merepek sana sini..

sangat2 setuju dengan ayat nie.. sebab biler kiter tengah marah, apa yg kita cakap, kita xkan berfikir panjang n xpk dgn warasnya.. asalkan kemarahan kita tue dapat dilepaskan.. sebab tue dalam islam kita perlu menghindar diri kita daripada marah.. kerana syaitan akan bersama kita di saat api kemarahan tue merah menyala.. macam2 boleh jadi.. n kadang kala tue di luar kemampuan akal fikiran kita.. so before buat aper2 decision or respond pada org lain, make sure dats kita tidak berada didalam keadaan marah.. :)

xbuat janji sesuka ati biler tgh bahagia.. gembira.. n senang ati.. coz kita xtau aper yang akan jadi di masa akan datang. belum pasti kita boleh menunaikan semua janji2 kita.. senang citer macam org bercinta la.. macam2 janji yang ditaburkan.. biler putus di tengah jalan.. mcm mana citer plak? lu pk la sendiri.. :)

xmbuat keputusan ketika sedang bersedih pun patut di amalkan.. coz dikala emosi kita sedang di landa kesusahan atau sedang bersedih, minda kita akan membuat keputusan yang drastik kerana dibawah pengaruh minda separa sedar.. kita jarang akan memikirkan kesan jangka masa panjang di dalam setiap keputusan yg kita buat.. oleh itu, elak2 kan la diri kita dari membuat keputusan sewaktu kita sedang berduka lara.. terutama sekali biler putus cinta, gagal lam perkahwinan, gagal lam peperiksaan.. n sebagainya.. anggapla semua itu dugaan dr Tuhan kerana Tuhan rindukan rayuan dr hambaNYA yang memohon pertolongan.. :)

summary on controlling contractual exchange risks in research and development interfirm cooperation- assignment Risk Management

actually arini aku belajar sesuatu yang baru.. belajar memperbetulkan kesalahan apabila wat summary.. actually masa sekolah dulu kita wat summary mcm yg aku wat kat bawah nie.. tp biler dah masuk degree, summary sama seperti literature review.. kena ader intro, body n conclusion.. n kena quota kan author dier.. intro plak amik drp abstrak lam journal.. xsusah pun.. cuma xde pendedahan secara terperinci ttg wat summary dr lecturer.. tue yg kelam kelibut jadinya.. anyway TQ to En Azizan, my risk management lecturer  yg sudi ajar mcm mana nak wat dgn betul.. :)




Summary
The research topic from this journal is controlling contractual exchange risks in research and development interfirm cooperation. The method that been use in this research is an empirical study. Furthermore, this research involving the research and development of interfirm cooperation. In this research, two method of risk have been perceived from the suppliers and buyer such as risk to achieve a lower profitability on the innovation return from the exchange partner while the other one are the risk of the partner becoming a competitor by unplanned. It is also known as one-sided knowledge flows.

This research analyse on how an option on later negotiation of an additional continuous innovation return on sharing which is based on the contractual hostages can decrease the perceived of exchange risks. The empirical study has been use in this research to examine how effectively these hostages lower the perceived risks. The objective of research and development interfirm cooperation is to control opportunism typically cause agency as well as transaction costs and thus a loss of economic welfare.

This research is more focus on two things that is the profitability risk which constitutes the danger to obtain a lower profitability than the exchange partner, and the second thing is competitor creation risk. This research focus on five groups of research and development supply relations that is contract research, transfer of existing research results, contract development, transfer of existing development results and licensing of development results.
In the cases of contract research and research result transfer the hostages are the only way to get a continuous return share because of the doubt and to be more precise, because there is no chance of share assessment at the basis of a final product at the time of contracting. The other cases is contract development which is they have an assessment basis at the time of contracting.
The difference is contract research and research result transfer use a basis typically before the process complete. So that, the supplier can demands a continuous share as reward for proceeding with the development process instead of stopping it opportunistically. The ceases of transfer of existing development results and licensing of development results the basis already exist at the time of contracting.

In these cases a continuous return share can be specified in the contract and in licensing agreements it is typical in the form of royalties because the continuous share has been specified. According to the cases above, empirically test been used to examine the effect of the hostages on the perceived risks without differentiate the supply relation types. Furthermore, the empirically test also use to examine the effect in contract research relations comparedto the contract development relations.

We often see a specialization of R&D suppliers in the early stages of theinnovation process, in high technology industries, such as biotechnology or information technology. It also known as basic research and applied research, whereas the R&D buyers focus on the later stages of the process such as development, production and marketing of final products. In many cases there is also an outsourcing of development activities by this interfirm cooperation.

Two exchange of risk perceived by the supplier and buyer. First is the profitability risk such as the danger to achieve a lower profitability than the exchange partner.Suppliers and buyers can calculate the innovation’s profitability by comparing their innovation return share to their costs.The supplier compares their production costs to the final payment, in case of a licensing agreement also to the royalties. The buyer calculates his profitability from the innovation return minus the supplier compensation.

Second is the competitor creation risk establishes the danger to achieve a lower inter partner learning effect than the exchange partner.The risk can be reduced if the supplier could also gain insights into the knowledge of his exchange partner. A supplier who has the necessary resources can become a potential competitor using the buyer’s knowledge about the production and marketing of final products.

In this research they see that in all investigated supply relations the supplier’s return is threatened by hold up. The beginning of the process of contract research or development the supplier invests more in specific assets than the buyer. The buyer only gives information by specifying their demands. So that, there is a possibility of hold up by the buyer, threatened the expected supplier compensation.In the case of licensing development results the situation is similar to the contract research or development.

 The supplier or the licensor, typically invests more in specific assets than the buyer at the beginning of the exchange relation because the transfer of the licence object has to be regarded as ruined costs.  The buyer can exploit the resulting need to lower the inferior royalties. It also can turn out the licensee as it does not work as effective and not as motivated as necessary to exploit the market potential. Therefore, the licensor’s expected return is endangered in two ways. The competitor creation risk is different to the profitability risk.

It does not result from opportunistic behaviour caused by specific investments and asymmetricinformation.
It arises from the fact that is observed on R&D supply relations, only the buyer can gain insights into the production process of the exchange partner. In this research the instrument that been used in exchange risksof R&D suppliers; agency and transaction cost theory is Agency Theory. It discusses different instruments which help to minimize the profitability risk of the supplier regarding the payments minimize the risk of hold up experienced by the supplier of contract research or development. Before the beginning of the research or development process and reduce the maximum possible damage the payments have been transferred.
 Other than that, without exclusive buying rights or in case of a standard licence, the hold-up risk of the licensor is reduced because the licensor could cooperate with alternative licensees.In order to prevent a lack of performance motivation, minimum licence fees can be agreed. Buyers, who agree to these conditions, can demonstrate their performance orientation and motivation. In other way, Transaction Cost Theory suggests specific investments of the buyer as safeguards and also in favour of the supplier against the hold-up risk. Agency and Transaction Cost Theory do not deal directly with competitor creation risk. In this research stated that we suppose have a continuous return share agreement to imply closer interaction and thus creates a basis on which the supplier can gain insights into the buyer’s competences.

Two hypotheses have been developed regarding to test whether an option on post contractual negotiation of an additional continuous innovation return share is perceived by R&D suppliers as lowering their exchange risks. The first hypothesis is concerns the influence of contractual hostages on the perceived control of risks without differentiating between different groups of R&D suppliers. It means a growing number of contractual provisions increase the perceived satisfaction of the R&D supplier with the control of exchange risks. In this hypothesis include concerning the profitability risk and concerning the competitor creation risk.

 The second hypothesis is based on the presumption that the suppliers of contract development are less dependent on contractual hostages than the suppliers of contract research. The hypotheses that get from this basis is with an increasing number of contractual provisions, the perceived satisfaction with the control of exchange risks grows more in the case of a supplier of contract research than in the case of a supplier of contract development. This hypothesis involves two criteria that is concerning the profitability risk and concerning the competitor creation risk.

 The researcher in this research tested the two hypotheses above in a quantitative-empirical analysis of vertical interfirm cooperation in high technology industries. The random sample that been used in this research consist of 1.200 companies founded until 31 December 1997 which received a questionnaire in the time between December 1999 and February 2000. In order to complete this research, every of each respondent was asked to refer on one typical cooperation which had already been completed or at least existed for a year when answering the questions and the contractual provisions were measured.

The first hypothesis obtained that the fact that the group with few provisions is more satisfied with the risk control than the group with a medium number of provisions. It found that the suppliers of group that have found ways of risk control other than the contractual hostages.The second hypothesis obtained that with an increasing number of contractual provisions the perceived supplier’s satisfaction with the control of the competitor creation risk grows more in case of a research contract than in the development contract.

