HOME PEANUT GARDEN FOOD INDUSTRIES SDN BHD:

A STRATEGIC MANAGEMENT CASE STUDY

SITI NORFAIZZAH BINTI ZUBIR

3150123

Case Study Submitted in Partial Fulfillment of the Requirements for the Master of Muamalat
Administration (Halal Product) at the Faculty of Economics and Muamalat, University Sains
Islam Malaysia

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PART 1: CASE DESCRIPTION

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1.0 PROLOGUE

It was wonderful Sunday morning of 6th July 2015, Mr. Simon and his family spend their
weekend as well as grocery shopping at Giant Supermarket, Nilai. As a production and sales
director in Home Peanut Garden(HPG) much of his time were busy handling his family
business, so, this short period would be a precious time to spend with his family. While looking
some candies for his son in snack food shelf, he realized that none of Home Peanut Garden
products were available in this shelf, thus, this product line were monopolised by various types
of flavour, packaging and taste selection of snack food. Claimed to be one of big supplier of
peanut products to local supermarket in Malaysia make this statement just a bombast
interpretation towards HPG. In the situations when the products were not available in the local
market would made the customers not familiar with the company products. So, in this
competitive market of snack food products, marketing strategy must become priority. As been
planned from last week meeting, the company would be more focusing to cater foreign market
rather than local and aiming to export 55 percent of their production to more foreign countries.
However, the Malaysian Ringgit was currently fell as a results of various incidents which
would affect worldwide economy. Mr Simon felt that this planning was strictly ambitious when
looked for this economic condition. He thought to himself, he must discuss with his brother,
Mr Soh which the marketing director of the company about the plan whether it can continue to
survive as domestic supplier or remain to continue their planning to export their products for
more foreign market.

2.0 COMPANY BACKGROUND

2.1 Company Profile

Home Peanut Garden Food Industries Sdn Bhd. (will call as HPG or the company) was founded
by Mr. Soh Fook Heng and Madam Lu Goon Eng which is husband and wife in the middle of
1994. This family business had been earlier located in Jinjang, Kuala Lumpur. The passionate
sensation in home- made business product had lead the spouse to share the family recipes by
sold in house production of nuts, beans and pea products with various flavour. All the hard
work of family member had gave the opportunity to them expanding their business production.
Thus, in March, 1997, they had moved to own premise in Arab-Malaysian Industrial Park,
Nilai, Negeri Sembilan (Refer Appendix A, location and key facts of the premise).

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HPG was categorised as snack food industry in Malaysia and had been driven by its vision
statement which to delight customers around the world with a delectable variety of
healthy and quality nuts as well as tailor made the products according to their client
preferences. Holding on these principles, the company had categorised the taste of the products
suitable with Asia and Middle East Market as to be acceptable by local and foreign customers
that the company in.

The part of detailed information on snack food industry and Malaysia environment condition
are provided in Appendix E. Generally, player in this industry faced pressure to compete due
there are many substitute snack food products choices that consumer can found in the market.
However, due to low entry barriers, the existence of multiple snack food products had forced
players in the industries to focus on continuous improvement on product quality, packaging,
flavours as well as varied the product offer.

2.2 Organisation and Management Structure

Presence as a family business company makes most of the top management are being handled
by the family members and currently by the second generation of Sohs family. They would be
assisted by the division of middle classes workers such as executive and personal assistant. The
management team chart can be refer in Appendix B1. The company was structured into five
department, each headed by a director, namely, the production and sales, finance and human
resources, marketing for domestic market, factory manager, and last but not least is
maintenances and health. Each of functional directors followed by their middle classes workers
formed the executive management team of the company.

2.3 Human Resources

HPG had employed over 80 employees consisted of lower until upper class workers. However,
the case only focus in Nilai Industrial Park which is consist almost 60 employee from
management and production side. Most of the production workers were from Nepal, Indonesia
and a few from Malaysia. As for now, the company were more relying on foreign workforce
rather than local and now the company face the lack of skilled workers position at middle
manager department. Thus, sometimes, regulation from the government were unexpected.

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The operator in the company would handle five department of processing area such as storage
of raw ground nut in cold room, quality control cheque, coating and seasoning, frying the nuts
and packaging. They would be assigned by weekly progression by in line supervisor. However,
the operators are divided into these five division area without being assign to different job
scope and keep constantly doing the same job.

