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BUSINESS STRATEGY & STRATEGIC MANAGEMENT

PMA NO 5

Business Strategy
&
Strategic
Management

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BUSINESS STRATEGY & STRATEGIC MANAGEMENT

CONTENT

1. Company Background ……………………………………………………….


4

2. Corporate Objectives …………………………………………………………


7

3. External Analysis ………………………………………………………………


15

4. Internal Analysis ……………………………………………………………….


16

5. SWOT Analysis ………………………………………………………………….


18

6. Implementation Of Strategies
……………………………………………… 28

7. Conclusion ………………………………………………………………………
29

8. References ………………………………………………………………………
30

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1. Company Background

Kasturi Chillli Sauce Sdn Bhd were fully own by Malaysian


Businessman. The company has been around for nearly 12 years.
Kasturi Chilli Sauce Sdn Bhd is specialized in variety of chilli sauces
from bottles to plastic packets . Kasturi Chilli Sauce has
accumulated wealthy experience and being producing fresh and
tasty sauce for Malaysian Market. Kasturi Chilli Sauce is located in
Bukit Kemuning and a 4500sq meter company. Currently Kasturi
Chilli Sauce Sdn Bhd is supplying mostly to Supermarkets and
Hypermarkets throughout Malaysia. Kasturi Chilli sauce is truly a
Malaysian product and a favorable product among housewifes,
childrens and food stall owners due to its taste and reasonable
price.

Picture Fac

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1.1 Product Range Of Kasturi that being produced and sold in


various supermarkets and Hypermarkets are : -

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1.2 Kasturi Chilli Sauce Sdn Bhd manufacturing summary

Table 1

Description Remark
Area Span 2500 sqm
Work Force 8 members
No of Cooker 1 unit

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Production Capacity 8000 metric tone


Actual Production 3600 metric tone
Export Market Nil
Local Market Giant, Tesco, Carrefour,
supermarkets
ISO 9000 Nil
Halal Certificate Nil
Distribution Channel Nil
Advertising Not Aggressive

Promotion Not Aggressive

WEB Page Nil

Global Positioning Nil

The above summary shows Kasturi Chilli Sauce has a long way to
go
and needs drastic changes immediately.

2. Corporate objectives

Ever since Kasturi Chilli sauce company was formed, it has been
operating as a family like business for more than 10 years. Business
operation has changed tremendously due to new and fresh players
entering into the same industry. Competition has became crucial
and

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without new ideas and forward thinking Kasturi will face


competitor dilemma and eventually become death elephant.
Sustainability and

competitiveness can be achieved through higher productivity and


low operation cost. New way of branding and market positioning is
vital in keeping competitors away.

After looking at the sauce market scenario and market share


cake been eaten by other players. Kasturi has to reform from
conventional manufacturer to modern and higher production
capabilities. Top management of Kasturi Chilli Sauce aware of its
weaknesses and moving into reformation. Kasturi Chilli Sauce Sdn
Bhd corporate objectives will be, to be the leading manufacturer
and major exporter. The current production capacity is a
stumbling block for the company and a new plan and strategy have
to be implemented in achieving corporate objectives. A brief
summary of current and future plan is tabulated in table 1 as an
overview. Comprehensive and detail strategy will be elaborated in
coming pages to bring Kasturi Chilli Sauce as a leading brand and
international image within the time span of 5 years.

2.1 Production capacity

Glass bottle – 1000 metric tonne yearly

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Plastic bottle – 7000 metric tonne yearly

2.2 Production - current

Glass Bottle – 600 metric tonne yearly

Plastic Bottle – 3000 metric tonne yearly

2.3 Comparison capacity versus actual

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Productio Capacity Actual Shortages


n Tonne/yearly Tonne/yearly %
Type
Glass 1000 600 - 40%
Bottle
Plastic 7000 3000 - 57%
Bottle

From the analysis there is huge potential for Kasturi Chilli


Sauce to
Expand since the production capacity is under utilized.

