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Environmental Analysis-PESTE

Politic  Political factors refer the policies and actions of the governments.
 P&L are important factors especially in food industry.
 P stability affect MM company survival in the industry and business
process run smoothly.
 tax policy such as Good and Services Tax (GST) affect all the business,
includes MM.
Economic  Huge influence on the business of MM for ex like gross domestic product
and inflation.
 If economy not stable MM will not expand their business because
probability that the company will lose a great amount of money.
 factor: cost of living
MM located at north Malaysia such as Kedah and Perlis. This is due to the
cost of living in northern area are lower compared to other part of
Malaysia.
Socio-  MM products is for everyone no matter people from any area, culture and
Cultural income
 They use soy sauce, chilli sauce and vinegar in their daily life
 factor: Demographics
Consumers in northern and southern part of Malaysia have a different
tastes and behaviours. MM produce the different product to meet
customer demand & preference. From 3 main product only SOY SAUCE
distributed in southern part of Malaysia due to the different in the
geographical taste.
Technology  Internet and Mobile Technology is currently growing rapidly and people
nowadays will get contact with it.
 MM can promote their products by using technology (media/radio) .
 Customer can get information from their website (offer, prices)
Example 1: the use of advanced machinery in operation process had
increase the productivity. It is also can reduce the errors during the
operation process

Example 2: To be competitive MM improved in its operation from manual


to automated production. Due to met high D, new and sophisticated
technology which was vital for the production.(pg 7)

Example 3: C4 system (pg 10) & Switch from UBS to Autocount (pg 11)
Ecology  MM using the plastic bottles for their product packaging.
 Consistent with the environmental law that implemented in Malaysia.
 It easier to recycle as well as not producing much pollution.
 MM have their own strength compares to their competitors & affect their
bis.
FIVE FORCES MICHAEL PORTER

Threat of New Entrants

 possibility new firms may enter the industry affect the competition.
 Current food industry, specifically soy sauce industry is pure competition market in
from the competitors such as HB, JL, AB.
 A pure competition market commonly typically easy to enter and exit the market.
 Therefore, new entrants affect the food industry, which is soy sauce industry
 MM faces stiff competition from other business that offered the same product (chilli
sauce, soy sauce & vinegar)
 MM needed to be constantly prepared to face threat of new entrants into the same
market. (pg 8)
 The competitors’ products could easily enter the new markets due to their popularity
and aggressive advertising.

Bargaining Power of Supplier

 The main raw materials needed by MM for production were soy beans, dried chili,
sugar and salt, and of course, the plastic bottles.
 There are seven (7) suppliers, TC, HM, AAA, SSF, HL, RB and BN, supplied raw
materials to MM. (Pg 3)
 For MM, it was not difficult to get new suppliers if the current suppliers overcharged.
 Since the raw materials needed by MM is not unique and easy to get, suppliers’
bargaining power for MM products are relatively weak.
 They are many competitive suppliers and MM can easily find a new supplier.
 However, MM prefers to create and preserve long term relationships with its suppliers
as this helps to ensure the quality of raw materials being purchased. (pg 3)

Bargaining Power of Buyer

 The bargaining power of buyer is relatively high


 Because the companies are usually price taker, and it is easy for customers to move on
to other companies’ products since there is a lot of well-known branded companies
that produce soy sauce.
 MM understand the power of the customer and has taken specific steps to meet the
needs of its consumers.
OR

 The bargaining power of buyer is relatively low


 people preferred MM’s products as the prices were reasonable for all customers from
low to high income earners and unique of the product. (pg 9)
Threats of Substitute Products

 Substitute products refer to products in other industries.


 Due to the nature of the industry, MM is afflicted with the threat of substitute
products.
 As more substitutes available, the demand becomes more elastic since customers
have more alternatives.
 In soy sauce industry, it is possible substitute for soy sauce but it seems to be no real
threat to soy sauce.

Intensity of Rivalry Among Competitors

 The soy sauce industry is very competitive due to the recipes of soy sauce and the
ingredients used to make it are usually the same and low level of product
differentiation.
 MM needs to set up objective to gain its market share by processing competitive
advantages over its rival companies such as JL, AB and HB.
 MM was increasingly facing fierce competition as many food manufacturing rivals
had achieved significant improvements in their operating efficiency.