In the other hand, prevalent of the business operation to make sure the employees are delivering
the best service to the company. In order to achieve that, the company had implemented the
performance-appraisal approach by pass up the evaluation forms to fill up by the operator about
the performance of the management in the company. From the first-line manager until the top
manager would be evaluate by the common workers to improve the effectiveness of the
management aspects in the company and probably the workers also being screened to measure
their performance. The manager in all departments would conduct performance evaluation and
taking necessaries action to minimize inefficiencies. Consequently, all members in the
company had been evaluated each other in the company.

2.4 Marketing

The main production of HPG is based on snack food diversion (Refer Appendix C). The
company is only focusing to produce the nuts, peas and bean products from the raw until it
become a products and producing only five flavour for its products. However, with the ample
choice of snack food come with cheap and easy to get are of the factors that can affect the
company production. For example, when come to local snacks such as crispy chips from
tapioca, banana, sweet potato and onion are the preferred ones in the market today. Even
though, this cottage product received tepid feedback from the earliest introduction in the market
compared to other snack foods, now, they stand the same level as imported snacks with
numerous flavour, shapes, sizes and impressive packaging.

2.4.1 Sales and Marketing

For a business to success the product offer must be known by the potential buyers and it is
important to the company to use marketing strategies to create product awareness. HPG
marketing strategy is to reconnect with customers through product, price, place and promotion.

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HPG is currently supplies its product local and broad such as the local major hypermarket,
local repacker, restaurants, karaoke and catering companies. Besides focusing markets its
product name, they are also known as supplier of peanut products. The company had offered
bulk packaging for those repacker that wants to market the product with their own branding.
However, this type of offer had made the company had less focus to market on its products and
only one type of packaging is recognised in the market (Refer Appendix C, HPG packaging).
In facts, build its own product name can be advantages for both offering

Furthermore, one of the proudest achievement is Brahims Airlines Catering Sdn Bhd (BAC)
which is the main vendor of in-flight catering services in Malaysian Airlines Berhad (MAS) is
one of its biggest costumers. The company would buy the product in bulks and repack suitable
with the airlines packaging. General brief of BAC, it is not only becoming the main vendor of
MAS but other giant air industries such as Air Asia, Air Asia X, Cathay Pacific, Etihad, China
Airlines, Korean Air, Thai Airways, Emirates Airlines and other international airlines. Thus,
becoming a world recognised flight cabin catering had proudly made BAC as a globally
recognised 100 percent halal compliant with integrated food logistic supply chain.

As being mention HPG had expanded its business by exports its product to the foreign
countries. Singapore, Saudi Arabia, Kuwait, Palestine and Mauritius (Refer Appendix A, area
of export industries) are the list of its foreign customers. As to become acceptable with the
market preference from local and foreign customers, the company had categorised the taste of
the products suitable with Asia and Middle East Market.

In term of promotion, the company is depends on word of mouth communication which are
rely on customers to spread up its offering. With the strategic location in industrial area in
Nilai, most of the customers are from the factory workers. When there are promotions or
discounts for their products, these workers were being informed based on the banner in front
of the premise followed by spreading the promotion to other parties. Besides that, the company
take this opportunities to promote in house sales during festive seasons. They were various
product had been offered by HPG which is not focusing on its products but also offered wide
selection of snack food such as chips, chocolate, and raya cookies made from various flavours
and tastes which they get from local supplier.

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As a food processing manufacturer, significant to the company to produce the quality products
and straighten the products control in order to gain customer trust. Thus, HPG had been
certified by all food regulation and management system from a local authority and widely
recognised standard which are ISO 9001: 2008 Standard, Hazard Analysis and Critical Control
Point (HACPP) MS 1480:2007, and Halal JAKIM. Initially, become a Chinese manufacturer
had received a lukewarm perspective from the Muslim consumers, not only Malaysian but also
global Muslim market. Thus, with these certification definitely would become a competitive
advantage to all products of HPG.

In the other hands, the rapid growth of technology had vast many opportunities for all people
around the worlds. For instance, the marketing aspects can be more efficient and effective by
enabling the companies to promote the product without spending much compared to traditional
forms of advertising such as billboards, TV commercials and radio advertisements. As for now,
the company itself must updated and searching the opportunities to market the products.
Presence as Halal certified and approved by recognised standard company make HPG is one
of the company lists in Halal Exporter Inc. This web actually had been recognized as a leader
in halal business information solution and industry intelligence that can assist the entrepreneur
to gain the effectiveness and productiveness in Halal Industries. Even though HPG had market
to the foreign customers, the companys web is still less attractive and not updated well which
would affected the customers perspectives. Besides that, it also become a medium to market
the products into the global market.

