bakery is very responsibility, the director of the
company always come to their workplace in early in the morning. The management team
make the creativity and innovation project as their hobby, they will try to do any new

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products and systems that bring benefits to the company. Furthermore, the management team
also needs to motivate their employees to do creativity and innovation project, because this
activity may be unsuccessful after spending a long time and the employee may feel
disappointed to their project, so management team have to motivate and monitoring them to
get successful results.
In addition, employees are also important in enabling the good practice. According to
Mr. Tengku, the company has a few competitions in the creativity and innovation aspect aim
to encourage the creativity and innovation thinking among the staffs. Mr. Tengku told that,
the bakery activity is an art activity, they need a lot of innovation and creativity activities to
support the bakery industries. The creativity and innovation thinking can increase more ideal
to the bakery industries, it can improve the company indirectly.
Thus, the facilitating factors to make the good practice happen are the members of the
organization. All of the parts of the organization are important in implementing the creativity
and innovation activities and they are the critical element to make sure the creativity and
innovation activity success.
8.0 Challenges
8.1 What challenges you are facing and how to overcome this problem?
The challenges that Mr. Tengku Company faced first is price offer. Their product will be sold
based on the cost and process to make a product. Having competitors was selling their
product lower price than Fairy cakes, but they dont think about the quality of product.
According Mr. Tengku, they very important around the quality ingredient, create a product to
increase their gross receipts. They look at butter, they buy in small packaging butter it was 80
cents per cup. Today, they produce by themselves to get the butter; it can save their monetary
value. So correspondingly, you cannot a risk, but you have to manage to get on the price by a
few hundred percent, then you accept to manage it.
Second challenges about good services and taxes (GST). GST doesnt affect too much
to the customer because it only six percent. For example, if customers buy cakes with the
price RM 2, they had to pay about twelve percent only, so not affect too much. For the big
volume is different, they must purchase RM400 thousand per month with the GST is about
RM24 thousand must pay for government. So overall in the customer behavior payback, they
cannot talk because their input taxes against the customer. That is technical system input that

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business is not important value if cannot have customers.

Third, challenges, logistics problem to transfer cakes to Penang. According Mr.
Tengku they also fail to open outlet in Tesco, Penang. This problem because logistics problem
to transfer product at there. Besides that, for through Penang Bridges have cost that imposed
tolls. Besides that, the customer in Penang a bit different because the customer behavior, they
love doing focus food so it is not effectively to sales Fairy Cakes. According Mr. Tengku
state, we have to really interpret the area, He doesnt reckon a lot business can be successful
in Penang because the consumer behavior, unless you have substantial capital and depend on
the market segment. As a solution Mr. Tengku just expanded their outlet in the area, Kedah
and Perlis only that located 150 kilometer radius.

9.0 Lessons learned

9.1 What worked particularly well?
According Mr. Tengku, part your business worked particularly well is important have the
shop. At the factory just produced the product for their shop. They dont sell the product to an
outside shop because to maintain their quality of product. This is important to, this is the cash
caught there is where the money come to the shop, so we have to monitor. Apart from the
quality of product, they have monitored the shop. Every day Mr. Tengku and the director are
at the shop all outlets until branches in Arau to monitor the cash flow at the retail shop.
9.2 What would be do differently next time?
According Mr. Tengku wants to do different next time is the creativity shop compare to
current shop. The creativity shop can understand the customer need. Sometime, certain
customer who enjoys this sort of merchandise, so Mr. Tengku is plan next time they were
running into the high standard cafe, system and so on. They are going into a different
environment for teenagers and graduate of the university. They will ask the teenagers into
their grocery store segment, makes the people who wish to have a safe spot to do their
computerizing and so along.

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10.0 Additional Information

10.1 What is the future plan for business? Will open a new outlet?
Yes. Today they deliver another event to provide for young people, such as special cake,
premium coffee and so on. He said maybe another shop in a good environment importantly.
They maybe by next year they will strain to afford another one shop like it shop. To produce
knowledge about this place, you must try open shop at there. Certain business venture, they
stay maintain quality of food for more than ten years of his survey like shop at Bandar
Laguna Merbok cannot improve their gross revenue. They are bad might manage aroma and
they still do the promotion, customer based on expanded population extended is the main
causes. They will able to sell depends on the School of Bandar Puteri Jaya they been
promoting all the time, so is use flagship there if you go by the outlet. Well, that is their
business, He just said about the business environment. According Mr. Tengku, you must have
to be strong in capital in order to remain in your position something like Sime Darby, if they
run out in one or two project nothing give effect because they have kind of capital. Or so his
shop that isnt making money, then they will monitor straight out if too low the shop must
stop operation. And then any shop that is your offer would not guarantee will be in effect. Mr.
Tengku did the survey at Kulim because customer behaviour, retail the sale. In Kulim as we
know, they do their shopping in Butterworth not in Kulim because only take 15 minutes to
Butterworth. The business opportunity in Kulim hard because the customer behaviour.
10.2 What is the hope or expectation of the organization?
Mr. Tengku hopes they should constantly do good management practice to improve their
company performance and sales.
10.3 What are the barriers to creativity and innovation? Are we can manage them?
The barrier in the company main power pays a high wage. Pay high salary very important to
attract those which high creativity understanding. Thusly it is spending against the income
you have to balance, maybe not the time yet to engage this sort of matters. So depend if the
need arising, they do it employee that kind of people.

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10.4 How about main power machine which does better?

Main power, includes machine, but depend on the product segment, like previously, they have
sandwich machine, but they would not able to sell that kind of product, we was not economic
to produce the sandwich using the machine very costly, So the barriers. So sandwich is not
our product, they cannot find Gardenia bread. According Mr. Tengku said he had a certain
customer buy his sandwich. So Mr. Tengku produces this product to them, but this is not our
product. They are a customer who loves our sandwich bread we produce for them, but just
not much to attract customer stay with them. This part of strategy, you have made sure the
customer would not run.

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Appendix

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References
Facilities.

(2013).

Retrieved

22

Apr.,

2015,

from

Fairy

Pastry

&

Cake:

http://www.fairy.com.my/facilities.html
Future plans & strategies. (2013). Retrieved 22 Apr., 2015, from Fairy Pastry & Cake:
http://www.fairy.com.my/future.html
History.

(2013).

Retrieved

22

Apr.,

2015,

from

Fairy

Pastry

&

Cake:

http://www.fairy.com.my/history.html
Index of industrial production Malaysia February 2015. (10 Apr., 2015). Retrieved 22 Apr.,
2015,

from

Department

of

Statistics

Malaysia

Official

Website:

http://www.statistics.gov.my/
Quality products. (2013). Retrieved 22 Apr., 2015, from Fairy Pastry & Cake:
http://www.fairy.com.my/quality.html
The company. (2013). Retrieved 22 Apr., 2015, from Fairy Pastry & Cake:
http://www.fairy.com.my/thecompany.html

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