Regarding to the maximization of innovation return, R&D suppliers who behave opportunistically, make a suboptimal investments. Perception of exchange risks is a major reason for opportunism. In this research also stated that the exploitation of the innovation by the buyer can be obstructed by six ways.
First is,if there is no exclusive buying right for the buyer. Second is,if the supplier is not obligated to treat the buyer’s know-how confidentially. Third is, if the buyer is obligated to treat the supplier’s know-how confidentially. Fourth is, if the supplier is not obligated to inform the buyer about further developments of the contract object.

 Fifth is, if the buyer is obligated to inform the supplier about further developments of the contract object. The last way is in case of mutual specific investments of the supplier and the buyer in the exchange relation.The exploitation of the innovation can be blocked, not only hindered, by providing the supplier with exploitation rights on further developments of the contract object.

The benefit that obtained from this research are describing exchange risks of suppliers as hindering factors in R&D supply relations, analysing buyer opportunism as major reason for those risks and present an integrated view on buyer opportunism in the different R&D supply relations, giving an insight how the mechanism of contractual hostages against buyer opportunism that is realized in practice and offering empirical results concerning the effectiveness of contractual provisions against the perceived exchange risks of the supplier.

Overall conclusions that can get from this research journal are the interpretation of the empirical study has to be viewed against the background of the small sample size. It also is necessary to consider that the survey concerned isone of the most sensitive areas of a company.

Research on MAMEE Company -SM Assignment

1.0 Introduction to the Industry


1.1 Description


1.1.1 Description of Food and Beverage Industry
Global market forces are driving the continual evolution of the food and beverage industry. Consolidation, changing customer preferences and increasing government regulations are dramatically impacting manufacturing and business strategy. In this fiercely competitive market place, the manufacturer must offer a greater variety of products to meet consumer demand. At the same time, the manufacturer must consistently and cost-effectively produce high quality products. To be successful, the manufacturer should focus on three key business issues: financial performance, sustainability and brand equity.


1. Financial Performance
In today’s global market place, where growth via acquisition is prominent, the key to sustained positive financial performance is the ability to understand and respond to consumer demand and competitive pressures while reducing cost of production.


2. Sustainability
Manufacturers want to have a positive impact on society and the environment. In addition, they want to turn sustainability program is the belief that the corporate investment in environmental and social responsibility must strength business performance to be successful. It must reduce environmental impact, achieve genuine economy in the use of resources, deliver a return on investment and enhance the equity of their company.


3. Brand Equity
Customer loyalty is the key to success of manufacturer business and maintaining customer loyalty is achieved through consistently manufacturing high-quality products, batch after batch. In doing so, the manufacturer need to add value on into their brand.




1.1.2 Description of Key Stakeholders
Definition of stakeholder is a person, group, or organization that has direct or indirect stake in an organization because it can affect or be affected by the organization's actions, objectives, and policies. The explanation below establishes that Mamee-Double Decker Bhd product market stakeholders have the greatest stake in the firm's strategies and success.


Key stakeholders in a business organization included creditors, customer, directors, employees, government (and its agencies), owner (shareholders), suppliers, unions, and the community from which the business draws its resources. Although stakeholder is usually self-legitimizing (those who judge themselves to be stakeholders are stakeholder), all stakeholders are not equal and different stakeholders are entitled to different considerations. For example, a company’s customers are entitled to fair trading practices but they are not entitled to the same consideration as the company’s employees.


Stakeholder power is an important factor to consider whenever you are asked to write about the relationship between a business and its stakeholders. In the context of strategy, what is important is the power and influence that a stakeholder has over the business objectives. Stakeholders can be classified in to 3 main group which is product market, capital market and organization stakeholders. 


Each group have their own roles, benefits and some might affect company’s objectives. Product market stakeholders are people who benefit directly from the business without necessarily investing money, such as consumers, suppliers and host community. 
Besides, organizational stakeholders are employees who work for the company and depend on survival for income. While, capital market shareholders are the shareholders and lenders who expect the firm to preserve and enhance the wealth they have entrusted to the company and returns should be commensurate with the degree of risk to the shareholder.


1. Product Market Stakeholders
(a) Consumer
As stakeholders, consumer generally demands reliable products at the lowest possible prices. Mamee-Double Decker Bhd's customers will ultimately determine if the company succeeds based on satisfaction measures such as product taste, product function or nutrition, interesting packaging, and also level of service. 
As consumer sentiment gets more favourable in light of the improving economic climate, Mamee-Double Decker Bhd hope to capitalise on it by getting closer to the consumers' minds and hearts so as to better respond to their needs. 


(b) Suppliers
Suppliers typically seek loyal customers who are willing to pay the highest sustainable prices for their goods.  Driven by the opportunity to move large volumes of product through the distribution chain, suppliers have accepted Mamee-Double Decker Bhd's rigid terms and continuous pressure to reduce costs to support its low price strategy. 


However, supplier reaction to company's "strong-arming" should be monitored, and they need to understand the types of actions required by suppliers to meet its demands. 


Beside, Mamee-Double Decker Bhd needs to measure successful relationships with suppliers not by cost alone and minimize the unintended consequences of its relentless quest for lower prices.  By partnering more closely with suppliers, Mamee-Double Decker Bhd can help them achieve mutually-beneficial goals without the abuse of resources or damage to the environment.


(c) Host community
Mamee-Double Decker reiterates their Corporate Social Responsibility values and goals in helping to create a better Malaysia for all. While the needs of the less fortunate will always remain their priority, will also look at ways and means in which they can improve the lives of their most precious resource, and employees. 


Creating better workplaces and giving them opportunities to give back to the community will feature in their Corporate Social Responsibility plans moving forward, and they look forward to sharing their progress.


2. Organization Shareholders


(a) Employees
Basically, employee are expecting in a dynamic, stimulating and rewarding work environment. Besides, they are satisfied by a company that is growing and actively developing their skills. Mamee-Double Decker Bhd employees' development programme is seen as a strategic investment for the future success of this company. 


In year 2008, they have been constantly challenging the status quo by conducting various on-going activities from external and internal best practices based on our employees' development programme as above. 


Mamee-Double Decker Bhd shall continue sourcing for talented graduates and professionals through various career programmes, such as Malaysia Student Internship Programme, Management Trainee Programme, Trainee Executive Programme and Applied Skills Development Programme. If employees’ got the ability, company must have the opportunity to success.


(b) Board of Director (BOD)
The Mamee-Double Decker Bhd’s board has overall responsibility for the Group's system of internal control and for reviewing it’s the role of management is to implement the board's policies on risk and control. 


The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives. In pursuing these objectives, internal controls can only provide reasonable and not absolute assurance against material is statement or loss. 


The board confirms that there is a continuous process for identifying, evaluating and managing the significant risks threatening the Group during the financial year under review and prior to the date of approval of the annual report and financial statements.


(c) Internal Audit 
The Mamee-Double Decker Bhd Group's internal audit function was outsourced to an independent audit firm who report directly to the Audit Committee. The outsource audit firm perform regular reviews of business processes to assess the effectiveness of internal controls and highlight significant risks impacting the Group. 


The Audit Committee conducts annual reviews on the adequacy of the internal audit firm's scope of work and resources. The Audit Committee regularly reviews the internal auditor's reports and discusses the highlighted issues with the Management to ensure every issue has been properly resolved.


3. Capital Market Shareholders
(a) Shareholders
Shareholders and lenders expect financial returns that exceed industry performance and the potential returns from alternative investment opportunities.  A look at Mamee-Double Decker Bhd financial performance helps to identify measurements that determine the success of Mamee-Double Decker Bhd strategy for capital markets:  


• Net profit of RM43.6 million, an 84.7% increase from the RM23.6 million in the preceding year.
• Revenue was at RM411.5 million in 2009, up from RM397.0 million previously.
• In 2009, 10.2% improvement in sales contributions from the domestic market to RM285.3 million in sales, from RM259.0 million in the previous year.
• Net Profit to Shareholders in 2009 was increase from 10,296million up to 9,225million and the changes were 11.6%. 
• Earnings per share (EPS) for the quarter ended 31 December 2009 was 11.87 cent. This brought the yearly EPS up to 50.31 cent in 2009, a 73.0% increase from 29.05 cent in the previous financial year.




1.2 Segments
1.2.1 Demographic Segment
According to a survey, Mamee-Double Decker has invested in football fans. There are more than five million Manchester United football fans and they have a similar profile to its target consumers, mainly young adults and families. Mamee-Double Decker strongly believed that football is a wholesome event that brings friends and family together. They cheer for their team together and when their team wins, they celebrate together. 