2.4.2 Market Segment and Competitors

By offering snack food product based, HPG had faced strong marketing strategies from its
competitors. The major competitors of HPG are Tong Garden and Juta Food Industries
(Melaka) Sdn.Bhd. Both companies use similar business products which is nuts based products
but there they come out with strong marketing strategy. Besides that, with the ample choice of
snacks food in the market, the customers can easily find substantial product such as local
snacks, chocolate, biscuits as the alternatives for snack foods.

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2.4.2.1 Juta Food Industries (Melaka) Sdn.Bhd

Juta Food Industries (Melaka) Sdn Bhd was established in 1985 under the name Juta Food
located in Malacca, Malaysia. The company had been experience more than 20 years in peanuts
and snack food products and had been supplied not only for local markets but also foreign
customers such as Mexico, Brazil, Libya, Indonesia and China. In order to become competitive
in the market they were in, they had develop variation of snack selection consist of variation
taste of cookies; butter cookies, green tea, dark chocolate, taro, caramel coffee, mixed nuts
selection consists of almond, cashew nuts, pistachios, coated nuts , prawn crackers, cassava
chips, snack bar. These products came with different flavours and taste. Besides that, they
offered wide selection of product packaging and the most interesting part the new packaging
with Arabic description targeted for Middle East customer.

2.4.2.2 Tong Garden Food (Singapore) Pte Ltd

Among nuts based snack food product in Malaysia, it can be claimed that Tong Garden are the
big competitors in this industry. Founded in Singapore in 1963 had bring Tong Garden become
the Asians Largest Nuts Company. With 5 decades in this industry probably made this
company become well-known brand in the market either local or worldwide. Alongside with
customers changing preferences, there had offer variety of nuts product resulted with honey-
coated nut series, seaweed and wasabi cashew nuts, mixed macadamia, almonds with dried
cranberries and banana chips. Not only focusing on nuts products, they also offered variety of
snacks such as yam, tapioca, sweet potato, and potato chips.

2.5 Production and Supply Chain

In the food business, the best strategy requires best supply chain achievement. Sourcing and
delivering the best quality product are the main objectives to all food business and nothing is
more important than satisfying the costumers. Presence as manufacturer that produce Halal
product make the company are more focusing to maintain the Halal integrity in the production
from the raw materials and finish with satisfied customer. This activities are describing as
supply chain management.

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Figure 2 provides a supply chain for nuts in HPG that covers all activities during production.

Storage at
Receiving raw Coating and
chilled Selecting nuts
groundnut seasoning
temperature

Fried Cooling Packing Storage

Transportation Retailer

Figure 1: Supply Chain for Nuts

Basically, Malaysia is not the country that produced nuts. Even it have, they are consist small
portion of the production and would not be enough to cover the raw nut demands. It is limited
local nuts supplier in Malaysia. So, for those companies that manufactured in this product
range, they would get the raw nuts from China, India and United States of America. As for that
condition, the company had been receiving the raw nuts from India, since the climate condition
in India was not stable, the company had changed it to China. In maintaining the Halal integrity
supply chain, all the product that used in the production should Halal certified from the
authority body either local or broad. However, the raw nuts are not compulsory to be Halal
certified because it is from plant based sources. Besides nuts, the company had obtained the
ingredients from Thailand such as chili seasoning, cooking oil, flour, and garlic flavours. These
product are being satisfied by Halal authority in Thailand, thus recognised in Malaysia.

For HPG, by establishing strong and long term relationship with supplier would be one of the
way to improve performance during supply chain. Long term supplier are more understand the
procurement process and Halal issue of the company. For instance, the Halal label issue. As
being mention, Halal certified ingredients from authority body are crucial part in the Halal food
production, so, when one of these Halal certified company is expired its Halal license, the
supplier by self would immediately response to HPG about this issue. After been certified, they
would sent a new Halal certificate to HPG. This scenario will increase the efficiency and
improve the performance of the company related to Halal issues.

