Strategic Management
Strategic Management
Strategic Management
1.1 Background
Hwa Tai Industry Bhd has successfully established a strong presence in Malaysia and has
built up a wide international market. Hwa Tai Industry Bhd can be found locally from small
sundry shops to big hypermarkets, fast-food chains, airlines and other mass consumption
industries. Hwa Tai Industry Bhd is to be a leading biscuits and confectionery manufacture in
the region known for its product quality and variety. Now, Hwa Tai is one of the five major
biscuit manufacturers in the country. Hwa Tai Industry Bhd plans to embark on aggressive
promotional and marketing activities, focusing on selected products as it tries to expand sales
in the domestic market. All the products are safety and hygiene for consumers use by using
high technologies to produce the product. Hwa Tai Industry Bhd expected high standards
from their staff to the provision of the highest quality service in the business. There is 40% of
the companys production is exported internationally to countries like China, Taiwan, Hong
Kong, Singapore and others.
1.2 Strategic posture
1.2.1 Company Logo
1.2.2 Objectives:
Hwa Tai is committed in producing best quality biscuit products for our customers all over
the worlds and creating business opportunities for our partners. We have more than 50 years
of manufacturing experience and the ability to manage our entire value chain, from
procurement of raw materials to distribution of finished products. From the companys very
first beginning, we have recognized that the skilled and dedicated people who work for use
are critical to our success. We expect high standards that our staff which is a team totally
committed to the provision of the highest quality service in the business.
1.2.3 Strategies:
Hwa Tai Industries have a strong divisional corporate structure. A strong divisional corporate
structure can lead the company more powerful to operate. They try their best to gather
different idea and knowledge to come out creative and innovative idea to solve all problems
or create a new product. The Board of Directors have recognizes its overall responsibility for
maintaining the Groups system of Internal Control and risk management to safeguard
shareholders investment and the Companys assets, as well as for reviewing the adequacy
and integrity of the internal control system. Not only that, Hwa Tai Industry Bhd is also doing
Research and Development (R&D). Research and development (R&D) can help organization
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Strategic Managers
1.3.1
Board of Directors
Corporate Structure
Hwa Tai Industries Bhd is a well-known company; everyone knows what is selling by this
company. For a company to be successful or not are based on the companys corporate
structure. Hwa Tai Industries Bhd has a strong divisional corporate structure of their
company. The Board of Directors recognizes its overall responsibility for maintaining the
Groups system of Internal Control and risk management to safeguard shareholders
investment and the Companys assets, as well as for reviewing the adequacy and integrity of
the internal control system. Due to limitations inherent in any system of internal control, it is
important to note that the system is designed to manage rather than eliminate risk of failure to
achieve corporate objectives. Therefore, the system can only provide reasonable and not
absolute assurance against material misstatement or loss.
1.4.2
Corporate Culture
Whether written as a mission statement, spoken or merely understood, the corporate culture
must describe and governs the ways a companys owners and employees think, feel and act.
Therefore, corporate culture plays an important role in determining how well a business will
do it.
If anyone in the company feels not happy with the current culture, there should be changing
the culture into more comfortable to each member. The culture must consist with the current
objectives, strategies and policies so that can achieve the target of the company.
The Groups management team meets regularly to review and monitor the business
development, discuss and resolve key operational and management issues and review the
financial performance against the business plan and budget for each operating units within
the Group. The Board of Directors and management have ensured that safety and health
regulations have been considered and complied with.
1.5 Corporate Resources
1.5.1 Marketing
Hwa Tai has successfully established a strong presence in Malaysia and has built up a wide
international market. The products can be found locally from small sundry shops to big
hypermarket, fast-food chains, airlines and other mass consumption industries. A total of 40%
of these products is exported internationally to countries such as China, Taiwan, Hong Kong,
Singapore, Brunei, USA, Mauritius, Middle East, Papua New Guinea, Maldives, Nigeria and
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Financial
Yes, they are clearly stated or merely implied from performance or budget. Yes, the
companys financial objectives, strategies and policies are consistent with the corporations
mission, objectives, strategies and policies and with the internal and external environment.