So, Mamee-Double Decker want to be the favorite snack to watch football with, and become part of the special moments only Manchester United can provide. They also believe that Mamee product will be elevated by Manchester United partnership and the football fans will love Mamee product just as they love Manchester United. And also, sports was one of the key elements that promotes unity among the people and as a responsible Malaysian company, Mamee-Double Decker wishes to use the event to bring the different races and families together in a wholesome way. 


Mamee-Double Decker (M) Berhad, an investment holding company, engages in the manufacture and marketing of food and dairy products, and soft drinks. It products include instant noodles, snacks, dairy products, chilled products, beverages, and confectionery. The company also provides information systems management and motor vehicle rental services.


It has operations in Malaysia, Myanmar, and other Asia countries. The company was incorporated in 1971 and is headquartered in Ayer Keroh, Malaysia. Under income distribution, Mamee-Double Decker expects to see export sales contribution improve to as much as 50% from some 30% currently over the next few years on the back of its sponsorship deal with Manchester United Ltd. 


1.2.2 Economic Segment
In a filing to Bursa Malaysia today, Mamee-Double Decker said the profit
reduction was caused by the increase in raw material and other commodity prices, as well as higher advertising and promotional expenditure. Meanwhile, the increase in revenue was contributed by higher sales from the foreign markets with better pricing structure. 


"The board will continue to strengthen its operations, not only by implementing  continuous improvements in selling and distribution channels, but also by investing capital expenditure to increase and enhance the group's production capacity," the group said. – Bernama. From the economic segment, Mamee also has a strong balance sheet. Net cash and short-term investments totaled RM73.1 million as at end-2010. 


This and the expected cash flow from operations would allow it to comfortably fund the planned expansion and maintain a 50% profit payout. Indeed, we forecast the company will stay in a net cash position, albeit marginally so, after paying for its planned capital expenditure this year. 


They estimate single-tier dividends totaling 15 cent per share, which translate into a net yield of 4.2% based on its pre-announcement price of RM3.60. Mamee’s latest privatization proposal appears to highlight the fact that the market does, at times, fail to fairly value stocks for their underlying fundamentals. This has been one of the factors prompting controlling shareholders to take their companies private in recent years.


1.2.3 Political / Legal Segment
In political or legal segment, Mamee is facing Greening program which launch by the government and also the NGOs. This program has restricted the usage of plastic in industrial. Since plastic is the main raw material for Mamee to produce bottle for Nutrigen, Mamee has to think of other way to reduce using of plastic in the company. Other than this, Mamee also may face some environmental care policy. 


1.2.4 Socio-Cultural Segment
Malaysia is a multi cultural country which built up by multi nations.Mameehas to be focus on different nation’s customers. There are 3 main and others nations in Malaysia which is the Malays, Chinese, India, Iban and more. Mamee has to produce a suitable taste of products in order to gain more market shares. Mamee found that Malaysian are getting health concern now a days, so Mamee starts to diverse it product line by having healthier snacks which is Nutrigen, Lite Yeo yogurt and so on. This may gain more market shares on Mamee products. Mamee produce Nutrigen with various kinds of tastes to suit the Malaysian’s multi nation’s demand.


1.2.5 Technological Segment
Mamee has invested in the integrated SAP applications. MySAP, a product of the German software company SAP, is an e-business software integration tool that delivers content to the user based on their roles in the enterprise. This system enables them to analyze their costs in a way that was not possible before. They can report on all the cost components of each product from raw ingredients through to the proportion of overheads allocated. 


All could be done in less than three days. The data is convenient to them by highlighting areas where costs are rising, showing them the effect of administration costs, and allowing them to calculate the volumes that they need to sell. The SAP solutions have removed the delay in production planning, as they automatically prompt the sales teams for regular, updated figures. 


SAP has improved in forecasting accuracy and the production plans help them to identify likely manufacturing bottlenecks that could prevent them from fulfilling a customer order on time. Similarly, the quality management process has been fully transferred to the SAP applications. Should a quality issue arise, Mamee is able to track and trace every ingredient, manufacturing and delivery stage. This is an essential capability when selling internationally, since most customers require full audit data. 


1.3 Caveat

1.3.1 Global

In global, the Mamee have to face a problem with the environmental issues where the majority of the company product packaging is using a plastic. Nowadays government and majority of the country in this world are trying to reduce the usage of plastic bag in order to keep the health environment due to the plastic are very difficult to be destroy.

1.3.2 Physical

In physical, Mamee have to pay more for the cost of electricity consumption per tonnage of steel and the natural gas that currently used in the rolling mill operations. Mamee also must concerned with petrol price increases as it would affect the price of plastics, a by-product of petrol which they use a lot for bottles of beverage products and other products. Besides, they must also manage well to settle the garbage from their production to keep the environment clean and leave no environmental footprints. Other than that, Mamee have difficulties to create an awareness of their workers to encouraging their workers to protect the environment by save the usage of electric current and also water. 

2.0 Socio- Economic


2.1 Relevant Government or Environmental Factors


2.1.1 Infrastructure and Support Services


Slaughter, processing and support facilities for halal products will be expanded and upgraded. This will include the establishment of “centralized slaughter facilities” with veterinary supervision to replace the current “wet slaughter market”. There will also be infrastructure at entry points for exporting and importing halal products including storage systems.


Cold rooms, warehouses, and containers will be built and better transportation system will developed for proper distribution purposes.


Skilled manpower will be developed through accredited training schemes. Industry funded training programs will be encouraged to complement training provided by Government institutions and the academia. 




2.1.2 R&D and Food Processing Technology


Government involvement in R&D will be strengthened and consolidated to increase overall institutional capacity and efficiency to support the industry. The R&D are carried out by several institutions, especially MARDI, DVS, UKM and UPM, on new product development, food biotechnology, halal food ingredient, disease diagnostic, and prevention and control on livestock.  


According to the director of MARDI, Dr. Abu Bakar Hussin (1999), MARDI has a very strong team of food specialists and technologists contributing to the food processing technology, such as creating a new supplement for halal ingredient such as the vegetable-based gelatine to substitute the meat-based gelatine. The advancement of food biotechnology has instigated new issues to halal food production.  


For example, if the swine DNA is transplanted to the yeast cell for producing a kind of protein, is the new protein halal or non-halal. The fermentation of soy sauce, which produces very low level of alcohol in the final product, is it halal. 


These types of issues will be forwarded to the Majlis Fatwa of JAKIM to determine the halal status of the product. MARDI is trying to develop proper processing methods, new technology, new ingredients, and material that are safe, clean, healthy, and halal.  




2.1.3 Laws and Regulations


Ministry of Domestic Trade and Consumer Affairs has some authority to regulate halal food in Malaysia. Trade Description 1972 (Use of Expression “Halal” Order 1975 and the Marking of Food Order 1975) has stated clearly the condition of using the halal expression and the labelling of halal food, as well as the penalty of misuse of the halal expression and marking. 


However, as explained by Encik Mohd. Rabani of Ministry of Domestic Trade and Consumer Affairs, the use of halal and the marking of halal are voluntary, which mean that halal products do not need to be marked halal. However, if a manufacturer uses the halal expression and the halal logo and the products are found to be non-halal, they will be penalized.  




2.1.4 Capital and Financial Support


Public and private financial institutions are helping halal food manufacturers to get adequate funding in investing to be halal food producers.  According to Ms Lilywati (1999), Deputy Director, Agro Industries Division of MIDA, several banks such as Bank Negara, Bank Islam, and Agro Bank have special packages to help manufacturers get sufficient funding


In addition, suitable incentives for automation investment will be provided, and import tax on specialized livestock farm and processing equipment will be abolished.  The main incentives for the investment in manufacturing and agriculture sectors are provided for in the Promotion of Investment Act, 1986 and the Income Tax, 1967. 


MIDA is also providing incentives to food processors and manufacturers in the form of import duty exemptions for raw ingredients and tax incentives to encourage investments in infrastructure development to attract local and foreign investors.


The NAP3 comes with RM32.4 billion Plan of Action for a 13-year period (Singh, 1998).  Since promoting Malaysia as an international halal food hub is under the medium-term measure, sufficient amount of fund is expected to be allocated in this action plan.




2.1.5 Institution of Accreditation and Standards


Besides JAKIM’s official logo, the Veterinary Health Logo is another accreditation to enhance the halal product.  This DVS logo ensures the meat and meat product is safe to consume and disease free.


The food quality division of MOH is the agency in charge of the HACCP accreditation in Malaysia.  The Guidelines for HACCP Certification Scheme (1998) is ready and available to assist food manufacture to oversee the food manufacturing and practice the GMP.




2.1.6 Promotion 


MATRADE is the agency responsible for promoting Malaysian halal food under the Malaysia brand name.  Ministry of International Trade and Industry (MITI) is also playing an important role in the international arena to promote Malaysia as an international halal food hub. 


