Managing Small & Medium EnterpriseCompany: KWONG CHEONG THYE

Group Members:Kor Qi Min CrystalLee Yan KangNg Yong JianSahil JethiTham Jia En BridgetYeo Si Hian

Tutorial Class: T01Tutor: Mr Boh Thye Joon

Contents Page

1. Kwong Cheong Thye……………………………………………….......1-41.1 Brief History1.2 Industry Research1.3 Critical Factors that led to success

2. External Environment Analysis………………………………………4-7PEST approach

3. Industry Analysis………………………………………………………..7-9Michael Porter’s 5 Forces

4. SWOT Analysis…………………………………………………………9-145. Business Expansion Plan…………………………………………..14-215.1 Overseas Expansion

5.2 Local Expansion5.3 Marketing Plan5.4 Resource Management Plan5.5 Funding Plan

6. Conclusion…………………………………………………...………...21-227. Appendix

Kwong Cheong Thye

The Small and medium enterprise I have selected is Kwong Cheong Thye. Kwong

Cheong Thye qualifies as an SME as their annual sales turnover does not exceed

S$100 million and have an employment size of roughly 70 workers.

Industry type/Core business

Their company is in the food manufacturing industry and has a core business in the

manufacturing of soya sauce. Under their belt, there is more than just soya sauce. They

have a complete range of seasoning and cooking sauces, condiments, moon cake,

Yusheng, noodles, as well as pastry paste. By trying to be the top player in their league,

they adhere to authentic recipes and use top quality raw materials so as to produce the

finest products.

1.1 Brief history

Mr Choo Wai Luen’s grandfather, who migrated from China to Singapore, founded

Kwong Cheong Thye. With meager savings, he set up a shop manufacturing soya

sauce to food suppliers. From a humble shop in Jalan Sultan producing soya sauce,

Kwong Cheong Thye has come a long way. With a factory situated in Senoko, equipped

with up to date machinery, their products are consumed and are well sought after by 90

percent of top hotels and restaurants in Singapore. Kwong Cheong Thye also has a

specialty shop in Aljunied, carrying a complete range of their product line, catering to

non-industrial consumers. In 2001, Kwong Cheong Thye had a vision for expansion and

therefore took a risk to venture into overseas markets. With time, all their risk paid off

and as of present, they are one of well known/main exporters to over 10 countries. The

major markets of their export business are in China and Dubai.

1.2 Industry research/ Reasons for choosing this SME

According to statistics, the food manufacturing sector has been growing well in the past

five years, experiencing an 11 per cent average growth in sales(Appendix A). A growth

in the food industry together with an increase in consumer spending (Appendix B)

enhances the demand for Kwong Cheong Thye’s products domestically. Since Kwong

Cheong Thye supplies key ingredients in food preparation, a growth in the food industry

would only mean a boost in output for the company. Furthermore, the lack of time and

cooking abilities of many Singaporean working adults would boost the sales of Kwong

Cheong Thye’s ready-made condiment and cooking paste (For e.g. chicken rice paste

and Kway Teow mix) since it is an ideal alternative solution to the preparation of home

cooked meals. Being childhood friends of Mr. Choo Wei Luen’s son, we deliberately

chose Kwong Cheong Thye as our selected SME as we could obtain first-hand

business insights and key information needed for my report.

1.3 Critical Factors that led to business success

1.3.1 Support by IE Singapore

International enterprise (IE) is a government agency that is responsible for promoting

international trade and overseas growth for Singapore based companies. When Kwong

Cheong Thye decided to venture overseas 11 years ago, IE assisted the company by

subsidizing the majority of the expenses-70%, for holding Food Fairs abroad. Thus,

Kwong Cheong Thye as an infant company was able to enhance its brand name and

recognition, which served as the driving force behind the increases in product

awareness of the company Internationally. Furthermore, these subsidies also enabled a

product innovation to be carried out which was the catalyst of the vast improvement and

diversity of products produced. IE also recommended Kwong Cheong Thye to display

prominently the contents of their products in nutrition labels, which eased businesses in

making more informed choices. This allowed Kwong Cheong Thye to secure many

partners abroad. Furthermore with the initial backing of IE, a government agency,

Kwong Cheong Thye was able to gain recognition, which improved their export

competitiveness.

1.3.2 Support by Spring Singapore

Spring Singapore is a subsidiary of the Ministry of Trade and Industry, which aids the

growth of Singapore Enterprises and aims to build trust in Singapore goods and

services. It helps partners with their various economies, which in turn allows partners to

reap internal economies of scale. Spring Singapore has helped Kwong Cheong Thye in

various ways. For example, they aided them during their initial stages of production by

covering the interest payments on the bank loans that had to be taken out on capital

goods such as machinery. This helped ease the problem of a shortage in short-term

capital and allowed Kwong Cheong Thye to operate more efficiently and effectively with

a higher quality and quantity of machinery. Thus Spring Singapore can be regarded as

a success driver for Kwong Cheong Thye during its infant years of development.