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Besides that, with strong relationship with supplier it also increase the competitiveness of
HPGs product through high quality nuts, pricing, reliability, and share the trends of the market.
For both parties, termination of contracts early form actual dates would increase the cost for
re-tendering, re-negotiating and others. Thus, build a good and long relationship with supplier
will reduce costs of failures.

In the other hand, the procurement activities of HPG may engaged with storage and inventory
activities such as transportation. So, the Halal Executive which the person in charge for Halal
issue would take part. During receiving the raw material and distribute the product to retailer,
the Halal Executive will ensure the company are engaged with the Halal logistic company that
offer halal transportation services. This is requirement for the authority bodies which is
Department of Islamic Affairs Malaysia JAKIM to outsource the Halal transportation services
in ensuring production integrity.

Production and operation activities represent the largest part of the organizations human and
capital assets. Hence, most of the major cost of producing the products are incurred within
operations. Due to that circumstances, HPG production team are very concerned about this
condition and they had emphasizing production and operation audit checklist by focusing on
the process flow of the production, managing properly of the companys inventory and aimed
to ensure all the production are constant with the quality standard that company applied. This
involve managing the level of raw materials, work in progress, and process flow analysis.

2.6 Product Quality

2.6.1 Halal Legislation

Born in Muslim country makes all the food manufacturers in Malaysia are aware with the
Muslim preference rather the manufacturers are Muslim or not. They must ensure all the
production is Halal or permitted to Muslim consumer. In order to presence as Halal
manufacturer, the Halal certificate from Department of Islamic Affairs Malaysia (JAKIM)
would be a benchmark. As for HPG, born from the Chinese company make a Muslim
consumers have a lukewarm response to the products offer, as for now, with the halal certificate
from the JAKIM made the company had gain competitive advantage. A proper handling
procedures from received the raw materials until becomes a product goods were needed to
maintain halal integrity in the company productions, thus, gain consumers confidence towards

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the products. This circumstance totally showed Halal certification was important to attract not
only Muslim but also non-Muslim.

The evolvement of Halal legislation in Malaysia was begin in 1974, when the Research Centre
for Islamic Affairs Division started to issue Halal certification for the products that comply
with shariah requirements. At that time until now Department of Islamic Development
Malaysia (JAKIM) had been mandated to confirm the status of halal products. Dare to claim
that JAKIM now was the worlds first halal certification body responsible to issue halal
certification. After all, with the rapid growth of Halal Certification in Malaysia had induce
JAKIM to extend the halal section in 2005 through the establishment of JAKIMs Halal Hub
and the first halal standard released in 2000 was a milestone to shows Malaysia as the first
country to have systematic halal assurance system. Formerly, Malaysia now become the
leading global halal hub with an annual export of RM 35.4 billion for halal products which
nearly 5.1% of total exports (itc.gov).

Through MATRADE data, in 2015, Malaysians Halal exports reached 42 billion ringgit with
5.4 percent of total exports and with the growth of six times higher year by year. Thus, during
that year, the tops five export markets for Malaysias halal products were China, Singapore,
United States and Japan which all are consists of non Muslim countries. Despite on this
situation, the government had encourages the Small and Medium enterprise (SME) to search
the opportunities for international market.

One of the proudest achievement towards Malaysia halal industry is international halal
showcase or MIHAS. Despite numerous speculation on Malaysias economic scenario,
Malaysia remains as the focal point for 26 nation including 12 Organisation of Islamic
Corporation (OIC) member countries at MIHAS. MIHAS had built a strong brand name local
and broad market as the premier sourcing centre for halal products and services.

2.6.2 Halal Certification

The Malaysian Halal logo (refer Appendix D1) that issued by JAKIM become an external
assurance to claim all certified products were compliance with shariah principles. In order to
get Halal certification, the company should ensure the raw materials, processing, equipment,
location, sanitation, all in all, the elements to produce good are free from prohibited elements.
These elements was not derived only from permitted sources, they must also emphasizing the
toyyiban concepts as known as wholesome to consume by consumer.

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In applying for Halal certification, the company had been audit by JAKIM auditor based on
Halal Standard issued by Department of Standard Malaysia. As for HPG, the company had
been evaluate based on the MS 1500:2009 Halal Food-Production, Handling and Storage
General Guidelines (Second Revision) due the natal of its business are based on halal foods.
The Halal certification procedure was begin with online application in JAKIM website,
followed by receive supporting document, issuance of charges letter, then the company would
be audit until receive for panel meeting to issuance the halal certificate. A full halal certification
process flow chart can be refer at Appendix D2. After HPG were certified Halal, the company
must applied back for renewal process every two years.