Both these agencies also conduct trade exhibitions, seminars, and conferences to promote and ‘sell’ our halal food worldwide especially to United States, European Nations, Middle East, and OIC countries where there are substantial Muslims populations. MITI also facilitates efforts in identifying new halal export markets such as Commonwealth of Independent States (CIS) and Russia.


2.2 Economic indicators relevant for this industry


(a) Producer Price Index
It is a weighted index of prices measured at the wholesale, or producer level. The producer price index show trends within the wholesale markets, manufacturing industries, food and beverages industries and commodities markets. It does not represent prices at the consumer level.


(b) Durable Goods
Durable goods reports provides data on new orders received, which are generally defined as higher priced capital goods orders with a useful life of three years or more. This data provides forward looking data such as inventory levels and new business, which count toward future earnings.


(c) Consumer Confidence Index
Consumer Confidence Index (CCI) is a monthly release from the conference board which is a non-profit business group that is highly regarded by investors and the Federal Reserve. It is a unique indicator designed to gauge the relative financial health, spending power and confidence of the average consumer.


3.0 Porters Five Forces Analysis
Mamee Double Decker (M) Bhd is mainly focus on snack and food products since 1971. Those products are Mamee monster snack, instant noodles, Mamee Double Decker Prawn Cracker and so on. Later on 1996, Mamee-Double-Decker started taken significant steps to diversify its product range and develop more functional food and “healthy” snack options for their customers. They targeting on children between ages 10-15 and also the adult. So they try to enter in the range of beverage product like Nutrigen, Nutri Yo Yoghurt, Yoghurt drink, Nutrigen IQ3 and so on. Mamee Double Decker (M) Bhd may face challenge in this new field since there are many barriers of entry in the market.


3.1 Threat of New Entry
Plastic is the main raw material using to produce products like bottles, plastic wrapping, labels and more. In the controlled of government policy, MAMEE is currently facing greening program which set up by the government and also the non government organization. The greening program has been enforced to be use in beverage manufacturing industry. 


The consumption of plastic in each industry has been limited. Plastic which use to make bottles for Nutrigen or yogurt drink couldn’t be produce in a large quantity. In order to support the market demand, MAMEE has changed the thickness of the bottle for their beverage products. This may reduce the needs of plastic use in the company in order to fulfill the requirement which setup by the government and NGO.  


Besides, any food and beverage that sell in Malaysia should be certified by HALAL. HALAL foods are foods that are allowed under Islamic dietary guidelines. Nutrigen will have to get a HALAL certificate to gain market share on Muslim consumers. Besides, there are several act and regulations like Prevention of Food Adulteration Act, ISO and SIRIM approval and more rules should be followed by food and beverage manufacturer. This is not only to show the quality of the company’s products but also to build a good reputation for the consumers.




Mamee Double Decker (M) Bhd has invested equipment on processing their new products in million. The most significant investment is Mr. Pang, managing director of Mamme company has invested a 2000HA land to plant fruit tree in Indonesia for getting fruit juice and extract to make produce beverage drink like Nutrigen, yogurt drink and so on. Mr. Pang has also invested on latest IT system to be more flexible to access information on their operations to be better understanding the market and address subtle changes in industry. 


This may be the cost for manufacture a new product in the market. Other than government policy controlled and capital requirement of the company to enter a new market, MAMEE also facing products differentiation. There are several competitors which is Vitagen and also Dutch Lady Yoghurt drink. The consumers may believe that drinking Vitagen or Dutch Lady Yoghurt drink may good for their health rather than a new brand, Nutrigen which is consider a new comer in the industry. 


To overcome this problem, MAMEE has set a lower price than their competitors. Besides, MAMEE also invest some in advertising in television with animation advertisement to target on young children consumer. MAMEE also hired some buses to go along the primary school to introduce their products to the primary school children. They let the children try their new products and also having promotion for their parents to purchase in a lower price compare to shopping complex. 


3.2 Bargaining Power of Suppliers 
In bargaining power of suppliers, MAMEE is facing problem while they are trying to look for new land for fruit tree plantation. This may consider the supplier’s good are critical to buyer’s marketplace success since fruit juice and extract is one of the main ingredients for producing beverage products. 


According to Mr. Pang, he said that it is difficult to acquire a new land in peninsular or Sabah and Sarawak. Since there are many land owner sell their land in a higher price and also most of the land were already with other company’s plantation for example Sime Darby. This has caused MAMEE having problem to produce their product since they are lack of fruit extract and also the puree. Mr. Pang turned his target in Indonesia to search for new land to invest. He finally get it in Central Kalimantan as the area was less densely populated with many large tracts of lands still available for plantations, unlike other provinces in Kalimantan and Sumatra. 


Moreover, the price also lowers than the price in Malaysia. This may be a Win Win condition for MAMEE since they got their land in lower price and could also cut down their cost of manufacture in the company. Besides, MAMEE also facing shortage of milk to produce cultured milk products in Malaysia because the supply of milk couldn’t meet the demand. MAMEE have to buy this raw material from the neighbor country, Australia. 


This may increase the cost of producing since the exchange rate is not good for Malaysian and also the freight cost is high. In addition, MAMEE also facing plastic bottles shortage from the plastic producer cause of greening program which set up by the government and the NGOs. MAMEE and the bottles producer have taken action to produce a bottle which is thinner to reduce the plastic consumption. 


MAMEE also organized 3R program which is Recycle, Reduce and Reuse in their company to minimize the use of new bottle. They use recycle plastic to produce bottles and also plastic wrapping or label in their products in order to reduce the consumption of plastic.


3.3 Bargaining Power of Buyers 
Consumers are playing the main role in bargaining power of buyers, MAMEE has lowered their beverage prices in the market to gain more market share. The prices are as Table 1.1


Brand Nutrigen Yakult Vitagen LiteYo Nestle 
  Yoghurt Yoghurt
Price RM3.19 RM4 RM3.99 RM1.59 RM1.79


      TABLE 1.1


From the table above, we can see that price offered by MAMEE is far cheaper than its competitors. Consumers are bargaining for lower price, higher quality and greater level of service. MAMEE has done one of the conditions which are the lowered price to attract more consumers. Besides, for greater level of service, MAMEE has wide range its retailer. There are many places to that sell its products. For example, we can see Nutrigen selling in 7 Eleven, mini mart, Giant, Tesco and so on. This may ease the consumers to buy what they want from MAMEE. 


In addition, they also hired part time promoter to promote their products besides their product in the shopping centre in order to explain the benefits of drinking their products and what are different compare to their competitors products. In higher quality of products, MAMEE has offered 0% Fat LiteYo Yoghurt Drink in the market to deliver a healthier yogurt drink for diet consumers and also cultured drinks for kids and also health concerned consumers. MAMEE also use gift toy to promote its Nutrigen and other beverage for kids’ consumers. 


3.4 Threat of Substitute Products
There are tons of substitute products for MAMEE beverage products in the market especially Vitagen from Marigold Company which establish since 1977. It has had built up its reputation in the market for young children and also adult who have health concern. MAMEE has fight for more cultured milk market share with Vitagen in Malaysia market by using promotion and advertising. 


Nutrigen is setting in a lower price compare to Vitagen, it may attract price savvy customer to purchase Nutrigen. Besides, MAMEE also invest lots on TV advertisement on golden hour. Animation advertisements and toys have attracted kids’ consumers. Since kids are not concern about what they purchase, they are more attracted to the toys which included in the Nutrigen pack. 


Meanwhile, there is a new competitor existing in the market few years ago which is Yakult. It was set up in Japan since 1935 and starts selling in Malaysia few years ago. In just a short time, Yakult has switch from new comer to be a main competitor because it has a strong supporting firm from Japan which is an advance nation. Besides, Yakult also invest lots in media advertising and promotion. Consumers start switching from drinking Nutrigen to Yakult. MAMEE has encountered this problem by developing its products. MAMEE labeled they have improved their formula, now they add in good live bacteria in Nutrigen. 


MAMEE also invest their advertisement on Manchester United partnership to attract more football fans to consume their products. They believe that Mamee product will be elevated by Manchester United partnership and the football fans will love Mamee product just as they love Manchester United. Sport is one of the key elements that promote unity among the people and as a responsible Malaysian company. 


3.5 Intensity of Competitive Rivalry
In the structure of competition for Nutrigen, it is very intense since there are many competitors in the market. The main competitors are Vitagen, Yakult and Nestle Yogurt Drink. Vitagen is a product under Malaysia Milk Sdn. Bhd. since 1977. It is very old brands in Malaysia which can be considering an experienced competitor for new cultured drink. It is a first cultured drink introduce to Malaysian consumers. 