1.3.3 Product Differentiation

Kwong Cheong Thye has also recognized the need for its products to be differentiated

in order to serve different consumer bases. Different consumers have different taste and

preferences and Kwong Cheong Thye has taken this factor as one of the most

important factors in their production processes and has made an effort to capitalize on

these varying preferences by carrying out research and development in order to gain

niches in different markets. For example in terms of Kwong Cheong Thye`s exports,

they have varied the products in countries such as Japan and Dubai. The products

made available in Japan are less spicy compared to the products sold in Dubai. This is

due to consumers in Dubai being accustomed to spicy delicacies and the products of

Kwong Cheong Thye serve as vital ingredients in order enhance the taste of these

delicacies. Thus, product differentiation and innovation has benefited the company and

its consumers in terms of firm attaining dynamic efficiency.

1.3.4 Executives` Entrepreneurial Mindset

Mr Choo Wai Luen and his wife have acknowledged the need to constantly diversify

their products in order to remain competitive in the food manufacturing industry. Their

market position has constantly been under threat by other companies such as Lee Kum

Kee, Tai Hua and Primadeli Sauces. This has spurred the company to seek to develop

new and improved products in order to retain his share of the market. Furthermore,

Kwong Cheong thye are also on the constant lookout for prospective suppliers of their

product both abroad and locally and serve to venture into overseas market. This

enabled economies of scale to be reaped, allowing the company to earn a higher profit

margin. This in turn fueled the company to carry out more Research and Development,

which has allowed it to produce better quality products.

2. External Environment Analysis (P.E.S.T)

2.1 Political-Legal

Low political risk

What makes Singapore the top financial hub in Southeast Asia is its high demand for

cash management and trade finance (Appendix C). Therefore, the political risk in

Singapore is very low for SME’s because the Singapore government mq is able to offer

a safe and secured business environment for small and medium enterprises. The

Ministry of Trade and Industry (MTI) is tasked with anticipating problems and identifying

opportunities for growth. Kwong Cheong Thye can turn to an agency under MTI known

as SPRING Singapore for loans of up to $15 million to expand their business(Appendix

D).

Free Trade Agreement

Since the signing of its first Free Trade Agreement (FTA) under the ASEAN Free Trade

Area (AFTA) in 1993, Singapore's network of FTAs has expanded to cover 18 regional

and bilateral FTAs with 24 trading partners(Appendix E). Local companies like Kwong

Cheong Thye can benefit from privileges under the FTA agreements. These privileges

include faster custom clearance, lower import costs, and elimination of duplicate testing,

export competitiveness and faster time to market.

Foreign worker policy

However, from August 2014 onwards, firms that want to hire foreign professionals must

first prove that they have tried to hire Singaporeans through advertising in a national

jobs bank administered by the Singapore Workforce Development (Appendix F).

Otherwise, the foreigners’ employment pass application would be rejected. This would

be a disadvantage towards Kwong Cheong Thye since they would not be able to take

advantage of the lower wages that they pay their foreign employees.

2.2 Economic

Economic trend

The current economic trend in Singapore would give an indication of the future

economic trend so that KCT can decide whether to further develop their business. The

GDP at market prices for the manufacturing industry increased from S$53,999.8 million

in 2009 to S$67,189.7 million in 2012 which shows that the manufacturing industry is

doing well and producing at a higher output (Appendix G). A higher GDP indicates good

health in the economy and that there are a higher amount of demands to meet the

growing economy. Therefore, it is safe to say that the manufacturing economy is quite

stable and that it is a good time for Kwong Cheong Thye to expand because there will

definitely be demand and in general, people can afford to spend.

Currency

Singapore’s strong currency rate has a significant consequence on the company’s

profitability. With Singapore’s strong currency, Kwong Cheong Thye has an increased

purchasing power since the materials imported for production would be less expensive.

This would in turn have a positive impact on the cost of production. However, the

downside of a strong currency is its negative impact on Kwong Cheong Thye’s

international business importers. Making payment with a weaker dollar, they would incur

a higher purchasing cost. They may substantially reduce their buying quantity if they

look for a cheaper alternative import destination.

Aid International Trade

International Enterprise (IE) Singapore is the leading agency under the Ministry of Trade

and Industry spearheading the development of Singapore's external economic wing. Its

mission is to promote the overseas growth of Singapore-based enterprises and

international trade. Kwong Cheong Thye can rely on IE Singapore to help them I in

promoting the export of Kwong Cheong Thye’s goods and services aiding their

expansion. International Enterprise (IE) Singapore can also help Kwong Cheong Thye

to grow by organizing trade fairs and exhibitions. For example, Singapore based SMEs

can attend SIAL (Salon International de I'Alimentation), a trade fair as part of the

“Singapore Pavilion”, bringing local food manufacturers and distributors to one of the

largest food and beverage exhibitions in the world (Appendix H).

