INTERNAL AUDIT

1) Vast network of downstream activities

Hup Seng successfully established a vast network of distribution channel to place their
products in the shelf of variety retailers

2) Focus on effective operation and cost saving initiative

Hup seng has achieved an 2.9% margin increment in their gross profit, all is due to
cumulative effect of lower material input cost and optimal utilization of existing new
operation facilities

3) Has its own factory for manufacturing purposes

With a 68,000square feet factory, Hup Seng is committed to manufacture quality

products that receives market demand. The factory is located in Tongkang pechah, Batu
pahat

4) Superior quality management

Hup Seng has a stringent control over its manufacturing quality, whereby this effort
earned the prestigious MS ISO 9002 Quality System Certification and MS ISO 9001:2000
from SIRIM.

STRENGT

5) Strong financial position

Based on the financial statements of year 2010, 2011, and 2012 , it shows that
Hup Seng is performing extremely well in comparison with its close competitors
and also between industry average.

6) Brand recognition

Hup Seng is a well established brand, which was founded in 1958. It has been a
household name synonymous with quality biscuit manufacturing

7) Carry variety of products

Products are segregated by cream crackers, crackers, marie biscuits, sandwich
cookies, assorted biscuits and coffee mixture. Under each categories, they have
atleast 5 different flavors.

8) Cross-Border operation

Hup Seng involved in cross-border operation, and is currently operating in more

than 40 countries in Asia, Europe, America, Africa, and Mid-Asia through-operated
stores and other associated companies

STRENGT

1) Human Talent Recruitment

Hup Seng pays less attention to recruit fresh graduate or initiate management
trainee program to foster more talent to be placed in the management team.

2) Relatively higher selling price

The cream cracker pack from Hup Seng is selling at RM4.00 to RM 4.20), while the
newly entry biscuit named golden cracker is selling at around RM 3.60 to RM 3.80.

3) Lack of healthy range products

Consumer health awareness is catching up the trend lately, and demand for more
healthy and organic food for consumption. However, Hup Seng fail to supply the
demand

4) Little incentive for marketing purposes

Hup Seng invested very little for their promotion and advertising which resulted in
poor product awareness in the market

WEAKNE

5) Unattractive packaging
Hup Sengs signature cream crackers packaging has been the same for the last
10 years or more. It looks outdated, and not attractive.

6) Product variation, almost similar to one another

Hup Seng offers a wide variety of crackers and cookies. However, there are some
of their products are almost the same to one another and it is rather redundant.
Eg; Assorted biscuits

7) No research and development team

As a leading organization in the F&B industry, Hup Seng should invest in a

research and development team to do thorough research on market analysis,
product development, and business expansions.

8) Outdated website

The website at http://www.hupseng.com/ interface is unorganized, and looks

more like an amateurs website. It has no information about the companys
mission and vision, board of directors, and the links to their annual report is
broken and inaccessible.

WEAKNE

IFE MATRIX

EXTERNAL AUDIT

1) Shareholders/ public confident on Hup Seng Performance

With a number of 120,000,000 outstanding shares, Hup Seng paid a total of
RM 30 million dividends in 2011 and rise to RM 36 million in 2012

2) Opportunity to raise more capital

The significant growth in profit and EPS, will attract more investor willing to
buy Hup Seng shares at a higher price, and Hup Seng could take this
opportunity to dilute the shares/issues more equity to the public to raise more
capital for expansionary

3) Declining of Ringgit Malaysia

There is a big export opportunities for Malaysian manufacturers. As countries

with stronger currency would find products from Malaysia cheaper.

4) Growing market in neighbouring countries

Economy in countries like Thailand, Singapore and Indonesia are very much
blooming. Therefore, it is the best time to expand businesses in these
countries

OPPORTUNITY

5) Concern for healthy food

Demand for healthy food products are relatively high. People are more aware of
the effects of snacking on unhealthy food, and are looking for healthier
alternatives.

6) Increasing number of new supermarket/ hypermarket

Since Hup Seng method of selling is through retail stores, the emerging of new
super market and hypermarket is an opportunity.

7) Technological advancement
In this era, technology is almost limitless. This also means, Hup seng is capable to
produce more products to cater mass market. It also can help in value chain
management, which could centralized the value chain with computerization that
will help to more efficient management.

8) Evolvement into new unique products

. People demand for new products that are Instagram material. Hup Seng could
maybe come up with unique looking cookie ice cream, etc.

OPPORTUNITY

1) Sugar subsidization revoked

As stated in the Malaysia 2014 budget, the long subsidize sugar commodity
will be revoked. Therefore, all goods related to sugar are expected to have a
significant raise in price

2) Imposing of Good Sold Tax (GST)

Starting from 1st of April 2016, the new tax system called GST has been
imposed to substitute the old tax system. In the new tax system, tax is
charged for every pipeline of production for a product or services.

3) Increasing number of competitor

When more competitors come into the market, the market shares is diluted
and less profit earned

4) Increase in labor wages

Through the Budget 2016, it was announced that the minimum age in
Malaysia has been increased to RM900 RM1000 a month. This policy is
under the National Wages Consultative Council Act 2011 (Act 732).

THREAT

5) Stiff competition of the food products especially from neighbouring

countries

These countries are now exporting their food goods to Malaysia. This could be a threat
as their prices are comparatively lower, as their operating costs are lower.

6) Food act & regulations changes

Regulations are constantly changing, to adapt with the current situation, and
according to demographic.

7) Slow growth in world economy

According to the United Nation latest issues of the World Economic Situation and
prospect 2015, growth of the world economy has weakened considerably during 2015
and is expected to remain to remain subdued in the coming two years.

8) Domestic Market is deteriorating

The domestic market growth rate in 2014 and 2015 is merely 5.1% and 5.6%, which is
merely on the par of 5%. This is a sign that the domestic market might be
underperformed in the coming years.

THREAT

EFE MATRIX

COMPETITIVE PROFILE MATRIX