Vitagen has built a strong reputation in the consumer’s mind by telling the consumers they are certified by the health ministry of in Singapore because Singapore is strict on food and beverage products. It was always the first choice for the consumer during that time because there is no appearance of substitute products. Several new cultured drinks try to enter the market but they couldn’t sustain long time enough. It is because they couldn’t differentiate their product clearly to the consumers like what Vitagen does.


Since then, MAMEE try to enter this field with the name Nutrigen in the year 1996. MAMEE has placed a lot of effort to gain market share by media advertising. For example, Nutrigen advertise them in golden hour, it is between 5pm to 8pm in the television when everyone is going for dinner.


 Nutrigen has to place more effort to differentiate them because it is competing with a experienced brands with good reputation in the market. They try to differentiate them by telling the consumers they are a better cultured drink with live cultured bacteria. Besides, they also offer more flavors to the consumer. Nutrigen offers original, grape, orange, green apple, lychee, kiwi and also strawberry. Compare to Vitagen, Vitagen only offer 4 favors to the consumers. Consumers who like the favors of Strawberry may switch to drinking Nutrigen. 


Other than this, Nutrigen also try to gain market share by promoting their products to the school children with buses travel along the primary school and let the students to taste their products free. They also offer promotion for the primary school student’s parents. Toys are offer upon purchase of Nutrigen to attract more young customers.


Later in year 2004, a strong foreign brand, Yakult cultured drink joined in the market in Malaysia. Yakult can be considering a strong competitor because this cultured drink was discovered and set up in the year 1930 by Japanese professor. Yakult has been selling throughout the world for a long time and come in Malaysia 7 years ago. 


Yakult doesn’t offer much favors like what Nutrigen does. It only offers 2 favors which is the original and the less sugar. Yakult is more focus on consumer’s health other than targeting on other segment. Yakult clearly differentiate them by telling the consumers they are brands which chosen and trusted throughout the world and they are more concentrated with live cultured bacteria. Yakult claims that in each bottle of Yakult contains 30 billions of live cultured bacteria. 


Moreover, Yakult also invite live consumers to share their experience of how they feel and what has changed in their health while drinking Yakult. Yakult challenges the consumers to drink their product continuously in 2 weeks time and say goodbye to constipation. Health concern consumers have attracted with all this information given by Yakult and start switching to drink Yakult. In addition, Yakult put more effort on gaining market share by providing delivery service to their customers house by house. With all this advertisement and services has turn Yakult from a new comer to become a strong competitor in a short time. 


In order to gain more market share, several actions has been taken by Vitagen and Nutrigen. Vitagen starts provide several of favors other than the old favors. Vitagen realize people nowadays are concern on aging, so they start provides Vitagen collagen to attract more consumers who care for the wrinkles on the face. Besides, Vitagen also copy its competitor, Yakult by providing less sugar Vitagen drink to target on those customers who having high blood sugar. Nutrigen has changed their packaging with more attractive colour and clear label. MAMEE has placed effort on R&D in Nutrigen. Nutrigen is now with more live cultured bacteria in each bottle. This may attract their customers who are switching to Yakult since Yakult claimed that each bottle of Yakult contains 30 billions of live cultured bacteria. 


In the field of yogurt drink, Nutri Yo yogurt is facing international competitors from the Nestle yogurt. Nestle is considering a strong competitors for Nutri Yo yogurt since Nestle is an international brands which set up since 1867. Nestle has a good reputation throughout the world for a long period. Consumers are more confidence to purchase Nestle products other than the new brands. 


Besides, Nestle also offer a wide range of products. Other than chilled dairy, it also offers cereals, ice cream, culinary products and more. Consumers who used to consume Nestle products may choose Nestle yogurt without other thought of trying new products. This may let Nutri Yo yogurt facing great pressure since it is competing with an experienced international competitor. 


In order to survive in this competition, Nutri Yo offer a much lower price compare to Nestle yogurt. Nutri Yo offer a price of RM1.59 each cup in the market while Nestle yogurt is offering RM1.79 each cup. This action may help Nutri Yo yogurt to grab some price savvy consumers in the market. Other than this, Nutri Yo yogurt also hires promoters to promote Nutri Yo yogurt in the shopping complex. Promoters are taught provide service to answer health questions ask by the consumers upon Nutri Yo yogurt. It may let consumers to understand clearly what Nutri Yo yogurt may help them.    






4.0 Critical Success Factors


4.1 Global expansion for food and beverage industry
Malaysia’s food and beverage industry are known as halal food. This is muslim peoples need in their daily life. Malaysia Government itself had planned to expand halal food to the global market. So, any muslim peoples especially from Malaysia can easily find the halal food at the non-muslim countries such as America, Australia and many more. According to the New Zealand Trade & Enterprise blog, when Malaysia wants to expand their food and beverage industry globally, it can provide the opportunity to the New Zealand’s exporters to cooperate with Malaysia and participate in this plan too. To expand this industry globally, the industry itself must make sure they produce a good quality food so that our industry’s product can get nice market place.


4.2 Food quality
Food quality is the quality characteristics of food that is acceptable to consumers. This includes external factors as appearance (size, shape, color, gloss, and consistency), texture, and flavor; factors such as federal grade standards and internal (chemical, physical, microbial). Food quality is an important food manufacturing requirement, because food consumers are susceptible to any form of contamination that may occur during the manufacturing process. Many consumers also rely on manufacturing and processing standards, particularly to know what ingredients are present, due to dietary, nutritional requirements or medical conditions. Food quality also deals with product traceability, e.g. of ingredient and packaging suppliers, should a recall of the product be required. It also deals with labeling issues to ensure there is correct ingredient and nutritional information. In Malaysia, food processing is an important sector within the healthcare industry.  The Food Safety and Quality Division, Ministry of Health was established to ensure that food processing activities are managed according to the required hygiene and safety standards




5.0 Current Situation
5.1 Firm history and financial performance


5.1.1 History
Mamee Double-Decker was incorporated in 1971 with production commencing on the following year. Mamee is currently listed on the Bursa Malaysia. They began with a single product but have consistently grown to the current range of around 50 products and the number keeps on growing. Many of their products are already household names, including Mamee Monster, Mamee Instant Noodles, Mister Potato Chips, Nutrigen, Yogurt and also IQ3.


5.1.2 Financial Performance
Mamee-Double Decker will continue to grow core businesses and focus on talent management. Today, Mamee-Double Decker works as a strong team and all the employees are given clear direction to execute business plans and strategies. Mamee-Double Decker expect every business unit to under promise but to over deliver. 


Comprehensive human resource plans are developed to nurture and attract talented people who are passionate about their work. Mamee-Double Decker hire and build employees to link with the internal culture winning value I.e. the four I’s – Integrity, Intensity, Innovation and Involvement. Continuous employment and retention program shall bring fresh set of ideas in pursuit of nurturing innovation at work. 


Over the next three to five years, Mamee-Double Decker believe that it will be well positioned to increase market share and continue delivering double-digit growth both in turnover and return on equity.


Mamee-Double Decker are committed to deliver attractive and sustainable value to shareholders, and confident that this financial performance, coupled with attractive dividend payout, will result in consistent, double-digit returns to shareholders. Mamee-Double Decker are invested some of earnings in financial year 2006 to fund the research and development, products innovation and consumer-directed marketing. Indeed, overall advertising expenditure of the Group in financial year 2006 had increased significantly, including a surge during second-half media support for Mamee Sllrrrp and Mister Potato brand. 


In financial year 2006, Mamee-Double Decker had invested RM18 million in capital projects to support future business growth and productivity initiatives and believe these investments strategy will help to sustain momentum in the financial year 2007 and will underpin consistent good growth and returns in the years ahead.




5.2 Strategic Posture


5.2.1 Vision and Mission
The Mamee Company has set up their vision and mission in order to achieve their goal. The vision is Mamee-Double Decker is to be recognized as the provider of nutritious and tasty food products that everyone loves, everyday, the world over while their mission of this company is Mamee-Double Decker is committed to build long-term growth in volume and profit and to enhance its leadership position.


5.2.2 Current Porter’s Generic Strategy
Mamee –Double Decker strategy is to be the number one or two brand in every market segment in which their operate by providing nutritious food products of superior value and taste and offer a trendy, innovation, yet sensational eating experience with emphasis on very high quality products. Mamee- Double Decker will accomplish this through their strong management and employee commitment in order to satisfy their ever-changing consumer needs and expectations






Porter’s Five Generic Strategy


1. Cost Leadership Strategies (Type 1 and Type 2)


Mamee-Double Decker have striving to be the low-cost producer in an industry can be especially effective when there are few ways to achieve product differentiation, when buyers do not care much about differences from brand to brand, or when there are a large number of buyers with significant bargaining power.


