Business Strategy

BUSINESS STRATEGY & STRATEGIC MANAGEMENT

PMA NO 5

Business Strategy

&

Strategic Management

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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

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.

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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

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.

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2.1 Production capacity

Glass bottle – 1000 metric tonne yearly

Plastic bottle – 7000 metric tonne yearly

2.2 Production - current

Glass Bottle – 600 metric tonne yearly

Plastic Bottle – 3000 metric tonne yearly

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2.3 Comparison capacity versus actual

Productio

n

Type

Capacity

Tonne/yearly

Actual

Tonne/yearly

Shortages

%

Glass

Bottle

1000 600 - 40%

Plastic

Bottle

7000 3000 - 57%

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

3.1.1Political/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

a uniform law for all employees under the employee

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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.

3.1.2Demographics 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.

3.1.3Economics 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.

3.1.4Technological 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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3.1.5Socio-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.

3.1.6Global 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

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

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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

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

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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.

3.3 Market/Competitor Analysis

Dimension of market analysis :

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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.

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.

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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.

Any product brand is associated with consumer needs and

manufacturers

produce according to the demand.

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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

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

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Opportunities and Treat

From the result above Kasturi Chilli Sauce is performing below

standard

compare to other manufacturers.

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Strengths and weaknesses

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

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to sustain, achieve international and local market share and turn

around the company has leading and renowned brand in global

arena.

Programme Year

1

Year

2

Year

3

Year

4

Year

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

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Acquire International Halal

certification

Participate in Martrade,

International Exxibition

Synergize with other food

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

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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.

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

3

Yearly contract

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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http://www.google.com.my/imgres?imgurl=http://mazlina.net/wp-content/uploads/2009/11/giant_logo.jpg&imgrefurl=http://mazlina.net/2009/11/09/myreen-and-symbols/&usg=__pygF7d0A9vh3vuJ86keGzVLfVEk=&h=267&w=302&sz=12&hl=en&start=2&itbs=1&tbnid=FBdBy8kM_OVhNM:&tbnh=103&tbnw=116&prev=/images%3Fq%3DGIANT%2BLOGO%26hl%3Den%26sa%3DG%26tbs%3Disch:1


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

g

Duratio

n

Training

Allowance

Salary

Confirmati

on

Business

Dev

Executive

SPM with 3 years

experience in

similar field or

Diploma/Degree in

Marketing,Business

Economics or other

related field

1 Year 1500 2000

Marketing

Executive

SPM with 3 years

experience in

similar field or

1 Year 1500 2000

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http://www.google.com.my/imgres?imgurl=http://3.bp.blogspot.com/_zmoEeqomXD4/SlA01oL-LSI/AAAAAAAACfk/8B7KLzLDU88/s400/carrefour-logo.jpg&imgrefurl=http://diimaazazza.blogspot.com/2010/05/z-logo-terkenal-dengan-huruf-tunggal.html&usg=__impIT2rxxowXdODeyu482hqRmzI=&h=300&w=300&sz=14&hl=en&start=2&itbs=1&tbnid=y8Kz8zigoNbhRM:&tbnh=116&tbnw=116&prev=/images%3Fq%3Dcarrefour%2Blogo%26hl%3Den%26sa%3DG%26tbs%3Disch:1


Diploma/Degree in

Marketing, Business

Economics or other

related field

Productio

n

Executive

SPM with 3 years

experience in

similar field or

Diploma/Degree

Business,

Engineering

Economics or other

related field

1 Year 1700 2200

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.

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Step 2 – Create a modern and sophisticated web page to

advertise

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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http://www.giant.com/

http://www.tesco.com/

http://www.kasturi.com/

http://www.mtv.com/

http://www.ntv.com/

http://www.rtm.com/

http://www.thr.com/

http://www.wikipedia.com.my/

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Business Strategy