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3. External Analysis

Four elements required for Strategic Position Assessment :

• Macro Environment

• Industry

• Market Analysis

• Customer Analysis

3.1 Macro Environment consist of 6 major criteria’s which need


to be
considered before a good strategy is implemented on any
project

3.1.1 Political/Legal Forces

Taxation Laws – Government has given all Small and


Medium (SME) industry a low taxation and exemption
due to government encouragement for SME’S to excel
not only locally but internationally.
Employment Laws – Standard laws for
manufacturing sectors in Malaysia is similar
throughout manufacturing industry no matter it is
corporate or SME’s. Human Resources Ministry has laid

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a uniform law for all employees under the employee


act and has to be followed by all employers no matter
what Industry background are they in.
Government Policy – Good Corporate Governance to
protect industry. Good infrastructure created by
Government to ease industry to expedite their
activities effectively.

3.1.2 Demographics Forces

Since Kasturi Chilli Sauce is located at Bukit Kemuning,


labors are hard to find due to non strategic location
and high crime around the area. Transportation
around that area is worst due to poor road facilities.

3.1.3 Economics Forces

Higher income group of people are increasing and


they tend to buy imported products due to their brand
and quality. Kasturi Chilli Sauce is not the only brand
and there are dozens of other brands producing at
cheaper price in getting into the market. Price
competiveness has become a war among
manufacturers.

3.1.4 Technological Forces

Technology has advanced very much and many sauce


manufacturers have invested in sophisticated
machineries to increase their production. Kasturi Chilli
Sauce has a set back cause it is still practicing
conventional way of manufacturing process whereby it
will loose with giants like Maggi, Life and Kimball.

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3.1.5 Socio-Cultural Forces

Kasturi Chilli Sauce currently operating with foreign


labors as its major work force. Most of them are
contract workers and will not stay longer and labor
turnover is high due to poor management. Kasturi Chill
Sauce is operating without Halal Certification and it is
against the legislation.

3.1.6 Global Forces

Kasturi Chilli Sauce is very comfortable with its brand


name but as global forces are emerging the market a
strong brand awareness has to be planted in
consumers head to sustain longer life cycle.

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3.2 Industry Analysis

Michael Porter has identified 5 forces that determine the intrinsic


long run
profit attractiveness of a market :

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3.2.1 Industry Competitors

As mentioned earlier Kasturi Chilli Sauce is not the only


brand

In Malaysia but there are many players to compete with


Kasturi.

Listed below are some of the brand which exist in Malaysia


and its

Rank comparison.

Gold Premium Standard


Life Puteri Mastika
Maggi Habhal Vaizuri
Kimball Jalen Masjid
Hienz Kasturi Saaja
Baiduri
Oti
Taste me

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Currently Kasturi brand ranked at 9th place among other


brands

and without proper strategy Kasturi will fall far behind cause

many new players are entering the market.

3.2.2 Suppliers

Kasturi chilli sauce do not order raw material in bulk and


therefore

if price increase it will face major production problem. Lately


it

stops production due to sugar shortages cause did not plan

ahead. Kasturi chilli sauce lost production worth RM200,000


for a

week. Depending too much on single supplier is not a great


idea

and there should be 2 or 3 alternative suppliers.

3.2.3 Buyers

Buyers are comparing prices since many new players wants

to penetrate the market and willing to throw the prices in


order

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to capture the Market at beginning. Kasturi chill sauce have to

play an attractive role in price strategy and firm standing in


its

brand positioning so that no matter any new player comes in

Kasturi will stand out from others.

3.2.4 Substitutes

Many new players will come in and create competitiveness


but

if the brand stands out uniquely and creatively for sure people
will

buy Kasturi chilli sauce.

3.2.5 Potential Entrants

Influx of imported Chilli sauce are entering the market


therefore

local players have to be prepared in terms of creativity,

attractiveness, pricing, massive advertising and


promotion.

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3.3 Market/Competitor Analysis

Dimension of market analysis :

All this 8 key elements is very important when doing market analysis. Any
business has to be carefully analyze before decision is concluded. Market
scenario is difficult to predict or assume without a proper guide like the
above elements. Each factors play a vital role in summarizing the ultimate
decision by top management.