Mamee-Double Decker produces the lowest cost goods tend to be cost leader and get the most profit. It is undeniable that consumers tend to be attracted by low prices.


In this case, Mamee-Double Decker are able to produce goods which are at least meet the general market standard or that of competitor, consumers tend to choose the cheapest ones.


However, it does not mean that Mamee-Double Decker implements cost leadership strategy will have the low price product all the time. It just reduces the as much cost as possible in producing the products.


Example: Mamee instant noodle are lower price than Maggi instant noodle.




2. Differentiation Strategies (Type 3)


Differentiation strategy idea is contrast to cost leadership. While cost leadership aims to set the lowest prices as possible for the product while differentiation aims to offer consumers goods which are unique in term of quality and characteristics more than lowest price.


The company will be able to charge premium prices for premium products which satisfy the specific need of the consumer. The price must exceed the total cost of the product.


Mamee-Double Decker is doing many ways to differentiate their products to compete with the rival and the strategy should be not easily imitated by the rival. The purpose of differentiate are to attract the consumer attention or to attract buyers.


Mamee-Double Decker diverse the buyer needs, uses and do more differentiating features into a unique product that features the desired attributes.


A successful differentiation strategy allows a firm to charge a higher price for its product and to gain customer loyalty because consumers may become strongly attached to the differentiation features.


Example : Mister Potato come out with many flavour such as barbeque, tomato, hot & spicy, original, union, vegetables, grill, and crispy.




3. Focus Strategies (Type 4 and Type 5)


A successful focus strategy depends on an industry segment that is of sufficient size, has good growth potential, and is not crucial to the success of the success of other major competitors. Focus strategies are most effective when consumers have distinctive preferences or requirements and when rival firms are not attempting to specialize in the same target segment.


The focus strategy of Mamee-Double Decker are concentrates on a narrow segment in order to completely understand and satisfy its market well and within that segment attempts to achieve either the cost advantage of differentiation. Mamee-Double Decker believed that if each group of consumers is focused and understood, so it will be able to better produce products and services which answer their needs. Mamee-Double Decker are focuses on the consumers or buyers’ needs, wants and preferences in order to give them the best in term of prices and quality.


Example: Mamee Monster are the first product of Mamee-Double Decker on 1991 and still have the high demand until today.




6.0 External Environment (Opportunities and Threats)


6.1 Socio-Cultural 
Malaysia is a multi cultural country which built up by multi nations. Mamee has to be focus on different nation’s customers. There are 3 main and others nations in Malaysia which is the Malays, Chinese, India, Iban and more. Mamee has to produce a suitable taste of products in order to gain more market shares. Mamee found that Malaysian are getting health concern now a days, so Mamee starts to diverse it product line by having healthier snacks which is Nutrigen, Lite Yeo yogurt and so on. This may gain more market shares on Mamee products. Mamee produce Nutrigen with various kinds of tastes to suit the Malaysian’s multi nation’s demand.


6.2 Task Environment
Corporate Social Responsible is the greatest value of a company is its image and brand. By attempting to fulfill the needs and wants of many different people ranging from the local population and customers to their own employees and owners, companies can prevent damage to their image and brand, prevent losing large amounts of sales and disgruntled customers, and prevent costly legal expenses. While the stakeholder view has an increased cost, many firms have decided that the concept improves their image, increases sales, reduces the risks of liability for corporate negligence, and makes them less likely to be targeted by pressure groups, campaigning groups and NGO.






7.0 Internal Environments (Strengths and Weaknesses)


SWOT ANALYSIS


(a) Product Market Stakeholders
In general, product market shareholder is satisfying the needs of customers, suppliers, host communities, and unions in the product market. This means that the needs should receive the company's full attention to define their expectations and meet their measures of success. In this SWOT analysis product market shareholder, we focus on a specific product which is Nutrigen. Nutrigen is a cultured milk brand introduced by Mamee-Double Decker Bhd in 1996, targeted at children between 10 to 15 year old and adults who are health conscious in the vision to create more cultured milk consumption rate in Malaysia.


Strengths
Mamee Double Decker has achieved many awards and certificates previously such as Halal and SIRIM certification, ISO 9002 and China Award certificates. In 2003, this company was awarded the chief Minister Award for “Promising Local Company Award” in recognition of MDD’s contribution to local industries. In addition, the main biggest award that Mamee-Double Decker Bhd is Malaysia Most Valuable Brand in 2007. Based on the product namely NutrigenLiteyo, it was awarded the Malaysian Star Award 2003 by Federation of Malaysian Manufacturer Packaging Council of Malaysia.So, this achievement was building the good reputation and create brand image for Mamee-Double Decker Bhd.In 2006, Mamee-Double Decker Bhd introduced Nutrigen IQ3, a cultured milk product and it claimed to be the first synbiotic cultured milk in Malaysia market. Because of this development, Nutrigen became more recognize by the consumer and this product became the main choice of the user.


Health seemed to be the main focus within cultured milk industry due to the consumer’s awareness towards healthy product. The shape of the industry for cultured milk in Malaysia is expected to grow as cultured milk considered as a healthy drink, not only for children but adults as well. In term of the preferences of the customer health lifestyle, Nutrigen was achieved high value of customer satisfaction because of the product they produce was completely obtain all the customer’s needs, such as Nutrigen rich of the nutrition and feature diversity of flavour. Besides, in term of pricing strategy, Mamee-Double Decker Bhd set up their price in a lower price to attract customer loyalty. 


One of Mamee-Double Decker’s strength lies in its extensive distribution network, whereby the Group’s fleet of 150 vans make deliveries from 13 distribution centres to about 1,000 points of sales. Its local manufacturing facilities are held under 3 companies according to their respective lines, for example snack food and chilled products, instant noodles, and beverages. The Group has a centralized marketing and distribution system, with domestic sales handled by Mamee-Double Decker Berhad Distribution SdnBhd and Milk Specialities Distribution Sdn Bhd. Besides, this company a well-established distribution network comprising modern trade (hypermarkets, supermarkets, convenience chain store) as well as lower trade (mom-and-pop shops and single retail outlets).


Mamee-Double Decker Bhd’s emphasis on Resarch & Development (R&D) has always been of strategic significance in establishing its position a market leader in the food industry. More than RM2 million is invested in R&D annually. The ultimate objective is to improve the excellent quality of their current range of products and to innovate new products that meet with changing consumers’ taste in order to stay ahead of their competitors. R&D activities are mainly focus on using natural ingredients in developing new products, which offer specific functional benefits. R&D team has always been committed and dedicated to ensure steady stream of new developments. In the chilled division, the team developed functional cultured milk with new formulation enriched with DHA (major substance in Omega3), was proved in their Nutrigen cultured milk. This company firstly introduced, NutrigenLiteYo yoghurt and yoghurt drink in 2003, and after 3 years, they released a new product named Nutrigen IQ3. This product containing DHA and Inulin which can stimulate mental development, vision and improve the digestive system. In 2009, Nutrigen was newly improved cultured milk, NutrigenPlus Choline. NutrigenPlus Choline is a local brand of cultured milk with improved formula that contains Choline to enhanced healthy lifestyle.


Weaknesses 
Although the cultured milk industry is in the growing stage, but the NutrigenPlus Choline is currently experiencing a sales decline in the cultured milk market compared to the previous year which results in lower market share compared to other competitors. The company realise that external market forces, largely increase of competitor factors and the change of consumer behaviour that may be affecting this issue. The three major brands that are competing under the same industry are Vitagen (43%), Yakult (24.8%) and Solivite (10.9%). So, due to the high market share in the industry, Mamee-Double DeckerBhd was faced a sales decline in a short term period.


In term of their marketing, promotion that they were implements of cultured milk is not really successful because of the lack of consumer awareness created todays. In 2008, Mamee-Double Decker Bhd invested about RM40million in advertising and promotion, and this is a main impact on the marketing, because over 73.5% of the customers in Malaysia are not really concern about to their healthy lifestyle.


Opportunities
Nutrigen has long been in Malaysia and received encouraging response from customers. Nutrigen Mamee Double Decker was exported to foreign countries such as Asia countries, such as Hong Kong and Brunei. They actually bold enough to penetrated export market to increase their sales in long term to achieve their goals and objectives.


Industry trend upward Nutrigen is based on market trend nowadays because of the customer preferences to enhanced healthy lifestyle. Market trend is a putative tendency of a financial market to move in a particular direction over time. Traders identify market trends using technical analysis, a framework which characterizes market trends as a predictable price tendencies within the market when price reaches support and resistance levels, varying over time. So, this is a good opportunities for Mamee-Double Decker Bhd to develop their company in future.


