PEST in Strategic Analysis
The PEST analysis is an analysis which concerned with the environmental influences on a business. It is a business measurement tool for understanding market growth or decline, and as such the position, potential and direction for a business. PEST analysis is also an acronym stand for Political, Economic, Social and Technological issues that could affect the strategic development of a business to assess the market.
Political
Munchy's have always recognized the important of manufacturing only Halal product since the government of Malaysia focusing on turning the nation into an international Halal Hub. That is a reason why Munchy's have a dedicated committee that deals with all things Halal. The Committee is made up of representatives from each key section that contributes to the making of the products. Munchy's is setting its sights on a greater share of the regional pie while the tariff and trade barriers are trimmed with the formation of the ASEAN Free Trade Area (AFTA). In fact of this, Munchy have been opened a new branch offices in ASEAN neighbors.
Economic
Nowadays, Munchy's sales in ASEAN have seen a clear uptrend because of the proactive approach of Munchy's done in sales and distribution, For instance, Mr. Tan reveals that sales in Singapore have grown by more than 50% since 2003, making the island Munchy's third largest export market. Besides that, The Company has experienced double-digit growth not only within Malaysia but also in Japan, Singapore and other Asian countries. Still, Munchy's export growth has been broad-based and their exports have been grown by close to 60% within this year. The local market is also growing, as Malaysia's population expand
Social
Nowadays, health as a prime concern is now increasingly by many consumers, accordingly, Munchy's have been reformulating their range to feature less sugar, less salt, lower fat and high nutrient content. Munchy's believes that it must be a balance achieved between good taste and health. The CEO of the company Mr. Tan frequently used Teamwork as the key word to describe how the company has evolved and transformed. In order to work for teamwork, the staff from all levels must believe and have confidence with the brand of the company and be able to deliver the brand promise effectively to consumers. Munchy's has various CSR (corporate social responsibility) programmes in place which mainly aid to orphanages and hospices for children. Munchy Food also aims to produce more quality products on par with international brands but reflecting a typical Malaysian identity by carrying the spirit of "Malaysia Boleh.''
Technology
SWOT analysis
SWOT analysis is a basic, straightforward model that provides direction and serves as a basis for the development of marketing plans. It is an acronym used to describe the particular Strengths, Weaknesses, Opportunities, and Threats that are strategic factors for a specific company. It is the first stage of planning and helps marketers to focus on key issues. SWOT analysis is a tool for auditing an organization and its environment. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.
Strength
Munchy's always emphasizes the delicious wafers that are made from only the finest ingredients. They believe that the only way to produce the highest quality wafer sticks is using the finest ingredients. Besides owning state-of-the-art machines, have a good and committed management team with a strong multinational background assist Munchy's investment in talent and that is a factor that sets Munchy's apart from the rest of the competition. Another area of strength is their focus on brand-building, Mr. Tan engaged an international branding consultant to establish Munchy's as a distinct brand in 2004. Although Mr. Tan believes in continuous product development and he knows that everything starts from the product so he put a lot of innovative ideas into designing the products from the packaging to brand image, the sharp and weight of the products, basically from all aspects. Until now, Munchy's company still keeps thinking on how to make the existing products better in innovative.
Weaknesses
Although Munchy's company always thinking about how to make their product become more innovative, but what they done is just put effort on the wrapping of their product but not in the flavor and the varieties of the product. Munchy's should put effort on the variety of their product. For example like Nestle Company, their production such as Milo drinks, ice cream, Chocolate and so on. The varieties of their products on the market strengthen the value of their product in the market.
Opportunities
In laying the groundwork for their Asian expansion, Tan started to transform the company three years ago. This included bringing in an impressive senior management team with a strong MNC (Multinational Corporation) background. The idea is to eventually allow Malaysia to run without him as CEO so that he can focus on its regional plans. With the need to bring in new skill sets, Munchy's structured a supervising board which is filled by some of the brothers and also some very experienced former chief executives to help guide the company forward. To produce better products, Munchy's claims that it is the market leader in the wafer category and the top three in the biscuits market share ranking. Invests substantially in R&D, adding that research is an important aspect of branding and it is imperative to work closely with consumers to understand their wants and needs.
Threats
Munchy's intention to re-brand or remodel Munchy's into an international brand which aimed at establishing home-grown Munchy's as a global brand in line with its new business directives of aggressively expanding into foreign markets. Besides that they also plan to increase their export sales by 25% to RM50mil in year 2010 and the company is heading towards a new business direction for further market expansion. Munchy Food maintains its competitiveness through endless upgrading of its operations, marketing, sales and distribution, research and development, and most importantly, capital-intensive investments. Most of these heavy investments derive from world-class machinery and automation, computerization, and ERP engagement for its management.
Benchmarking analysis
Benchmarking analysis is an analysis contributes 'lessons are learned.' This analysis is a process of continual improvement which helps a company who is still growing to identify their trouble spots and provides a systematic approach to improving production efficiency and profitability.
Nestle is the world's largest food and beverage company which leading in Nutrition, Health and Wellness and they employs over a quarter of a million workers. Compare with Munchy's, Nestle strategy is based on a broad range which the company overcome cultural barriers and customer resentments to foreign brands by purchases local brand names which the consumer is accustomed to. After these niches of basic food supply are filled Nestle moves on into the more upscale segments such as chocolate, soft drinks and the like. Their strategy is to establish a basis and then expand into more niches as demand rises. Connected to the rising demand is the rising income level as the population can afford to spend more money on food products. As mentioned in the book, Nestle provides about 8500 brand names, but only 750 of them are registered in more than one country and only 80 are registered in more than ten countries.
Many household names such as Nescafe, KitKat and Nesquik were Nestle produces and some other brands are also well known by consumers just they might not have realized that they were Nestle products. In 2002 Nestle had a sales turnover of over £38.3 billion on which it made a net profit of over £3.2 billion. The majority of this profit was re-invested in the business whilst the remainder was paid out to shareholders in dividends. Munchy's put more effort in R&D on their wrapping and brand-building. They have spending close to RM4 million on branding and ads every year and this budget is increasing. Besides that, the company also invested RM10 million to buy packaging machines from Japan. Munchy's always thinking about how to make their product become more innovative, but what they done is just put effort on the wrapping of their product but not in the flavor and the varieties of the product. Munchy's should have a broad range to improve their performance in production efficiency and profitability.
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