2.3 Social-Cultural

Competitive Culture

Singaporeans have a natural competitive culture, which makes them unwilling lose out

to others. This has increased Singapore’s productivity to some extent because

Singaporeans work extremely hard to retain or fulfill their materialistic desires.

Therefore, the business sectors can expect a higher purchasing power from domestic

customers. With confidence in the domestic market, Kwong Cheong Thye can further

introduce new product to satiate the local consumers.

Requirements of different ethnic groups

Due to Singapore’s ethnic diversity, Kwong Cheong Thye has to always adhere to the

various requirement of each ethnic group. Since the company is already halal certified,

it must also ensure there is no beef or beef constituents to cater to Buddhist and Hindu

population. Following this principal will give Kwong Cheong Thye’s products vast

international acceptance.

2.4 Technological

Technologically Advance

The level of technology in a country can determine the life cycle of a product or service

in its industry. Since Singapore is fast paced with all relevant technology, Kwong

Cheong Thye would not face problems upgrading and attaining relevant machinery.

Also, Kwong Cheong Thye can depend on technology to further expand its business.

For example, they can market their products and services on social networking sites,

instead of other conventional marketing methods. This would help to save cost, and

interact with a broader consumer segment.

3. Industry Analysis: MICHAEL PORTER’S 5 FORCES

3.1 Supplier Power (High)

Kwong Cheong Thye has numerous loyal customers who are in constant demand of

their products. Kwong Cheong Thye’s soya sauce, seasonings and cooking sauces

(which include the famous laksa and chicken rice paste) are much sort after ingredients

for numerous Asian delicacies. Therefore, their products are instrumental in the

preparation of dishes in many households and restaurants. This results in Kwong

Cheong Thye having a huge consumer base. Furthermore, the good public relations of

Mr Choo Wei Luen and his wife have established the company as the ‘to go to’

company for food preparatory ingredients for its customers ranging from average

households to high-end hotels and restaurants. This has allowed the company to gain

significant market share and have significant control of prices.

3.2 Buyer Power (Low)

Due to the nature of their products being a necessity in food preparation, there will be a

large number of buyers in the market for Kwong Cheong Thye. The change in demand

of one buyer is unlikely to affnect the prices of the products on a whole as the individual

demand of each buyer only forms a small proportion of the entire market demand.

Furthermore, many buyers would be unwilling to worsen their relations with Kwong

Cheong Thye as they may not be offered the current discounts that they are presented

with.

3.3 Competitive Rivalry (Mid)

Although there are many other firms in the food manufacturing industry, Kwong Cheong

Thye has been able to differentiate its products such that they favor the taste of its

consumers. For example, Singaporeans tend to enjoy a tinge of spiciness in their food

and Kwong Cheong Thye has innovated its products as such. The threat of competition

by other firms is also reduced by intense loyalty of Kwong Cheong Thye`s customers.

The firm’s loyal customers appreciate the undeviated uniqueness of Kwong Cheong

Thye’s flavors. Although there still exists rivalry of competitive firms, Kwong Cheong

Thye successfully eliminated the possibility of extreme rivalry in supply for products in

the food manufacturing industry.

3.4 Threat of Substitution (Low)

The products sold by Kwong Cheong Thye are not easily substitutable as they carry

with it a unique taste and contents. Furthermore, consumers are unable to simply make

these products at home as most are unaware of the preparation methods of the sauces

and also it is not feasible to replicate the products. In addition, customers are too busy

to create their own food preparatory products and they are contented with simply

purchasing them from Kwong Cheong Thye.

3.5 Threat of Entry (Low)

The Food Manufacturing industry has high barriers to entry in terms of brand loyalty,

high capital outlay and economies of scale being reaped at only a high output level. The

entry of new firms into the industry will not attract buyers to switch to purchasing from

these new firms, as they are contented with the products produced by Kwong Cheong

Thye and its existing competitors. Furthermore, there is a need for expensive capital

goods to be purchased in order to produce goods. A large sum of money has to be

allotted to conduct research and development to produce goods that are comparable to

the standard of products offered by Kwong Cheong Thye and its existing competitors. It

is difficult for firms to attain this initial capital and hence this would deter them from

entering the industry. Key players in the food manufacturing industry, such as Kwong

Cheong Thye, would also be able to adopt predatory pricing due to their large market

share, which will drive out the new firms from the industry. Thus, it is difficult for firms to

enter the industry and erode the market power of Kwong Cheong Thye.

4. SWOT Analysis

4.1 Strengths-

Immense loyal customer base

Over the years, Kwong Cheong Thye has built a strong and trusted relationship with its

customers. It has a vast number of loyal customers ranging from ordinary homemakers

to chefs of high-end restaurants. Mr Choo Wei Luen himself verified from the continuous

feedback from his customers that they think of no other substitution in their food

preparation except Kwong Cheong Thye’ sauces and products.