Threats
Mamee Double-Decker facing the rival branding such as Vitagen, Solivite and Yakult that occupy significant shares of the culture milk in Malaysia. These companies have the advantage of familiarity with dietary and cultural preferences along with sophisticated, locally tailored marketing and packaging. For example, Vitagen’s strength supported by an efficient distribution and sales network covering key market centres located throughout the country. Special refrigerated delivery trucks and vans travel the length and breadth of Malaysia to ensure products reach retail outlets as fresh as the day they leave the Malaysia Milk plant. This is in keeping with commitment to quality. In additions, Vitagen success in Malaysia and include Brunei and Singapore. Besides, Yakult is a high quality probiotics in the form of a cultured milk drink. Yakult contains the probiotic bacteria "Lactobacillus caseiShirota" (popularly known as the "Shirota strain"). Born from the research of a doctor in 1935, we have over 75 years of research experience. Yakult has spread around the world, and is loved by 28 million people from 32 countries and regions.


Sometimes, the situation around causes disruption to the environment and the potential to affect operation during the manufacturing Nutrigen process. For example, the factory experienced black out that may affect the manufacturing Nutrigen until the last process. This can cause the quantity of production to decrease and will delay the distribution to distributors. Besides that, damage to the machines also had an impact. Such incidents cannot be expected and should always be prepared for the possibility.


Mamee Double Decker must follow all policies set by the government before making any decision on the nation. These policies should be followed to avoid some negative effects that have been noted in the organization. Due to the strict policy, it can cause the product export of Nutrigen will be slow until get approval from the government.


(b) Capital Market Stakeholders


Strengths
The determinants of Mamee-Double Decker Bhd’scorporate performance - strategic, managerial, and organizational, are complex and interrelated, and in the last decade other determinants may have cancelled the positive effect of board activism. Additionally, from outside the corporation looking in, it is difficult to determine whether active boards have actually been making decisions that could improve managerial performance. An active and independent board of directors working for shareholders clearly would seem to benefit the corporation by reducing the losses from misdirected "agency" inherent in the separation of ownership from control that is fundamental to the modern corporation. 


Weaknesses
The rise in euro against US Dollar also has a slight impact on Mamee-Double Decker’s earnings given some of its ingredient for products such as Mister Potato crisps are imported from Europe. The increase in vegetable oil, starch and flour has added pressure on profit margins to the company. Foreign currency may give a big impact toward Mamee-Double Decker sales and profits.
(c) Organizational Stakeholders


Strengths
Good in the company’s management team can affect the success of a business. Leader plays an important role to determine the direction of the company. Leaders need to know how to manage the company. Effective leadership is based upon ideas, but will not happen unless that idea can be communicated to others in a way that engages. Put even more simply, the leader is the inspiration and director of the action. He is the person on the group that possesses the combination of personality and leadership skills that makes others want to follow his direction.


Opportunities
Corporate Social Responsible is the greatest value of a company is its image and brand. By attempting to fulfil the needs and wants of many different people ranging from the local population and customers to their own employees and owners, companies can prevent damage to their image and brand, prevent losing large amounts of sales and disgruntled customers, and prevent costly legal expenses. While the stakeholder view has an increased cost, many firms have decided that the concept improves their image, increases sales, reduces the risks of liability for corporate negligence, and makes them less likely to be targeted by pressure groups, campaigning groups and NGO.
Summary Of Situation Analysis
In summary, Mamee is analyzed as a company which heavily depended on its product market stakeholders. Although organizational and capital market also plays an important role in shaping Mamee’s achievements and strategies, their core competencies which allows them to strive in the industry for 50 years has been the product-oriented marketing.






8.0 Firm Critical Success Factors


8.1 Adaptation to Locality
Mamee-Double Decker are using marketing network to ensure their products adaptation to the locality. Marketing will do customer analysis, planning on how to selling their products/services, pricing, distribution, research and opportunities analysis. Furthermore, marketing will help Mamee-Double Decker to anticipating customer’s needs, wants and preferences that fulfilling the desired. So, by having this, Mamee-Double Decker has no problem on acceptance or adaptation of their products to the locality.


8.2 Place
Apart from being the largest snack player in Malaysia, Mamee  also actively exports its products to more than 80 countries, of which the top five in 2010 were Australia, Singapore, Russia, Hong Kong and Netherlands. Mamee’s manufacturing facilities are located in five locations in Malaysia, and  one in Myanmar, all of which have ISO:9000s, HACCP and „Halal‟ certifications. Mamee intends to focus on strengthening its distribution network in neighbouring countries such as Thailand and Indonesia. It is also planning increase advertising and promotional activities to support sales in these countries.






9.0 Strategic Problem


Snacks and candies producer  Mamee Double Decker (M) Berhad found that paper-based  production planning and quality management processes were error-prone, wasteful and relatively slow. To maximize efficiency and manufacturing throughput, the company wanted to introduce the latest edition of SAP ERP and implement new components – but the existing infrastructure was not capable of supporting the expanded workload. The company needed 
a trusted advisor to help them integrate their systems more fully


Mamee engaged with IBM Global Business Services to roll out new SAP functionality, most importantly SAP ERP production planning, to link up the manufacturing plants and their beverages arm. In phase two, IBM also helped the company implement costing and quality management components, roll out SAP ERP to the beverages plant in Kuantan, and implement SAP NetWeaver Business Warehouse. 






10.0 Strategic Analysis and Alternative


Based on the organization’s internal, external and current environmental conditions of Mamee, we proposed three (3) options on which their organization can consider to opt for their future strategies. The strategies are product line extension, joint venture and acquisition.
10.1 Product line extension
Basically one of the strategic options that is appropriate for Mamee to implement in order for a better growth is to extend its product line. Basically , a product line is a group of products that are closely related because they function in a similar manner and are sold to the same customer groups , are marketed through the same types of outlet and also fall within a given price range . For example Mamee Double Decker offers various kinds of snacks ranging from Mr Potato , Mamee Monster and etc.  


Basically , the managers of Mamee should analyze their product lines periodically in order to assess each items sales and profits in order to understand how each item would contribute to the line’s overall performance. Company should also take in consideration in terms of its objectives and resources available . Mamee can expand its product line by “line filling” or  “line stretching” . Line filling involves adding more items within the present range of line . Basically , the reasons for this move is in order to reach for extra profits and satisfying dealers and also encourage the company to use it’s excess capacity.  An example of line filling is that Mamee has increase in product variety of Mr potato ranging from Mr potato Casava chips , Mr potato Mexican Wave and also Mr Potato Rice Crisps. Basically those items falls within the same price range but it is noticeably different .


Product Line Stretching occurs when the company lengthens its product line beyond it’s current range . Company can stretch line downwards , upwards or both ways . It can stretch downwards in order to form a market hole or otherwise attracting new competitors . Low end products can be added in order to find for a faster growth in the low segments. During the past , Mamee had been producing various snacks and beverages but right now they are releasing products that are healthier approach such as “Nutrigen” , “ Fruit Nation “ and also Mr Potato Rice Crisps that is 20 % lower in fats and also cholesterol free.


As a whole , in order to sustain growth and increase it’s market share value . Mamee can extend it’s product line by releasing with more range of healthy beverages and snacks that are low in trans fats and cholesterol free as globalization during this era has lead to many consumers being more health conscious .  No doubt , organic products are being very common nowadays among consumers . As to fit in this general environment , Mamee could utilized this opportunity by producing Potato Chips that are made of organic potatoes . Mamee should consider producing beverages and juices that are made of organic fruits and etc . 


Basically for every action , there’ definitely  a cost to consider . In order to implement a strategy such as to extend a product line , Cost , Time , and Capacity should be put into consideration. In our opinion , it is a must for  Mamee Double Decker  to cough up certain amount of cost for the purchase of new technology/equipment and also RND.  Newer equipments and better research and development would anticipate the company in producing better extended products and thus leading to high customer value and satisfaction . Once customer’s value and satisfaction are met , excess purchase and demand would lead to a higher revenue that would lead the company to a break-even cost in the investments on RND , new equipment , marketing  campaigns, advertising and etc. In the long run of the product growth , profit gains would lead to a better company growth. 


Basically the time frame in implementing this strategy would not be that long as company would just have to acquire better equipments and technology and also newer supplies for the extended products . In the short term company would have to also develop a good marketing and advertising campaign in order to reach for the customers regarding the new product released. More or less , the company would have to undergo and open tender in order to attain the best supplies of raw material and new equipment/technology at it’s best price.




Cost - Purchase of Equipment , Research and Development , New supplies , Advertising of new products , Marketing and Promotions.