The company revenue is decrease from RM 63.75 million to RM 61.30 million. This is
because of the company losing a certain OEM (Original Equipment Manufacturer) customer
cake products and also lower sales from the international market. The lower revenue had in
part resulted in the deterioration of the Groups results which recorded a net loss of RM 1.80
million as compared to a net profit of RM 385,000 in 2010. In addition, the decline in the
results was also caused by higher spending on advertising and promotional activities to
counter intense market competition and fluctuating market condition.
1.5. 3 Business environment
The global economy in the year 2011 did not see any improvement as compared to the
preceding year. A series of massive natural disaster which struck various parts of the world,
the political unrest in the Middle East and the sovereign debt crisis which hit the Euro Zone,
all had attributed to the weakened economic environment. Despite the gloomy global
economy, the Malaysian economy remained resilient in 2011 with the Governments
accommodative and supportive growth policies which had helped to keep domestic
consumption healthy.
1.5.4 Foreign currency risk
Sensitivity analysis for foreign currency risk. A 10% strengthening of the USD and SGD
against the RM at the end of the financial year would have increased/ (decreased) profit or
loss and equity. This analysis assumes that all other variable, in particular interest rates,
remain constant.
1.6 Research and Development (R&D)
They aim to be a leading biscuits and confectionery manufacturer in the region known for its
product quality and variety. Yes they are consistent with the corporations mission, objective,
strategies, and policies and with the internal and external environments. So for that they
should have a strong research and development department in their organization to the
development of new products, processes and service or to improvement of existing products,
processes and service.
Hwa Tai Industry BHD had a strong strategy for research and development to improve their
food industry. The technology also helps the organization to improve their marketing strategy
because they are updated the technology according to the trend so that they can manage the
global marketing and competitor.
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On the other hand, the commitment in in Hwa Tai Industry Bhd is producing the best quality
biscuits for customers all over the world and creating business opportunities for partners.
Hwa Tai has more than 50 years of manufacturing experience and the ability to manage the
entire value chain from procurement of raw materials to distribution of finished products.
From the company's very first beginning, they have recognized that the skilled and dedicated
people who work for them are critical to their success. Moreover, they expect high standards
from their staff, it is a team totally committed to the provision of the highest quality service in
the business.
Nowadays, China has become one of the worlds most attractive locations and Chinas rise
carries enormous significant for the international business communities. China has a very
good development in term of legal system, the size of the market, the low cost of labour and
Chinas growth potential together offer unprecedented business opportunities for foreign
investor to do business in China. International business have developed very rapidly in China
and today, China become increasingly integrated with other parts of the world and opened up
to a whole range of cross- border economic activities. Managing an international business in
China is not an easy task and there are some challenges will be occurred. The prime
challenge for those interested in doing business in China is achieving their strategic
objectives of cost reduction, local differentiation and the strengthening of core competencies
in their specific functional areas and business activities. China is the formal member of World
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Constitutional System
China or Peoples Republic of China adopts socialist system or communism in their political
system in their decision-making processes in governing the country. The countrys sole
political party in power is known as the Communist Party of China. The government have the
sole power to control all activities done by their citizen as what have been describe in how
communism system worked in governing a country. In other words, the purposes of working
in China are to contribute to the nation and also to the government as the government control
on all activities in the country.
4.1.2
Stability of Government
The stability of the China government is quite moderate and stable because the administration
of the government are not publicize to the public either through the press or on the internet.
So, the degree of the citizen involvement in the politics is low because of the heavy
restrictions impose by the government. However, the policies impose and the law regulations
are quite effective in terms of economy where China is one of the leading countries in the
world. In the recent years (2001), China has joined the World Trade Organization and results
rapid growth in industrial and manufacturing sectors because of the cheap labour in China.