International market attractiveness

Globally Singapore had made a niche in the international food industry. It adheres

strictly to high standards of hygiene, optimum standards of production, as well as strict

food safety standards. As Kwong Cheong Thye is a Singapore home grown brand, it is

easier for it to penetrate new international markets. Furthermore, being equipped with

HACCP, Halal certification, ISO22000 and other trusted brand awards have paved a

smoother road for Kwong Cheong Thye to enter the international market front.

Product differentiation

Kwong Cheong Thye’s strength in their market penetration lies in their product

differentiation through customization. They keep in mind the different palate

preferences of their customers without compromising on the quality of their product.

Adopting product differentiation has proved successful for Kwong Cheong Thye,

allowing the company to clinch many overseas clients.

4.2 Weakness-

Lack of focus on household consumer market

Kwong Cheong Thye and its’ key competitors, Lee kum kee and focus heavily on the

industrial consumers (Hotels and restaurants). Lee kum kee and Woh hup, however, set

themselves apart from Kwong Cheong Thye by targeting predominantly on non-

industrial consumers. They reach out to vast consumers through various channels, for

example supermarkets. At the same time, they enhance their product visibility by paying

for priority (eye level) shelf space. The extensive product lines (ranging from sauces to

ready made mixes) that Lee kum kee, prima sauces and Kwong Cheong Thye other

competitors carry are prominently displayed at supermarket shelves. On the contrary,

Kwong Cheong Thye only displays a few out of their vast range of products at

supermarkets (Appendix I). The company’s extensive range of products is displayed at

their sole flagship store, narrowing their product awareness to a limited clientele.

Management issue

Kwong Cheong Thye, being a family run company, does not have a proper

organizational structure. It relies on traditional business methods, which is inadequate in

today’s technological age. (no database for customers) Since the roles and

responsibilities are not clearly defined in Kwong Cheong Thye, the company’s

productivity tends to be lower. Mr and Mrs Choo oversee the entire business

singlehandedly since there are no specific departments. It leaves them no time to

identify new markets and expand the existing business.

Lack of advertising and promotional activities

After the year 2002, Kwong Cheong Thye has not advertised its products. The

company’s rivals, such as Lee Kum Kee, are however aggressively advertising their

products on local television media channels during Primetime hours, 6pm-10pm,

therefore marketing and raising awareness of their product line to a generous number of

viewers. Lee kum kee, competitors of Kwong Cheong Thye, have also assertively gone

to the extent of creating an IPhone app (Appendix J) and organizing cooking contest

(Appendix K) to promote their brand awareness. Following Lee kum kee closely is Woh

Hup. Woh Hup, too, participates in attractive promotional activities such as offering

overseas holiday getaway contest and supermarket vouchers (Appendix L). As a result

of not giving much heat to the intense advertising and promotional efforts of their rivals,

Kwong Cheong Thye suffers from low brand recognition and product awareness.

4.3 Opportunity-

Room for local expansion

As more women are entering the workforce, there is a change in the mindset of ready

made sauces and meals. With time constraints, household consumers (non industrial)

are more receptive to readymade products (Appendix M).Traditionally, Kwong Cheong

Thye has not placed much importance on targeting the potential market of domestic

household users. They primarily focus both domestically and internationally on the

wholesale business with major clienteles such as top hotels and top restaurants. Kwong

Cheong thye can take advantage of the present receptive perception towards ready

made sauces and time constraints of Singaporean households by targeting this

upcoming and growable market. Moreover, Kwong Cheong Thye can focus on

advertising, as it would inadvertently raise the awareness and knowledge of their vast

range of products to a broader segment of household consumers.

With stiff competition, Kwong Cheong Thye has to keep evolving by understanding

consumer trends. Singapore’s fast aging population will open an opportunity for Kwong

Cheong Thye to produce ready made meals that is compatible to the sensitive stomach

of the elderly. The company can also diversify into the restaurant business, given

Singaporeans passion for dining out.

Room for overseas expansion

In order for Kwong Cheong Thye to have a strong foothold in the export business, it

needs to look beyond its main export markets.

India

With Globalization, India is ready to aware and ready to embrace new cuisines, with

Chinese food gaining rapid popularity. Many Indo-Chinese restaurants have

mushroomed in the last few years. Indian Chinese food isn’t just served by restaurants

big and small, but also by handcart owners, highway food stalls and mobile Chow Mein

vans. (Appendix N)

United States

Over the years, Americans have visited China and more Chinese have migrated to the

States. As of this day and age, America has moved away from the limited selection of

American Chop Suey and fortune cookies to a more diverse authentic Chinese food.

(Appendix O)

People are more receptive towards Chinese food therefore it is a wise move to tap the Indian

and American market. Since the nature of Kwong Cheong Thye’s products are essential in the

preparation of Chinese food, the company can benefit from the overwhelming demands of

these overseas economies.

