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forces, economic force affect every industry in Malaysia. That why is it also affect
the growth of food and beverage industry in Malaysia and ASEAN region in future.
Economic forces are the factors that help to determine the competitiveness of the
environment in which the firm operates. F&N will find that Malaysia and ASEAN are
very competitive and the food and beverage industry have a very big opportunity to
develop. Some of the factors that include in the economic forces is interest rate, tax
rate, and value of ringgit in world market. The second external force is
demographic. Malaysia has almost 30 million peoples and for ASEAN, the population
is 633 million peoples. This is very large population for F&N to develop their
business and if they manage to develop, they will definitely affect the growth of
food and beverage industry. Last but not least is Political, government and legal. Not
only that, the changes made from government will create the opportunities and
threats. Same goes to F&N, they will be affected by this force and this force need to
be consider carefully to make sure better growth. Besides that, for the industries its
depend heavily on government subsidies and contracts. The change in law and tax
will affect firm significantly and for food and beverage industry. Question 2
Identify and explain any three (3) strategies adopted by F&N to realize its vision to
become the regional food and beverage player. First strategy that adopted by F&N
is make an investment to purchase Nestle (M) Bhds canned milk business in
Thailand which give them quick access to the Thai market and able to become the
most powerful canned milk producer in South East Asia. Second strategy that
adopted by F&N to realize its vision to become the regional food and beverage
player is to gain entry into the largely untapped markets of Indochina with a total
consumer base of about 224 million. By entering this market, F&N will get easier
access to neighbour country or ASEAN countries as they already enter one of them.
They also can do some research about the ASEAN peoples attitude and behaviour
regarding their industry and then plan the most suitable strategy to be use. Third
strategy that adopted by F&N is lunched a new corporate brand to unify the soft
drinks and dairy brands that enable consumers anywhere in the region to
distinguish the groups many brands as part of F&N groups range products. they
also more focus on their sale volume by increasing the sales volume of milk cans to
generate higher profit rather than gain profit from increasing the price of the
producer.
1. Economic Forces
Economic forces are factor that are related to the economic growth and economic
development. Economic factor have a direct impact on the potential activities of
various strategies. Economic factor like interest rate, tax rate , value of ringgit in
world market, import and export factor inflation rate , consumption pattern , foreign
exchange will affect the growth of food and beverage industry in Malaysia and
Asean region in future.
2. Social, Cultural, Demographic and Environmental Forces Social, cultural,
demographic and environmental change have a major impact upon virtually all
product ,service, market and customer . In future consumer will be more educated
and aware about the healthy life style. They will consume the products that give
value for money and more healthy food and drinks. These scenario will affect the
growth of food and beverage industry in Malaysia and Asean region.
3. Political , government and Legal Forces.
The change of government, government policies and regulation will create
opportunities and threats. For industries that depend heavily on government
subsidies and contract, change in law and tax rate can affect firm significantly.
4. Technologies forces
Technologies change and discoveries such as computer engineering, robotic and
internet is acting as global engine that...
Q2. Identity and explain the strategies adopted by F&N to realize its vision to
become the regional food and beverage player.
products enhanced the profitability factor of F&N towards other competitor thus is
at an advantage in the market
Political
Government had put initiative to boost spending of consumer with new economic
model (NEM), with this model being pursue, Malaysia economic boost as consumer
purchasing power increases and are advised to spend. F&N will get benefit by
provide goods to be sold to the market hence boosting sales.
F&N products are all 'Halal' hence are entitled for Halal Hub Tax Incentive. The
incentive offered had decreased F&N some percentage of tax liability to the
government. It made F&N more profitable compare to those companies which does
not qualified for the incentive. (Annual Report 2011 pg 028)
Government has removed subsidy of fuel and sugar has put an impact to F&N as
most of the F&N core businesses needed large amount of sugar which is dairies and
soft drink business. The withdrawal of sugar subsidy lower the overall profit of the
F&N although there is a large improve a sales but the profit doesn't show much
improvement as the sugar cost increases. Withdrawals of fuel subsidy did also
impact on F&N as the cost of their internal and external distribution cost increases
thus reduces profit. (Annual Report 2011 pg 037)
Technological
In the beginning of 2011, F&N introduced new product, Ice Mountain and it has
faster share gain among bottler waters player which established 5% market share in
Malaysia. (Annual Report 2011 pg 035)
F&N launched new beverage Zesta across Malaysia in October 2011.Zesta has
remarkably great tasting berry soda flavored soda. It contents the Guarana tropical
berries that originate from Amazon, South America. In addition, Guarana tropical
berries invigorate the body and mind. "Zesta is an extension of our already large
array of F&N beverages, a beverage that was initiated to complement our existing
range of F&N brands, creating a transition vehicle for our growing band of
consumers," said Dato' Ng Jui Sia, CEO of Fraser & Neave Holdings Bhd. F&N
believes that Zesta is the illustration of growing trends for beverage enhanced soda.
(Zesta 2011)
Environmental
Sichuan Earthquake of May 2008 has caused the raw material cost increase and
company's profit is affected. Natural disaster is beyond expectation and control of
the company. Profit before interest and tax in 2008 grew only 5%. This
environmental factor has affected company to achieve their mission. Natural
disaster would serve as obstacle that F&N provide superior returns to shareholders.
(Annual Report 2008