But still problems such as managing environmental degradation, demographic pressure and
the extreme immigration from rural to urban area must be faced by the government.
4.1.3
Business Freedom
The business freedom in China is quite tight because of the regulation impose by the
government where they restrict businesses from other countries coming in. But recently,
China government open their gate to the outside world to set up business in their country. It
takes 37 days to start anew business in China compared to the world average 38 days. While
it takes 1.7 years from the filling for insolvency in court until the resolution of distressed
assets. Examples of business freedom in China are super marketization and opening market to
foreign multinationals company because of the entry of China into WTO. Super
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Trade Freedom
In the past few decades, China loosens their trade policy to the outside world in their trading,
export and import industry. Chinas weighted average tariff rate was 3.9 present in 2008
based from the web (heritage.org). Factors that affect the cost of trade freedoms are import
and export bans and restrictions, import and export licensing, non-transparent tariff
classifications, complex regulations and standards, subsidies, state trading in certain goods,
services market restrictions, issues involving the protection of intellectual property rights, and
inconsistent and corruption-prone customs administration add to the cost of trade. So, Chinas
trade freedom score to account for non-tariff barriers deducted about twenty points.
4.2 Economic factors
Economic factors influence a business directly, because they affect capital availability, cost,
and supply and demand. If demand is high, and the capital cost is low, which attract more
investment on the company and produce more product to make profitable. However, during
economy recession period, there is still chances for some small potential corporations
accessing business market and competing with others.
Recent years, China economic growth rapidly. Overall, it can be reflect from industrial
sectors. Since from late 1978, China becomes market oriented economy. China gains
tremendous in production of agriculture. Even though, there are more than half people rely on
agriculture for living, the agriculture sector has less influence for gross domestic product. At
the same time, labour input decreases in most of industries, due to labour productivity
improvement and the migration from rural workers to urban areas. In the opposite, through
the adjustment of secondary industry and tertiary industry, they become unrepeatable roles to
GDP. (Ke-sha G, 2001) It provides activities as knowledge, skills, as well as experience,
entertainment to improve the quality of business. (Sasaki H, 2009) Due to its foreign trade
liberation and investment, the income has been dramatically rising after joining the WTO.
Moreover, the demand for material and energy resource is also increasing. They import and
process materials, then sell the final products.
In addition, the Bank of China as central bank in china. It uses monetary policy to increase or
decrease interest rates and control the amount of money in the economy to achieve steady
economic growth. Normally, government will not lend money to business company directly,
it has to deposit money from bank of china first. Also, the central bank reduces lending to
companies and individuals, according to the increasing amount of money they put with
central bank. Moreover, the central bank also guide country bank to increase more reserves
and its ratio, such as 16.5% for big bank, 14.5% for small bank, in case of any financial crisis
or loan needs. At the same time, bank of china will control conflict and surplus, as well as
increase tax for import product. Because if they increase tax, people would rather purchase
and import product with those money, not saving them into bank. (Bradsher K, 2010)
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1.80%
Lowest 20% :
4.66%
Second 20% :
9.00%
Third 20%
14.22%
Fourth 20%
22.13%
Highest 10% :
33.06%
Highest 20% :
49.99%
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Lifestyles and trends in China change in many ways such as the level of consumption,
attitude towards new product especially from the west, changes in the quality of life, and also
changing from quantity satisfaction to quality satisfaction. Besides that, changes in trends can
be seen from the degree of fashion sense where citizen tend to buy more colourful and
striking colours compare dull- coloured clothes.
4.3.3
Educational levels
The literacy rate for China is around 91.0% was able to read and write at a specified age.
While the average years of schooling is 11.2 year. Education expenditures in China are about
1.9% of the GDP.