4.4 Threats -

Difficulty in attracting skilled labor

The key to success and expansion of the company lies in a good organizational

structure (Appendix P). Without the structure, a company would face inefficiency and

stifled expansion. Since Kwong Cheong Thye’s business expansion is in the pipeline, it

would need to maintain corporate productivity during times of growth. This would mean

that the company would have to compensate its lack of organizational departments i.e.

Human Resource by hiring skilled labors. However, predominantly family run

businesses like Kwong Cheong Thye face an uphill task in attracting skilled labor and

professionals. Job seekers still tend to view employment in SMEs as ‘’second choice’’

due to lack of training opportunities, long-term career prospects and unattractive

benefits. This same viewpoint is being shared by Mr Lim kee choon,director of

partyware and food packaging retailer SKP.

5. Business Expansion Plan-

Kwong Cheong Thye’s business expansion plan capitalizes on their company’s

strengths, counters their weaknesses, seizes their company’s opportunities and reduces

their current threats

5.1 Overseas expansion plan

Kwong Cheong Thye’s history traces back to a humble shop in Jalan Besar producing

Soya Sauce. Though it has come a long way, there is still room for its expansion. With

globalization, Chinese cuisine has steadily gained interest internationally. Thus, it is

timely and significant in preparing Kwong Cheong Thye to expand into new untapped

overseas food markets.

Venturing overseas expansion plan

Kwong Cheong Thye can consider widening its overseas market presence. The

company can harness present consumer trends and tap on large high potential markets

such as India and The United States.

The first springboard into the American and Indian market should start with proper

business networking and knowledge. Kwong Cheong Thye can participate in Tasty

Singapore Culinary Mission (TSCM), held annually by IE Singapore, to provide an

excellent opportunity for the company to build a strong business network and alliance in

America (Appendix R). Simultaneously with showcasing its capabilities to prospective

buyers, Kwong Cheong Thye could also gain an insight on the American market through

interactions. As for the targeting the vast Indian market, Kwong Cheong could

participate in Government-led trade missions to India (Appendix S). These trade

missions can introduce Kwong Cheong Thye to local food distributors and agents.

Through the trade mission’s market briefings, networking events and visits to specific

businesses/government agencies, Kwong Cheong Thye will be able to spearhead its

movement into the potential Indian market.

Products to market (India)

Though Chinese food is gaining popularity in India, the Indian palates will still have

some reservation and hesitation towards truly authentic Chinese flavors. Certain Kwong

Cheong Thye’s products like their plum sauce, steam fish sauce and other authentic

Singaporean mixes (e.g Sambal Kang Kong/ Char Kway Teow mix) may need a while to

coax the Indian population into trying it. Kwong Cheong Thye can start penetrating the

Indian market with their basic products such as their light/dark soya sauce and Chili

sauce without much consideration. Given the immense vegetarian population, Kwong

Cheong Thye can also market its vegetarian oyster sauce, vegetarian rojak paste as

well as their range of vegetarian noodles.

Products to market (United States)

America, being the quintessential melting pot of different ethnic groups, is more open-

minded towards exotic cuisines of diverse cultures. Kwong Cheong Thye would have a

ready market for its pre-made Singaporean mixes since majority of the people in the

United States are willing to prepare a Singaporean meal with pre-packed ingredients at

home. Also, since Chinese food topped Americans Asian food preferences (Appendix

R), Kwong Cheong Thye can market its wide range of essential products, such as plum

sauce and Hoi Sin sauce, necessary in Chinese food preparation

5.2 Local expansion

Supermarket expansion

Kwong Cheong Thye’s products found in major supermarkets are limited to their Soya

Sauce. Though they have an immense range of products, many household consumers

are unaware of its extended range. Since supermarkets have heavy human traffic, it is

advisable for Kwong Cheong Thye to buy more prominent shelf space in major

supermarkets to effectively display their wares. More shelf space would get more

consumer attention and also have a driving impact on the sales of Kwong Cheong

Thye’s products, refered to the phenomenon of space elasticity (Appendix T).This

allows the company to emerge itself from it’s shadow and portray itself as a competitor

to Woh Hup and Lee Kum Kee, to fight for the market share of domestic household

consumers. From time to time, the company should also engage in personal selling

through sales promoters. These promoters would build product awareness, provide

information and stimulate demand to potential consumers(Appendix U).

Diversify into the restaurant business

According to a survey conducted by MasterCard, Singapore surfaced as the top

spender in the region on dining (Appendix V). Since Kwong Cheong Thye has been in

the food manufacturing business for decades, it can diversify its business by venturing

into Singapore’s thriving restaurant business scene. Ms Choo, the brainchild behind

various recipe innovations for the company’s sauces/paste, has a wide networking in

the food and beverage industry. Having fostered strong customer relations with chefs

from top hotels and restaurants, finding a chef to helm the kitchen would not be an

obstacle. Furthermore, Kwong Cheong Thye would be the sole supplier of essential

Chinese cooking sauces, paste and noodles to the restaurant. Attaining cost efficiency

from using their factory-produced products allows Kwong Cheong Thye to secure a

higher profit margin.