 Mr. Kim realised that some of MM’s competitors had previously received several
awards, especially for quality standardisation. For instance, HB’s soy sauce, a well-
known product in this country, especially in West Malaysia, had received the ISO
9000:2008 certification, which was an obvious indication that HB’s products had
fulfilled international quality standards; customers had since begun to make a beeline
for HB‘s soy sauce which were marketed all over Malaysia, including Sabah and
Sarawak and to some countries, such as the United Kingdom. (pg 8)
Strength Weaknesses

S1) Own Soy Sauce Recipes W1) Less comprehensive marketing strategy
which is lack of promotion during festive
S2) Be able to receive various awards
( Halal from Jakim, MeSTI cert from Ministry of W2) The supplies are not able to meet customer
Health, GMP award) demand

S3) Packaging strategies- plastic bottle W3) Inefficient operation machine

S4) Monopoly in Northern of Malaysia in Kedah, W4) Lack of product variety ( vinegar, soy sauce
Perlis & Pinang. and chilli sauce)

S5) Affordable price RM 2.80 with GST. W5) Lack of employee skills because their
priority is among family members and fren(pg 5)
S6) Strong support from government agency
(FAMA, MADA, MARA, MARDI, SIRIM,
TEKUN NASIONAL)

S7) Good relationship with the suppliers

S8) Good culture environment with the employees

Opportunity Threat

O1) Customers' confident on local product T1) Competition with HB, AB and JL.

O2) Indirect Marketing ( Sell directly to the T2) The changes of customer perception and
customer lori & student ke luar ngra) behaviour. Example, customer's tastes can
always change because of the price of
O3) Market expansion globally competitor's product almost same, and at market
they display the product side by side.

O4) There is higher opportunities of potential T3) Unsustainable price increase by suppliers
suppliers for resources. For example in Arab might increase the cost of product, hence it
Saudi, the ingredient of MM product are totally increase the price and cause lost of customers
halal product, and Arab Saudi known as one of the
islam countries. T4) Product imitation/ duplicate

O5) Automated & Sophisticated technology


(weekdays operation) business operate effectively.
Strength Weaknesses
S1) Own Soy Sauce Recipes W1) Less comprehensive
marketing strategy which is lack of
S2) Be able to receive various promotion during festive (atas pg
awards 8)
( Halal from Jakim, MeSTI cert
from Ministry of Health, GMP W2) The supplies are not able to
award) ( awal pg 3 & 4) meet customer demand

S3) Packaging strategies- W3) Inefficient operation machine


plastic bottle (pg 3) ( awal pg 3)

S4) Monopoly in Northern of W4) Lack of product variety


Malaysia in Kedah, Perlis & (vinegar, soy sauce and chilli
Pinang. (pg para 3) sauce)

S5) Affordable price RM 2.80 W5) Lack of employee skills


with GST. (pg 9 para 1) because their priority is among
family members and fren(pg 5)
S6) Strong support from
government agency
(FAMA, MADA, MARA,
MARDI, SIRIM, TEKUN
NASIONAL) (para 5 pg 2)

S7) Good relationship with the


suppliers (pg 3 atas)

S8) Good culture environment


with the employees (pg 6)

Opportunity Strengths-Opportunities Weaknesses-Opportunities


O1) Customers' confident
on local product S1O1- Growth Strategy W1O2 - Increase Indirect
S6O2 – Marketing Strategy Marketing
O2) Indirect Marketing ( W3O5 – Build New Factory
Sell directly to the
customer lori & student
ke luar ngra)

O3) Market expansion


globally

O4) There is higher


opportunities of potential
suppliers for resources.
For example in Arab
Saudi, the ingredient of
MM product are totally
halal product, and Arab
Saudi known as one of
the islam countries.

O5) Automated &


Sophisticated technology
(weekdays operation)
business operate
effectively.

O6) Expected build new


factory

Threat Strengths-Threats Weaknesses-Threats

T1) Competition with S5T1: Product Development W3T1- Improved Their facilities
HB, AB and JL. Strategy W2T2 - Aggressive marketing
strategy
T2) The changes of S1 T4: Branding strategy
customer perception and
behaviour. Example,
customer's tastes can
always change because
of the price of
competitor's product
almost same, and at
market they display the
product side by side.

T3) Unsustainable price


increase by suppliers
might increase the cost of
product, hence it increase
the price and cause lost
of customers

T4) Product imitation/


duplicate
EXPLANATION FOR SWOT

S1- (PG 4- MR ANI)


 MM has been established for almost 27 years which was started in the year 1987.
 This business only started from his house which his own soy sauce by followed the
recipes that they created and then sold it around their housing area.
 Conclude that the recipes of MM products are not changed even it was introduced
almost three decades ago
TOWS MATRIX
S1O1 - Growth Strategy

 MM using their own secret recipes which is one of the main strengths that help their
business maximize the profits. (pg 4)
 Taste of product especially soy sauce are diff from others. ( awal pg 2)
 The textures of the MM products are more classic and pure which they never make
any innovations in their recipes.
 Loyal customers especially the older will always stick to buy and use this product
because the taste and texture never changed.
 MM products had received many awards and certs likes HALAL certs which make
customers more confident on their products. ( awal pg 3)
 This give more advantage to business to attract more customers (Muslims).
 Customers give full support to business and this will helps them to max profit.
 The best strategy MM should implement is growth strategy (have to expand the
company’s activities).
 Business can maximize the production and try to minimize their cost.
 Easily distribute their output inside and also outside of Malaysia.
 Overcome the supplies problems that cannot meet the customers demand.