HPG can be categorised as medium manufacturing industry with annual turnover between RM
15 million and RM 50 million. So, as required in Manual Procedure for Halal Certification
(Third Revision) 2014; reference document for Halal certification, the company should pay
RM 700 for certification fee and must establish Halal Assurance System (HAS). The HAS
implementation was required to enhance the Halal integrity to all supply chain activities in the
company. The establishment of Internal Halal Committee (IHC) was a vital elements in HAS
which responsible to monitor, develop and controlling the production effectiveness, the most
important part is they must ensure that all elements in the production are comply with shariah
requirement.

IHC organisation chart can be refer at Appendix B2. Consequently, the company was certified
Halal on 1 Mac 2010 and had renewed the certification almost three time. The aggressive
compliance checks during audit and inspection drew mixed responses within the industry. In
other words, those requirement from JAKIM were obviously had increase customers confidents
towards Halal JAKIM. Thus, HPG gradually realized that this certification had helped them to
increase their sales towards Muslim consumers which previously refused to buy from non-
Muslim manufacturer.

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2.6.3 Others product quality standards

As being mention, HPG had certified Good Manufacturing Practices (GMP), Internal
Organization for Standardization (ISO); different acronyms in different language and Hazard
Analysis and Critical Point (HACCP). These world product quality standards had brought
advantages to company image. This is because, GMP certification would assure that products
that the company offered were safe, clean and effective. Regardless, HACCP was important to
control potential hazards in food production by align the major food risks such as chemicals
and physical contamination. The company had convince the consumers through good science
and technology assurance safety.

Besides that, ISO 9001 quality management standard is an international standards that provided
wide advantages to the company. This standard had enhanced customers satisfaction and
improved customer loyalty due this standard had become a benchmark that the consume
product were high quality. The products quality control in HPG can be identified as the below
process flow:

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 Figure 2: Process Flow Diagram for HPG Products

2.8 Finance

HPG total revenue from the past two years totally shows strong growth rate. The company had
constantly received total revenue exceed of 15 million per year. However, when the
government had forced the company to stops exporting its products to Palestine and Israel, it
totally effected the sales revenue of the company. It had reduce 30 percent for the last year
sales revenue. However, HPG still generate profit from the current countries they had supplied
and also received a consistent profit from Brahims Airline Catering Sdn.Bhd. Eventually, the
actual financial performance of the company was not allowed to be published. These financial
performance are based on the interview resources.

3.0 GROWTH PLANNING

In enhance the company growth and performance, HPG never stopped looking for new
ventures activities. Through the government regulation to stop the companys export to Israel
and Palestine, the company had lost 30 percent which more than quarter of the companys

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profit. Nevertheless, the slump in oil prices and the increases of US interest rate had decline
the ringgits value make the thing worse. This depreciation was mostly caused by external
factors and followed by strengthen of US dollar make the increasing value of ringgit back was
likely far. However, this situation can give advantages and disadvantages to the company.

Furthermore, in a domestic market, Juta Food and Tong Garden operates similar business
models, which means the firm with the best marketing plan will ultimately become customers
choice. These two rivals are more focusing to burst their marketing strategies by offer variety
types of snacks with different flavour and come out with catchy packaging to attract the
customers. With the competitive environment that HPG in, the company were still not focusing
to build their brand name. The company were more focusing to remain as a wholesaler of bulk
pack nuts in Malaysia. Thus, had been planning in market orientation, HPG would more
focusing the foreign customers rather than local consumers and the company saw this strategy
would help them to gain company profit.

4.0 EPILOGUE

The plan to expand the business in more foreign country in the conditions of bad economic
situation made Mr Simon feel worried about the companys plan. Would HPG be able to handle
those situation? Should HPG expand for domestic or foreign market? Does HPG have other
strategies to increase back the company profits? All these questions keep asking around
Mr.Simon. He must plan as well as possible before he discusses with his brother, Mr Soh and
come out with possible outcomes by looking on industrial overview (refer appendix D) as well
as internal data.