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3.4 Customer Analysis

Customer analysis is important because customers are the consumers. In


the world of sophistication and increase in average household income the
needs for healthier, impressive, good looking and modern merchandize is
required by consumers today. If manufacturer do not keep track of their
external trends than they will be dragged to failure zone.

Successful companies such as Nestle, Kimberly-Clark, Fraser &


Nieve
(F & N) and Glaxo & Smith Kline (gsk) give high importance to
consumer
behaviors and expectation by spending millions of dollars on market
survey.
From the market survey they can assure the expenditure budget by the
consumers and the trend of their purchasing power.

Kasturi Chilli sauce has to build a strong database of competitors


activity so that it will gauge the performance of other competitor in the
same industry.
Proper marketing strategy will keep alive an organization rather than
dragging to disaster.

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Any product brand is associated with consumer needs and


manufacturers
produce according to the demand.

4 . Internal Analysis

Internal Analysis consist of two major criteria which is listed below : -

• Company Resources – for having a good strategy companies


must have qualified and experience human capital in order to
take off the plan. Current operating location has to be strategic
in order for easy accessibility. Loyal suppliers and dealers are
the stakeholder of a company. Kasturi chilli sauce is located in
non strategic location and unskillful employees which make the
organization hard to excel. Conventional process equipment will
not give sufficient productivity due to old version. EMPLOYEES
who are working in Kasturi Chilli Sauce are 100% foreigners and

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poor communication and unskillful employees will drag


performance.
Sustainability of current employees is a question mark due to
their permit which is not directly involved with Kasturi Chilli
Sauce and they can be arrested by immigration authority
anytime.

• Strategic capability – Kasturi Chilli Sauce manufacturer do


not have strategic capability since its operation does not have
competent workforce, modern equipment and R&D to enhance
its operation to a level of superior quality. Nevertheless its
existence in Hypermarket has been established it does not
mean other competitor can’t swept the market share
anytime if proper strategy is not in place.

5 SWOT Anaysis

Opportunities and Treat

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Exte rn a l F a cto rs A n a ys i s Su m m a ry (EF A S) : KA STU R I CH I LLI SA U CE a s Exa m p l e


Exte rn a l Fa cto rs W e i ghRt a ti n W
g e i gh te d Co m m e n ts
Sco re
Opportunities
H yp e rm a rk e t p re ce n ce 0.2 4 0.8 Es ta b l i s h e d
D e m o gra p h i cs fa vo r s a u ce p 0.1
ro d u cts5 0.5 A s i a n s fa vo u ra te fl a vo u r
D e m a n d f o r e xp o rt m a rk e t 0.05 1 0.05 Se l e cte d co u n tri e s
A s i a n fa vo ra te 0.05 2 0.1 H i gh d e m a n d
A u th e n ti c f l a vo r i n fo o d 0.1 2 0.2 H i gh n e s ce s s ci ty
Treats
N e w p l a ye rs e n tra n ts 0.1 4 0.4 V i b ra n t
Pri ce w a r 0.1 4 0.4 Co m p e ti ti ve
Po o r a d ve rti s i n g a n d p ro m o ti
0.15
on 3 0.45 V e ry w e a k
Lo w ca p a ci ty 0.05 1 0.05 Lo w
I m p o rte d s a u ce s 0.1 2 0.2 Cu s to rm e r ch o i ce s
To ta l s co re 1 3.15

From the result above Kasturi Chilli Sauce is performing below


standard
compare to other manufacturers.