S6O2 – Marketing Strategy


 Strong support from government agency can be proven when MM attended various
courses organized by the Government such as MARDI, MARA, MADA, FAMA and
SIRIM to establish MM in market (pg 2).
 MM also participated in Expo organised by the relevant parties in any place such as
Expo MIHAS in Melaka, IAT Expo at the Putra World Trade Centre in Kuala
Lumpur and ALL-Expo in Serdang, Selangor. (PG 2)
 Indirect marketing found that their products not only marketed in the Malaysia but
introduced in overseas like Egypt, Brunei, Indonesia and Singapore indirectly (pg 8)
 By unofficial agents (students) that further their study there.
 The students will bring along the MM products in the huge quantity for their self and
also they will sell it to their friends there. (pg 8)
 Strategy we can use is Improved their marketing through the various media.
 This can improved the demand of product MM.
 The MM can gain more advantages through their strength and opportunities in this
strategy.
 By doing strategy like that, it would allow MM became better in the market.
W1O2 - Increase Indirect Marketing
 analysis between less comprehensive marketing strategy and indirect marketing.
 we recommend MM to increase their indirect marketing which is through agent.
 MM had less comprehensive marketing strategy, they can minimize this weakness
through increase their indirect marketing.
 The agent for MM is their own workers which is the lorry driver (pg9).
 The student who went studies overseas will promote the MM product and sold to their
friends (pg8) & “word-of-mouth” from the student
 They will deliver the products of MM and also promoting the products indirectly.
 add the amount for commission for the agent - will be more motivated to promote the
products.
 minimize the weakness of less comprehensive marketing.

W3O5 – Factory expansion strategy


 Inefficient operation machine & automated and sophisticated technology
 Recommend – to build new factory that will increase in production……. (pg11)
 MM has inefficient operation machine bcoz they need to produce soy sauce & chili
sauce using 1 machine, so they can minimize the weakness by build new factory and
add same new machine
 Improve business operation from manual to automated production.
 The work system changes from a shift system to daily weekdays operation, that could
operate business effectively without 24 hours. (pg7)
 New factory is larger, so more products will be produces.
 Help to solve the weakness of having inefficient operation machine that limit the
production of the MM company.
S5T1: Product Development Strategy.
 The point in this analysis is between the affordable price of the products and
competition with other firms.
 In this case, Product Development Strategy is the suitable strategy to minimize
 threats.
 MM can develop new products for existing markets or for new markets.
 MM produce a products with an affordable price compared to their competitors such
as HB, JL and AB.
 But, we cannot deny the fact that there is a high competition with other firms in the
 industry.
 In this situation, MM should develop new products in existing or new markets
 which can make them compete with their competitors in food industry, which is soy
sauce Industry.

S1 T4: Branding strategy


 MM recommended to use branding strategy.
 Mr. Ani manage to come out its own soy sauce recipe for his MM product. since this
is their recipe hereditary so it can be a strength for them to minimize the threats that
MM being imitiate by other competitors.
 MM succeed in branding strategies that their rival because their products are
positioned to capitalize on their unique recipe in MM and which, in one or more
aspects, their rivals find hard to emulate. ( Page 4 kiri bawah)
W3T1 - Improve Their Facilities

 Problems MM is have to face is their operation machine are not enough to produce
two products at the same time which is sauce and soy sauce.
 Main threat of MM is the competition with others firms that also market the same
products likes sauce, soy sauce and vinegar.
 Competitors already achieve variety of awards especially in term of quality
standardization. (para last pg 8)
 MM Company can improved their facilities which is provides the machine for make
production more effective and efficient.
 MM Company can compete with their competitors and meet customer demand.

W2T2 - Aggressive marketing strategy

 MM weakness is unable to meet customer demands.


 They must try to make a huge and positive change in term to maximize their
production.
 Have to make an investment which to buy a new machine that can maximize their
efficiency to produce their main product.
 If new machine, they no need to wait for a week to rotate the production of their
output. ( future direction pg 11)
 Suppliers will be able to meet the customer demands.
 If MM can meet the customer demands then the customer will not easily to change
their perception and behaviour towards MM products.
 They will keep buying and using MM products.
 This will make sure that they still stick with their perception and behaviour which be
the loyal customers.
 The best strategy that the business should implement is aggressive marketing strategy.
MM should more concern about how to conduct marketing strategy inside and outside
the Malaysia.
 They can market the products through advertisement by using media socials sush as,
in television and radio.

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