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Management Trainee

Case Study
Company A states that it is a leader in the snack food market,
especially in flat wafers segments of South East Asia. The Company
operates in Indonesia and it has 4 manufacturing plants covering 68
production lines. The Company has more than 1,100 direct wholesale
and 16,000 direct retail customers. While it has its own national
distribution network, the Company also exports to more than 5
countries around the world.

Currently, it has 5000 employees. The Company


produces, distributes, and sells a range of wafers
products with a total of 3 million of wafers annually.

Company Overview
The products sold overseas averaged around 9% of
the company’s total sales in 2018, with Myanmar,
Vietnam, and Philippines as the main markets.

NAME OR LOGO 2
Market Trends
The China wafer snack market is forecasted to reach USD 96.33 million by 2024 growing at a
China Wafer Snack Market Summary
CAGR of 11.77% during the forecast period (2019–2024). In China, demand for snack wafers
has increased in recent years, due to the significant presence of the nation's aging
population. The market for natural and healthy snack foods is strong, due to their various
health benefits.

Moreover, India wafer snacks is projected to grow at a CAGR of more than 13% (2016–
2021). Market growth can be largely caused by population increase, rise per capita income,
the introduction of regional flavors and aggressive marketing strategies that the leading
players are implementing.

Indonesia also offers a strong market proposition, with a large addressable market and a favorable background for affordable
wafer snacks consumption. The market grew at a CAGR of 15.1% from 2015 to 2020. At the same period, the population growth
was 2.7%, and it shows an increase in demand. This is caused by the change of lifestyles and consumer habits in Indonesia and
the Southeast Asia region. The data also shows that more than 50% of the population are under the age of 24 years, which is the
prime age for snack consumption. Therefore, a continuous increase in demand for the wafer products is expected.

CAGR = Compound Annual Growth Rate NAME OR LOGO 3


Population Rate

The world’s population is at 6.909 billion, and more than half of it (3.87 billion) live in just 7 countries, according to the United
Nations (2010). It shows that China has the world’s largest population (1.34 billion), followed by India (1.21 billion) which is still
greater than 5 most populous nations are combined (U.S., Indonesia (238 Million), Brazil, Pakistan, Bangladesh and Nigeria).

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Direct Manufacturing Costs (2008–2018)
The labor cost in China is more
than doubled from 2008 to 2018,
from 5.2% of the total direct
manufacturing cost to 10.6%.
Meanwhile in India, it has
decreased from 6.1% to 5%. In
Indonesia, it has increased from
3.1% to 4.2%. The energy cost
(Natural Gas) also has increased in
China from 3.20% to 6.50%. In
Indonesia, it increased from 3.60%
to 7.40% and in India it was from
2.60% to 4.20% of the direct
manufacturing cost.

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Labor Cost
The national average labor cost is $0.81/hour in
Indonesia, $0.92/hour in India, and $3.52/hour
in China.

Yet manufacturers in the not so well-established


areas will have lower costs: manufacturers in the
Chinese inland will have up to 30% lower labor
costs than the coastal areas.

In India, there several areas for manufacturing,


and it is similar to Indonesia, for example from
$0.49/hour in Punjab to $1.20/hour in
Maharashtra.

However, when adjusted for productivity, the


balance shifts back in China’s favor.

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Ports
The World Shipping Council, lists 10 Chinese ports in the
Top 50 World Container Ports (2013) with an average of
14.77 million TEU.

Meanwhile, India, which has roughly 13 commercial ports,


is listed with only one port accounting for 4.12 million TEU.

If we consider the cost of exporting a container, China


leads in 2014 with $823/container while India lags at
$1,332/container and Indonesia lags behind at
$1,629/container.

Infrastructure, bureaucracy and corruption related


problems will add significantly to those costs in both India
& Indonesia.

TEU = Twenty Foot Equivalent Unit NAME OR LOGO 7


Buying Pattern
China and India’s consumer markets are constantly evolving, and companies need to be sensitive and responsive to the local
environmental, social, and economic factors that impact consumption trends. For example, both China and India have a growing
middle-class population with increasing levels of personal disposable income; yet in both markets the trend of personal
consumption expenditure (PCE) on food varies greatly. While Indians spend more on food overall than China, personal
consumption spending on packaged food in China is greater than in India.

Personal Consumption Expenditure


As % of aggregate PCE per capita, 2015 India China Indonesia
Food 29.90% 22.50% 38.50%

Indonesia has been experiencing a consistent growth rate for a few years, which has been reflected by a rise in incomes
(including disposable income) thus increasing overall food spending. As many of Indonesia’s low-income consumers continue to
move into the middle-income segment, they are becoming increasingly in their spending habits and product choices.

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Business Case Challenge

You are appointed as the company leader. Due to capacity increase, you have a target for the next few years to
grow the business from 3 million wafer per year to 6 million wafers per year. You also have to choose whether
to expand your business overseas or domestically. Please do:
○ Create an analysis to determine which country you will choose for the expansion and explain why.

○ Describe the strategy in terms of sales, costs, products, operations, people, and the business process flow to
achieve the targets.
○ Explain how you will manage the organization effectively and maintain your company performance?

Please note that your proposal should be based on facts (the given ones and you are also allowed to use
other additional information to support your presentation).

You will present your proposal to the management in a 15 minutes presentation.

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Thank
You