Extended product line to cater the aging population

With Singapore’s fast aging population, there has been a segment in the food industry

that has been ignored. With the food industry preoccupied with product innovations,

customization and continuous line extensions that cater to the mass population, not

much has been focused on the elderly. With special dietary requirements and easy to

prepare meals, Kwong Cheong Thye can produce a new range of products that cater to

the elderly. Having a head start with readymade Bah Kut Teh soup (Pork Rib Soup),

the company can specialize in nutritious readymade authentic Chinese soups such as

Birdnest soup, Watercress soup, Winter melon soup, ginseng soup and many more.

These low sodium soups tailored to the elderly needs would make Kwong Cheong Thye

the pioneer in carving a niche amongst consumers of the aging population.

5.3 Marketing Plan

Digital Marketing

With advancements in technology, digital marketing has revolutionized into the preferred

media platform for firms. Social media platforms have high viewership and the ability to

reach out to a broad consumer segment. Kwong Cheong Thye can jump into the wagon of

social media by creating a Facebook page. Setting up an interactive Facebook page has

numerous advantages. Firstly, Kwong Cheong Thye can reach its target market for a fairly

affordable price. Through this medium, customers can interact directly with Kwong Cheong

Thye. They can provide feedback, share their experience about the company’s products

and simultaneously get updates on relevant events. On the part of Kwong Cheong Thye, it

can offer a vibrant array of information about new product launches, kitchen tips, food facts,

recipes, promotional activities and even recipes suggested by their loyal customers.

Product placement in popular shows/ advertisements in local channels

Another method for Kwong Cheong Thye to reach out to its consumers is through

product placement. Unlike other conventional advertising methods, product placement

can strengthen brand recognition more effectively and serve as a long-term reminder

advertisement. The company can place its products in local popular television

series/dramas on Singapore’s quintessential Mediacorp channels. If Kwong Cheong

Thye were able to impressively revamp its Facebook page and successfully market its

products through personal selling at supermarkets, product placement in local television

would be viewed as part of a total marketing plan in which it complements other

techniques in the promotional mix. Apart from product placement, the alternative

method of conventional television advertisement should not be overlooked. Mediacorp

channels offer easy value packages at affordable rates, with high advertisement

frequencies (Appendix W).

5.4 Resource management

The proposed resource management plan changes the leadership style from

entrepreneurial to leadership management. This transition is crucial for SME’s during

the growth/expansion phase of business. Kwong Cheong Thye has to move forward

from a husband-wife team dominant entrepreneurially managed firm to one run by

functional organizational structures.

Kwong Cheong Thye’s first step starts with restructuring its’ company into organizational

departments (i.e. human resource/marketing departments) followed by attracting skilled

labor to fill in the positions. The company can attract talent by participating in SPRING

Singapore’s Management Associate (MA) Initiative program, under the Capability

Development Grant (appendix X). The MA program helps to recruit outstanding fresh

graduate talents via the Careers @Enterprise job portal. Mr and Mrs Choo have to

submit a comprehensive training and development plan to SPRING, based on building

each MA’s capabilities, aligned to the company’s growth plan. The initiative also helps

to defray up to 70 % of qualified training cost, covering both on and off the job training.

Through this channel, Mr Choo Wei Luen and his wife can additionally attend the MA

initiatives’ talent management workshop to improve their Human Resource abilities.

Another alternative is for Kwong Cheong Thye to participate in SPRING’s Executive

Development Scholarship (EDS) program. SME-SPRING Joint EDS is a scholarship

offered jointly by SPRING and Kwong Cheong Thye, with the objective to attract talents,

who aspire to be future business leaders to join the industry (Appendix Y). These

scholarships are given to students during their universities/ polytechnic years to entice

them to take up a career in the food manufacturing industry

5.5 Funding (Financial) Plan

With restructuring of the company, Kwong Cheong Thye needs to look into its

manpower cost. Though the expense of the company may escalate, these cost incurred

would certainly benefit the company in the long run. We also have to understand that Mr

Choo and his wife have expressed their desire in remaining a privately owned company.

Though funding the expansion may be an uphill task, the strategic goals can be

achieved to a certain extent through government subsidized loans and training

programs.

By participating in the MA initiative and EDS scholarship program, Kwong Cheong Thye

can benefit from hiring a large pool of fresh graduates. The benefits constitute of cost

effectiveness, as the starting pay of fresh graduates are not in the higher bracket.

These are the proposed vital positions that the initial expansion plan would

require(Appendix Z).