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PART 2: CASE ANALYSIS

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1.0 EXECUTIVE SUMMARY

Following the current trend consuming plant-based protein in Malaysia, the case study choose
Home Peanut Garden Food Industries Sdn.Bhd as one of the retailer that offering plant-based
proteins products. This study will analyse the existing strategies that had been implemented by
Home Peanut Garden Food Industries Sdn.Bhd and would suggest the suitable strategies the
company can employed to boost it sales.

2.0 PROBLEM IDENTIFICATION

Home Peanut Garden Food Industries Sdn.Bhd (HPG) main problem was its relatively
motionless revenue, which had been flitted around 30 percent over the last years revenue.
During 2015, the value of Malaysian Ringgit (RM) was volatile compared to other international
countries, which impacts HPG that have substantial revenue outside from Malaysia. However
this scenario sometimes would gave advantages and disadvantages to the companies. In
addition, HPG brands was not familiar within the local market because the company were not
focusing to burst market performance as being compared with their competitors.

3.0 INTERNAL AND EXTERNAL AUDIT

Business analysis would be a significant element of any business and company. Because the
change is the only continual aspect to the company to dealt. It can happen in both target market
and the industry that the company involve. Thus, to survive in the business and survive with
the changes and trends, proper analysis should be conducted.

HPG needs to understand both internal and external elements to make the process for strategy
generation and selection are formulated well. By understanding these analysis it would make
the company more adapt with the present scenario and can predict for the future events. Despite
that, the company can easily encountered their strength, weakness, opportunities, and threats
the market there are in.

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3.1 Internal Analysis

Every organization have strength and weakness in their functional of business. Regardless to
say no company only have strength and not include weakness. Even though they have strong
brand name and financial structure. In general, this internal analysis would focus on identifying
and evaluating HPGs strength and weakness in the functional are of management, marketing,
distribution, production and operation, and value chain.

a. Management Function
1. Family business (pg 3)
Presence as a family business company makes most of the top management are being handled
by the family members. In order to retains the family business, all members were gave a lot of
contribution and very commitment of the work tasks. This would prevent misleading activities.

2. Most of the workers are foreigner (pg 3)

The company were more relying on foreign workforce rather than local and now the company
face the lack of skilled workers position at middle manager department. Thus, sometimes,
regulation from the government were unexpected.

3. Proper job schedule (pg 4)

The operator in the company would handle five department of processing area such as storage
of raw ground nut in cold room, quality control cheque, coating and seasoning, frying the nuts
and packaging. There would be scheduled by weekly assessment based on the production

4. Implemented the performance-appraisal approach (pg 4)

The manager in all departments would conduct performance evaluation and taking necessaries
action to minimize inefficiencies. Besides that, the workers would receive form to evaluate the
performance of the management in the company

5. The workers are keep constant doing the same job tasks (pg 4)
The operator are divided into five division area without being assign to different job scope and
keep constantly doing the same job. The company not give opportunity to the operators top do
different job scope.

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 b. Marketing Function
6. Only focus nuts as a main production (pg 4)

The company is only focusing to produce the nuts, peas and bean products and producing only
five flavour for its products. Thus, with the ample choice of snack food in the market is one of
the factor that can affect the company production.

7. Focus to be supplier of nuts (pg 5)

The company had offered bulk packaging for those repacker that wants to market the product
with their own branding. However, this type of offer had made the company had less focus to
market on its products and only one type of packaging is recognised in the market.

8. Serves in-flight catering (pg 5)

One of the proudest achievement is Brahims Airlines Catering Sdn Bhd (BAC) which is the
main vendor of in-flight catering services in Malaysian Airlines Berhad (MAS).

9. Strong foreign customers

HPG had expanded its business by exports its product to the foreign countries. Singapore, Saudi
Arabia, Kuwait, Palestine and Mauritius. The company had constantly supplied for those
countries.

10. Weak marketing strategies (pg 5 and 6)

Depends on word of mouth communication which are rely on customers to spread up its
offering. With the strategic location in industrial area in Nilai, most of the customers are from
the factory workers.

Besides that, the company did not take the opportunity to market their products through
technology. Even though HPG had market to the foreign customers, the companys web is still
less attractive and not updated well which would affected the customers perspectives. Besides
that, it also become a medium to market the products into the global market.

11. Halal products in high growth market segments (pg 6)

Presence as a Chinese manufacturer especially on food production had received a lukewarm

perspective from the Muslim consumers, not only Malaysian but also global Muslim market.
Thus, with halal certification definitely would become a competitive advantage to all products
of HPG.