4.3.4
Chinas labour regulations hinder overall employment and productivity growth. The nonsalary cost of employing a worker is high. Dismissing an employee may require prior
consultation with the local labour bureau and labour union.
4.3.5
Freedom of corruption
Property Rights
Chinas judicial system is weak, and many companies resort to arbitration. Local officials can
ignore court decision with impunity. All land is state-owned, but individuals and firms may
own and transfer long-term leases (subject to many restrictions) as well as structures and
personal property. Intellectual property rights are not enforced effectively. Copyrights,
patents, brand names, trademarks, and trade secrets are routinely stolen.
Through the period, the achievement of science and technology in China are remarkable
where they manage to achieve many discoveries in the science field. The major achievements
are the discovery of the Daqing Oilfield, building the first atomic reactor, successful testing
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The government design many plans and strategies in developing the R&D industry. Many
programs to enhance R&D industry are launched such as the Torch Program and the
Scaling Heights Program
4.5 Environmental Factors
4.5.1 Environmental Protection Laws
The government takes serious matter on protecting the environment where they impose many
regulations and laws in protecting, preventing and controlling industrial pollution and
improving urban environment. The government also collaborate with many NGOs in order
to maintain the mother nature.
4.6 Legal Factors
4.6.1 Employment Regulations
Chinas labour regulations hinder overall employment and productivity growth. The nonsalary cost of employing a worker is high. Dismissing an employee may require prior
consultation with the local labour bureau and labour union.
5.0 EXTERNAL ENVIRONMENT
5.1 Politic and Legal
5.1.1 Impending Election
The Impending election from the government have giving more offer and benefit for the
people who is under their condition will freely giving subventions to them purchase the
necessary. Hwa Tai may will increase the sales during the impending election.
5.1.2 Free trade
Hwa Tai is exported about 50 country around the worlds, which government is stated free
trade with other country, Hwa Tai may be threaten and benefit by them. Other industry from
other country may import cheaper product to our country , people may will choosing the
cheaper one, Hwa Tai sales profit may goes down while Hwa Tai can also export their
product selling in other country easily to get more profit.
5.1 3 Halal Certificated System
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5.3 Social
5.3.1 Health Conscious
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5.5 Environment
5.5.1 Global Warming
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There are different approaches for implementing these alternatives. For example, a firm can
only identify target markets, where products may be sold without or with minor
modifications. A company can have its line of products for various markets global, regional
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Product characteristics
Functions, attributes
Durability , quality
Methods of operation and use
Company characteristics
Profitability
The cost of adaptation
Organization
Packaging
Brand
Resources
Policies adopted
Warranty service
Experience
Life cycle
Country of origin
Source: Adapted from Sasu 2005, p. 148
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10.2 Nabisco
Nabisco is another prominent player in the sector, owning the brands Ritz, Oreo, Chips
Ahoy!, Trakinas and Premium. The CMMS survey shows that Oreo was the second and Ritz
was the fourth most frequently consumed brands among the covered cities.
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10.3 Danone
Another big player, Danone, positions itself as a mid-to premium brand and offers a wide
variety of products. The product line of the company is extensive, ranging from mass to
premium offerings. In an attempt to tap the large rural market, Danone launched its first lowend biscuit products in early 2005 Danone Milk Jiagai Qingcui and Danone Milk Susong.
On the other hand, to strengthen its position at the premium end of the spectrum, Danone
launched its filled biscuit products in late 2004, called Danone Tiki Tartlet, with a relatively
high unit price. Danone is also an active player in fortified and functional biscuit products.
For example it has Danone Milky Crispy Biscuits, Danone Hi-Calcium Biscuit and Danone
Sunny Breakfast Biscuits. With years of systematic and aggressive advertising of its product,
Danone biscuits have been associated with healthy life among Mainland consumers.
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14.0 CONCLUSION
In a conclusion, as well known, china is the fastest developing country, which has many
potential business opportunities. However, it is important to judge and make sure the
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