Job Role Qua

ntity

Startin

g pay (SGD)

Monthly Cost

incurred (SGD)

Quality Control Manager 1 $2200 $2200

Food Technologist 2 $2100 $4200

Accountant 1 $2200 $2200

Human Resource Manager 1 $2000 $2000

Logistics Manager 1 $2100 $2100

Sales Manager 1 $2000 $2000

Marketing Manager 1 $2000 $2000

In this proposed manpower recruitment plan, Kwong Cheong Thye would incur an

annual wage expense of $200,400. This minimalistic recruitment plan focuses on

Kwong Cheong Thye’s vital manpower requirements. Furthermore, the plan is cautious

and takes into consideration MA Initiative Grant Support requirements .

Upon hiring of fresh graduates, training programs would be required. The MA initiative

would support the training programs, by covering 70 % of the training cost. In the

financial context, Kwong Cheong Thye annual training expenses would only amount to

30 % of its actual cost, keeping overhead low. Furthermore, many companies are urging

the government to up the grant to 80 % together with other proposed rebates.

(Appendix Z extended part 1)

Since an advertisement spot in local channels come at the charge of $3900(appendix

W), Kwong Cheong Thye would incur a yearly marketing expense of $93,600. Assuming

that product placement advertising cost the same, the marketing expense would be

hefty $187,200. Taking into account training, employee wage expense and marketing

efforts, the company would incur approximately $480,000 yearly.

Mr Choo Wei Luen would not want to fundraise through public listing, expressing his

desire to remain privately owned. Mr Choo felt that by being privately owned, he would

have the complete authority over the operational decisions of Kwong Cheong Thye,

without having to be answerable to various third parties(Shareholders and investors).

Furthermore, Mr Choo can determine the amount of profit to reinvest towards fueling the

company’s growth. Lastly, Mr and Mrs Choo have worked exceptionally hard to nurture

the company into a prominent food manufacturer, therefore, to relinquish the complete

ownership is unfathomable. In order to finance this expansion plan, the company would

have to look into Loans from financial institutions or SPRING Singapore’s local

enterprise finance scheme.

6. Conclusion

In the process of evaluating Kwong Cheong Thye as an SME, We learnt that there are both

dependent and independent factors that lead to business success. Many independent factors

attribute to the success and fame of Kwong Cheong Thye. Firstly, it is the vision to expand,

which both Mr Choo Wei Luen and his wife adhere ardently. Both of them are constantly

seeking new markets for their products. Simultaneously, they kept innovating and introducing

new products to keep up with industry trends. Least to say, business success would not be

possible without the utmost important dependent factor, the support by government bodies.

SPRING and IE Singapore aided them financially and actively promoted their brand name

through food fairs locally and internationally. All these factors together with Kwong Cheong

Thye’s good public relations has catapulted them into one of the top purveyors of fine food

products in the food manufacturing industry in Singapore.

Even though Kwong Cheong Thye is well established as of today, it should constantly

innovate itself. “ The innovation does not have to be the big bang type of changes or tied to

technological advancement, it can come in small packages’’ quoted Acting Manpower

Minister Mr Tan Chuan Jin. (Appendix Z extended Part 2). In line with Mr Tan’s statement,

Kwong Cheong Thye’s business expansion plan helps boost its company innovation through

simple avenues such as marketing and domestic advertising. With expansion, Kwong

Cheong Thye throws a wider net on the domestic household consumer market. It innovates

its products by adhering to the shifts in demographic factors including the aging population,

increasing number of women in the workforce as well as shifts in food consumption towards

away-from-home dining. The company’s expansion plan also features taping into high

potential international markets. With each successful step of expansion and innovation,

Kwong Cheong Thye will move up the ladder of success.

Personal Interview with Mr Choo Wei Luen(Owner)

Q1. Mr Choo, Kwong Cheong Thye started as a simple Soya Sauce manufacturer and has progressed into a well-established brand name in the food-manufacturing scene. What were the critical factors that led to your success? They were many critical factors that aided Kwong Cheong Thye during its infant phase. Firstly, it was SPRING Singapore’s help in financing the interest payments for the loans our company needed to purchase the machinery. Secondly, it was Mrs. Choo entrepreneurial mindset. She constantly innovated new recipes and extended our company’s product line. When our company made the decision to export in 2001/2002, she spearheaded our company’s growth by always looking out for potential overseas buyers. Q2. How did you manage to find overseas markets? I would say that IE Singapore played an important and crucial role. It advised Kwong Cheong Thye to include nutrient labels on our food packaging. It was an important step in entering the overseas market. IE also subsided the expense, up to 70%, for holding