Strengths and weaknesses

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Internal Factor Analysis Summary (IFAS) : KASTU RI CHILLI SAU CE


In te rn al Facto rs W e igh t Ratin gW e igh teCod m m e n ts
Sco re
Strengths
Estab lish m arke t p re ce 0.15n ce 5 0.75 W e ll re co gn ise d
Stro n g te ch n ical kn o w le0.05
d ge 4 0.2 Kn o w h o w th e p ro ce ss
High De m an d 0.1 4 0.4 Ho u se h o ld b ran d
Go ve rn m e n t su p p o rt fo0.05
r SM E 3 0.15 Stro n gly su p p o rte d
Te sco as A d ve rtisin g ce0.15n te r 3 0.45 P artn e r in ad ve rtisin g
W eaknesses
U n skille d lab o u r 0.05 2 0.1 100% fo rie gn e rs
P o o r m an age m e n t 0.05 2 0.1 P o o r re latio n sh ip
P o o r d istrib u tio n ch an n0.15
el 2 0.3 De lay in d e live rie s
M an u factu rin g facilitie s0.05 2 0.4 P o o r facilitie s
Glo b al p o sitio n in g 0.2 4 0.2 W e ak glo b ally
To tal w e igh te d sco re 1 3.05

From the result above Kasturi Chilli Sauce is performing below


Standard compare to other manufacturers.

6 Implementation Of Strategy – Positioning Kasturi Chilli Sauce in


global market. From all the analysis which was gathered and
presented as a business consultant a detailed projection and flow
of implementation has been drafted to enable Kasturi manufacturing
to sustain, achieve international and local market share and turn
around the company has leading and renowned brand in global
arena.

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Programme Year Year Year Year Year


1 2 3 4 5
Location
• Relocate to bigger unit  
• Relocate to Strategic location
 
for easy access
 
• Easy Recruitment
• Buyers, suppliers and  
customers
Easily can be accessed.

Manufacturing Facilities
• Invest on new equipments  
• Improve on production  
capacity
• Set up R&D department
 
• Recruit experience personal 
• Plan for ISO 9000 standard  

Marketing
• Establish distribution center    
Nationwide
• Aggressively involve in    
advertising
• Plan for promotional activities    
• Continuously train marketing    
and sales personals

• Structure attractive price


strategy for customers   

Global Positioning

• Acquire HACCP 
Certification 

• Acquire International Halal
  
certification
• Participate in Martrade,   
International Exxibition  
• Synergize with other food

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manufacturers internationally   
• Open marketing and servicing
offices worldwide   
• Franchise the business

Five years projection plan has been tabulated and should be implemented
by stages so that Kasturi vision can be achieved progressively. Detailed
strategic plan and recommendation will be discussed for further
clarification and justification.

6.1 Location
Currently Kasturi Chilli Sauce is operating in 2500sq feet floor
Space in remote area which is Bukit Kemuning. Most of the
infrastructure at that premises is quiet old and typical. Many
foreigners stay there illegally and many local workers feel
insecured in working around that area. Due to that after
numerous advertisement for workers Kasturi ChillI Sauce have
difficulty in recruitment.

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Current FAC 1

Future Company

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It is major investment but due to proposed expansion plan


Kasturi manufacturing will not excel or move forward without
bigger plant with higher volume. Manufacturing capacity have to
modernized in order to triple production and keeping overheads
low Kasturi can compete with competitor on price strategy in
case competitor throw price. Bigger players have all the tools to
play with pricing as
a drastic move to fight competitors because consumer will pay
for quality product yet cheaper price.

6.2 Manufacturing Facilities

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Modern Sauce manufacturers uses boilers to cook sauces and


it is very much efficient in terms of consumption and clean
process.
Kasturi manufacturer uses typical method which is gases to heat
up
water as a conduction system to cook the sauce which slow the
process time and low in production.

Modern equipment have to be invested to increase production


Volume and factory can run at optimum capacity. Overall
manufacturing cost can be sustained or kept low due to plant
efficiency. By doing so, factory cost per unit is low and we can
sell our product at a more competitive price.

R&D department has to be in place to develop new way of


process flow and innovative brand to compete with competitors.
Continuous Innovation and research has to be carried out in
updating current trend and working style to lead and sustain
market changes. Assist Marketing personal in global trend and
provide impressive tools for marketing personals to prepare for
any competitiveness.

Recruit technical background personal and train them to


maintain and troubleshoot manufacturing operation in order to
keep the
Plant equipment in top notch condition. Employ local operators
and provide proper training for the right job and monitor their
performance to achieve high productivity.