Cost are assumed to be slightly costly but somehow , Returns on investments(ROI) are able to breakeven the costs if the product could gain high customers satisfaction.
Time Frame -Takes a short time to implement as company would just have to search for newer equipments and supplies , the RND department would work in order to make a slight modification in the products . Marketing efforts would be run in the short term in order to reach for customers and also for promotional reasons.


Besides , there’s an exception .  It would take slightly longer period of time for the company to create a new product line instead of stretching it . For e.g it would take a shorter time for Mamee to release a new range of snacks that falls in the same product line but a longer time would be taken if Mamee were to try to develop a new Healthy Cereal Product which they are not familiar with yet.
Capacity -Mamee exports to more than 80 countries, making them widely accessible to target markets. Mamee is optimist that they will 5 folds in the 5 year plan through the implementation of various growth strategies which was with full support of the Group's staffs, including enhancing their distribution channel locally and
overseas, developing and launching new products, as well as undertaking
marketing efforts to build their brands


Hence, this would enable new product line to be distributed and exported easily . Presence of accessible market allows product to meet it’s customers easily.


10.2 Joint Venture
Joint venture is the cooperation of two or more individuals or businesses in which each agrees to share profit, loss and control in a specific enterprise. Besides of that, it is to share some of their resources and capabilities to develop a competitive advantage. It can also involve any type of business transaction and the “person” involves can be individuals, groups of individual, companies, or corporations. 
Mamee-Double Decker Bhd should joint venture with organization which is doing the healthy product. This is because different organization has different knowledge about the healthy, it can improve and innovation the product and attract more different background of customers.


The advantages of joint venture are to provide the companies with the opportunities to gain new capacity and expertise. Joint venture is also allowing the company to enter related business or geographic markets or gain new technological knowledge. Besides of that, it is sharing of risks with a venture partner and access to greater resources, including specialised staff and technology. Moreover, joint ventures can be also flexible. For example, joint venture can have a limited life span and only cover part of what you do, thus limiting both your commitment and the business’ exposure.


This is why Mamee-Double Decker Bhd should joint venture with any other relating organization. This is also the reason and it can improve the weaknesses such as lack of promotion, sales decline due to high market share and customer awareness. In addition, joint venture also can have few opportunities to make the industry trend upward, penetrate new market and established local taste and distribution channel. Furthermore, joint venture is kind of sharing of risk and cost with a partner. 


Cost Share the same cost with the partner
Timeframe Limited to a specific time frame.
Capacity Help to further optimize the manufacturing network, and increase production capacity and satisfy rapidly growing demand. 


10.3 Acquisition
Acquisition is a firm’s strategy of buying another firm’s shares in order to have a total control of the buyout firm or with the intent of making the acquired firm a subsidiary business within its portfolio. There are many reasons for acquisitions which bring along advantages and disadvantages towards it. Some advantages of acquisition includes the increase in the acquirer market power, ability to overcome entry barriers for new upcoming firms, reduced cost of new product development and also increased speed of earning profitable return. However, acquisition alone is not the ultimate strategy that every firm should pursue. Research shows that some 60 percent of acquisition strategy produces disappointing results and some which end up with failures. The reason behind it is partly because of integration difficulties which includes resource sharing, different working culture and ineffective vertical and horizontal chain management. Apart from that, the large debt that a target firm withheld can serve the acquiring firm with big liabilities and also possible bankruptcy. Acquiring firms may also face difficulties in achieving synergy within working units. If there is no synergy within a firm, it is likely the employees overturn is high.


On 6th June 2008, Mamee Double-Decker (Mamee) announced that it had acquired 100 percent of equity interest of Charmille Private Limited for $3.3 million by Rosedale Investment Private Limited. Rosedale Investment Private Limited is a wholly owned subsidiary of Mamee.


From this acquisition, Mamee obtained 10000 hectares of land. The land will allow Mamee to invest in assets such as factories, plantations, R&D facilities and also leasing revenues. Besides that, the acquisition of land from Charmille allows them to save thousands of dollars in terms of property taxes, agreement fees and such.


Apart from that, the board of directors (BOD) were also pleased to announce earnings, net assets, gearing, share capital and substantial shareholders' shareholding of the Company has increased by 60 percent. This simply means that their capital and marketing power is now greater. All supply chain under Charmille now will have new sets of agreement which put them under Mamee’s supply chain management. In simpler words, former Charmille supply chain is now working for Mamee.


Charmille Pte Ltd. is a subsidiary firm of Golden Seed Holding Company – also a snack and beverage company like Mamee. With the acquisition of the subsidiary firm of a competitor, Mamee has proven its dominance within its industry by acquiring its rivals before they became a threat to Mamee. Hence for Mamee, this acquisition also serves as a purpose to establish its brand positioning in the customers perspective. Thus, whenever Malaysians ought to think of snacks, they will think of Mamee.


In order to understand if Mamee’s acquisition strategy will serve them better for the long run, it is important to measure 3 factors which is the cost, the timeframe and the capacity of its operation.


Cost • Mamee just made a 50% Mamee dividend payout ratio policy. Mamee had financial assets more than RM100 million in 2011
• Share price went up. A stock now (as of June 2010) cost RM 4.39
• To fund the capital expenditure, the group may need to incur higher bank borrowings and this may result in higher borrowing costs which will then affect the dividend payment capability of Mamee in the immediate term
Timeframe • 5 years plan starting from 2010
• The privatisation plan may take about 6 months time
Capacity • Mamee is undergoing a capital reduction and repayment exercise under Section 64 of the Companies Act, 1965
• Mamee BOD members were concerned about the trend of increasing raw material prices as well as the foreign exchange volatility amidst the uncertain economic environment.
• Mamee exports to more than 80 countries, making them widely accessible to target markets. Mamee is optimist that they will 5 folds in the 5 year plan through the implementation of various growth strategies which was with full support of the Group's staffs, including enhancing their distribution channel locally and
overseas, developing and launching new products, as well as undertaking
marketing efforts to build their brands






11.0 Recommendation


If we looked at Mamee’s history, they did all strategies mentioned above, and have been successful in maintaining the happiness of their stakeholders of BOD members, suppliers and also their customers. However, the one strategy that Mamee has yet to implement is joint venturing with another company. The many benefits of joint venture have been highlighted above. From any joint venturing, Mamee would definitely be able or in fact is a must for them to extend their product line. 


A company which is likely to have a strategic partnership with Mamee can be any company at all since a joint venture always opens new market opportunities. And on top of it, Mamee has its own investment company which is the Pacific United Group Venture Limited. Pacific United has been sealing deals for Mamee including the recent acquisition of Charmille. If Mamee were to consider a joint-venture with another company, they could do so thru Pacific Group, and the best company for the joint venturing is non-other than Yakult Japan.


The recommendation of joint venture with Yakult Honsha Limited has been our highest recommendation after much deliberation on the path that Mamee has started to undertake following their product line extension of healthy drinks, including Nutrigen Liteyo and IQ3. With more than 75 years of research which initially was meant to treat contagious disease from World War II, the production and sales of Yakult has reach nationwide of 32 countries.


Yakult strengths include a number of core competencies on which Mamee can utilize or set to exploit if the joint venturing plan is executed. First of all, Yakult is already an established name which pioneered the probiotic health drink. A probiotic health drink is a cultured drink filled with over 30 billion “Shirota strain” that helps to improve intestinal environment. With such expertise and knowledge, Mamee will save much cost on doing research and developments on its healthy products. Mamee can capitalize and further enhance the market for its Nutrigen and IQ3 product. They could also come up with a new product line if they wish so.


Besides that, all members of Yakult group has their own working culture named Shirota-ism, which strive for the ideas of preventive medicine, longer life and committed to provide products at affordable prices. For all this, Yakult has been working with the leading scientists in Japan and Europe for more than 30 years. Mamee on the other hand could use this opportunity to expand its networking in terms of drugs and health field or even marketing field in Europe.
Yakult has penetrated the market of more than 32 countries of which most of them are European nations. Whilst Mamee has been championing the South East Asian and Australian region market in food industry, Mamee has yet to set a firm ground in Europe. This is because the barrier of entry and stiff competition from the existing competitors in Europe itself. However, if Mamee and Yakult have a joint venture, both of them will be able to reach even broader customer segment and each company will have opportunity to promote their brand and products to each other customers.


The joint venture of Yakult and Mamee also serve to benefit Yakult too. Yakult has been facing difficulties in acquiring land assets to set up factories, laboratories, and plantation for themselves. However, Mamee, with the acquisition of certain companies in Indonesia especially in Kalimantan through a couple of basic agreement (BA), have been able to acquire thousands of hectares of land thru investments of RM20 million. The land are meant for palm oil plantation, however Yakult should be able to use some of the land as their own under leasing terms.




12.0 Bibliography


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