food fairs abroad. Q3. Do Kwong Cheong Thye’s products fit the adage of ‘’one size fits all’’? No, our company customizes our product offerings. For example consumers in Dubai have high spiciness tolerance level. However, Japan does not. As such, one size fits all does not apply here. We customize our products and deliver Dubai a spicier version of a sauce/paste then Japan. Q4. Who are Kwong Cheong Thye’s major clientele? Domestically, our major clienteles are top hotels and restaurants. Internationally, we have secured various business partners but our major markets are in China and Dubai. Q5, Who are your key competitors? Lee Kee Kum and Prima sauces, being long established food manufacturers, are Kwong Cheong Thye’s main rivals. However, to have competition in business is healthy. It keeps Kwong Cheong Thye’s on its toes. Q6 Do you believe in constant innovation of your product line? Yes, I do. There are many food manufacturers in Singapore, each trying to reach out to broader consumer markets. Therefore, it is important to regularly come out with new products to differentiate our brand from competitors and harness consumer trends. Just Last month we launched our new ready-made Bah Kut Teh Soup, targeting at Singapore’s elderly population. Q7. Does Kwong Cheong Thye aggressively advertise its products? I did not pay much importance to advertising. We receive a good business from our existing loyal customer base and many established international business partners. Therefore we do not pay much attention on advertising locally since we focus mainly on industrial consumers. The last time Kwong Cheong Thye advertised on television was in the year 2002 Q8. Does Kwong Cheong Thye face difficulties in the aspect of human resource? Yes it does. Singapore’s strict foreign policy impedes our ability to hire foreign unskilled

workers to run our manufacturing plant. Due to Singapore’s mandatory 5;1 Singaporean to foreigner ratio, Kwong Cheong Thye has to limit its foreign workers. This could also mean hiring Singaporean workers who demand a higher salary. Kwong Cheong Thye also faces difficulty in attracting skilled labour and professionals. Many skilled Singaporean workers still view employment in a SME as a ‘’second choice”’.

Appendix A

Reference: http://www.asianewsnet.net/news-52441.html

Appendix B

Reference: http://www.tradingeconomics.com/singapore/consumer-spending

Appendix C

Reference:http://sbr.com.sg/financial-services/news/heres-what-makes-singapore-top-

financial-hub-in-southeast-asia

Appendix D

Reference:http://www.spring.gov.sg/Enterprise/Loan/Pages/Local-Enterprise-Finance-Scheme.aspx#.UufrmhCwrIV

Appendix E

Reference: http://www.fta.gov.sg/sg_fta.asp

Appendix F

Reference: http://www.singapolitics.sg/news/firms-must-try-hire-sporeans-trying- foreigners

Appendix G

Reference: http://www.singstat.gov.sg/statistics/browse_by_theme/national_accounts.html

Appendix H

Reference: http://www.enterpriseone.gov.sg/en/Topics/Venture%20Abroad/Partners%20and %20Opportunities/va_partopp_trademission.aspx

Appendix I

Kwong Cheong Thye’s limited range of products displayed at supermarkets

Competitor’s (Woh Hup, Lee Kum Kee and Prima) diverse range of products displayed

Appendix J

References: http://www.hot-mob.com/wp/lee-kum-kee-iphone-app-download-promotion/http://www.pixopunch.com/lee-kum-kee-your-best-cooking-assistant/#1

Appendix K

Reference:http://www.straitstimes.com/breaking-news/singapore/story/cooking-contest-

aims-promote-family-and-community-bonding

Appendix L

Referance: http://blog.wohhupfood.com

Appendix M

Reference:http://www.straitstimes.com/the-big-story/case-you-missed-it/story/the-decline-home-cooking-20130409&

Appendix N

Reference: http://travel.cnn.com/mumbai/none/indian-chinese-food-598134

Appendix O

Reference: http://topics.nytimes.com/top/reference/timestopics/subjects/c/chinese_food/

Appendix P

Reference:http://smallbusiness.chron.com/impact-organization-structure-productivity-

21902.html

Appendix Q(newspaper article cutout)

Appendix R

Reference: http://www.iesingapore.gov.sg/Venture-Overseas/Browse-By-Market/Americas/United-States-of-America/News/mc/Speeches/2008/6/Opening-address-by-Mr-Ted-Tan-Deputy-Chief-Executive-Officer-International-Enterprise-Singapore

Appendix S

Reference:http://iesingapore.eventshub.sg/Events/EventDetailView.aspx?EventID=5550

Appendix T

Reference:http://modeledbehavior.com/2010/02/06/the-economics-of-supermarket-

shelves/

Appendix U

Reference: http://www.knowthis.com/personal-selling/objectives-of-personal-selling

Appendix V

Reference:http://business.asiaone.com/news/singaporeans-are-top-spenders-dining-region-mastercard

Appendix W

Appendix X

Reference:http://www.spring.gov.sg/CareersScholarships/ss/Pages/about-eds.aspx#.UueXLpFm4b1

Appendix Y

Reference:http://www.spring.gov.sg/CareersScholarships/ss/Pages/about-

eds.aspx#.UuifBZFm7L8

Appendix Z

Reference: http://myjobstreet.jobstreet.com.sg/career-enhancer/basic-salary-report.php

http://www.fst.nus.edu.sg/programmes/Undergraduates/Prospectus/FAQ.html#salary

QA Manager

Food Technologist

Accountant

Human Resource Manager

Logistics Manager

Sales Manager

Marketing Manager

Appendix Z Extended (Part 1)

Appendix Z Extended (part 2)