Move forward in preparing for ISO 9000 so that Kasturi Chilli


Sauce
will be internationally recognized as international brand.

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6.3 Marketing

Kasturi Chilli sauce is operating from central and covering the


whole
Malaysia by one Marketing Personal. This method will not
generates
higher volume and new market expansion due to time constraint.
Method which being proposed to the management as a business
consultant :

Step 1 – Identify capable distributors that can cover Northern,


Southern, East Coast, Central , East Malaysia, Singapore and
Brunei. Each of them holds sufficient stocks in order for push the
sales up. This plan is implemented because most distributors has
the storage center, manpower and logistic to move any product.
Proper pricing strategy and good support will always gain
profitable business for both manufacturers and
distributors.

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Step 2 – Engage with Advertising partners and other media to


aggressively move Kasturi brand into consumers mind.
Proposed
Media partners : -

Media Partners Brand Logo Frequency


Thr Raagaq Yearly contract
3

TV3 Yearly contract

NTV7 Yearly contract

MTV Yearly contract

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Step 3 – Major customer base for Kasturi Chilli Sauce are


Giant,
Tesco and Carrefour. Promotions has to be planned throughout
the year in order for customer to shop more conveniently.

Tesco – Frequency

Festive season, 3 months


once

Giant –

Festive Season, 3 months


once

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Carrefour -

Festive Season, 3 months


once

Step 4 – Recruitment and training for new employees has to be


in
place to produce talented human capital that can uplift Kasturi
brand even higher among other brands.

Position Qualification Trainin Training Salary


g Allowance Confirmati
Duratio on
n
Business SPM with 3 years 1 Year 1500 2000
Dev experience in
Executive similar field or
Diploma/Degree in
Marketing,Business
Economics or other
related field
Marketing SPM with 3 years 1 Year 1500 2000
Executive experience in
similar field or
Diploma/Degree in
Marketing, Business

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Economics or other
related field
Productio SPM with 3 years 1 Year 1700 2200
n experience in
Executive similar field or
Diploma/Degree
Business,
Engineering
Economics or other
related field

6.4 Global Positioning


In order for any company to participate in global market the
company must have international accreditation or certificate of
quality such as ISO,HACCP,ISO 14000, Halal Certificate and
many
other international standard in order to do business globally.
Western community and European community has their own
standard which other countries have to obey. Understanding
culture socio economy, political ,environmental aspect of
other countries is very important for any businessman to have
trade among countries.

Step 1 – Kasturi Chilli Sauce have to prepare for HACCP and


Halal Certification which is the first step to penetrate into Middle
East Market . Middle East market alone are the biggest
consumers of Halal product from Malaysia. Martrade is a
platform for Malaysian manufacturers to access into Arabic
world in food, textile, wood and many other products.

Step 2 – Create a modern and sophisticated web page to


advertise

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And offer international client to look for agency to sell Kasturi


product or franchise business that can open outside market and
improve market shares. Provide international partners on
technical

Knowledge, product knowledge, design via internet, email or


teleconferencing. Business has to go global by using advance
tools
which is available in today’s world. There are many media
partners like Alibaba, Google, ebay, yahoo and many more to
help business associates to trade globally by virtue of a laptop or
desktop. The world has become small and business has grow
magically big.

7 Conclusion

Kasturi Chilli Sauce is very weak in its strategy due to out focus
direction and before big waves swept away the organization into ocean
beneath well planned and visionary ideas has been presented to the
management. A detailed recommendation and justification for the next
five years has been PUT FORWARD for the top management and by
gearing forward wisely and actively Kasturi Chilli sauce will have its
brightest of tomorrow. “KASTURI MOVING FORWARD”

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REFERENCES

1. www.wikipedia.com.my
2. www.thr.com
3. www.rtm.com
4. www.ntv.com
5. www.mtv.com
6. www.kasturi.com
7. www.tesco.com
8. www.giant.com
9. www.carrefour.com

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