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 12. High level of consumer trust on Malaysians halal certificate (pg 9)

Dare to claim that JAKIM now was the worlds first halal certification body responsible to
issue halal certification. The aggressive compliance checks during audit and inspection drew
mixed responses within the industry. In other words, those requirement from JAKIM were
obviously had increase customers confidents towards Halal JAKIM.

13. High quality products certified from international standard (pg 11)

HPG had certified Good Manufacturing Practices (GMP), Internal Organization for
Standardization (ISO); different acronyms in different language and Hazard Analysis and
Critical Point (HACCP). These world product quality standards had brought advantages to
company image.

14. Marketing research (Appendix E)

The part of detailed information on snack food industry are provided by management side to
have knowledge and obtain some information about current trends of global snacking food
industry, which have been provided by manager in Appendix E. This gives advantages for
management to know their strength and weaknesses.

c. Operational Function

15. Strong halal supply chain (pg 7 and 8)

Presence as manufacturer that produce Halal product make the company are more focusing to
maintain the Halal integrity in the production from the raw materials and finish with satisfied
customer. The company would use all halal certified ingredients and use halal transportation.

16. Strong relationship with supplier (pg 8)

By establishing strong and long term relationship with supplier would be one of the way to
improve performance during supply chain. Long term supplier are more understand the
procurement process and Halal issue of the company.

17. Outsources transportation services (pg 9)

As requirement to maintain halal integrity, Department of Islamic Affairs Malaysia JAKIM

required the company to outsource the Halal transportation services. Besides that, it also can
reduce the cost of using own transporation.

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 18. Production and operation audit checklist (pg 9)

The world product quality standards had brought advantages to company image. Thus, the
company had emphasized quality control for all of the production and products by focusing on
the process flow of the production, managing properly of the companys inventory and aimed
to ensure all the production are constant with the quality standard that company applied. This
involve managing the level of raw materials, work in progress, and process flow analysis.

19. The establishment of internal audit (pg 11)

The establishment of Internal Halal Committee (IHC) was a vital elements in Halal Assurance
System that had been applied in HPG. This committee is responsible to monitor, develop and
controlling the production effectiveness and the most important part they must ensure that all
elements in the production are comply with shariah requirement. They would be an internal
audit for shariah in the company.

d. Financial Function
20. Constant generate profit (pg 13)

HPG still generate profit from the current countries they had supplied and also received a
consistent profit from Brahims Airline Catering Sdn.Bhd.

3.2 External Analysis

An external audit sometimes called environmental scanning or industry analysis is important

to identify trends and events beyond the control of the firms. It will reveals key opportunities
that could benefit the firms and threats that should be avoided so that the manager can easily
formulate the strategies. In the case of HPG, the firm external factor are divided by two main
area (1) general environment; (2) industrial environment.

3.2.1 General Environment

The general environment analysis can be classified by political, economic, socio-cultural and
technological factor which indirectly effect HPG. These groups are based on the factor that
influence industry that HPG were in, which is snack food industry.

21
 a. Political Factors

Political factors are include government regulation, change in tax laws, import-export
regulation

1. The government had forced the company to stops exporting its products to Palestine and
Israel, it totally effected the sales revenue of the company (pg 13)
2. Implementation of Good and Service Tax (GST) in 2015. It had make the consumer are
more price conscious and cut down on snacks.

3. The New Economics Model (NEM) aim to boost economic growth, the halal industry had
been listed as one of the focus point. SME Bank has been one of master mind to help
Malaysian small medium enterprise (SME) to tap into global halal market.

b. Economic Factors
1. The spent of global consumers on snack food in 2015 are worth than $374 billion, a year
over year increase of 2 %
2. Europe and North America make up the majority of worldwide snack sales. While snack
food market trends in Asia Pacific and Latin America constantly growth between 6% and
7% respectively, followed by the Middle East and Africa spent about $7 million with grew
of 5%
3. Malaysias snack industry is growing rapidly with the sales figure RM 200 million (66
Million USD).
4. Economic growth in Malaysia had decreased from 338,882.8 million in 2014 to 296,160.8
million in 2015
5. Devaluate of Malaysian ringgit which HPG can take advantages from this circumstances
due a weak ringgit can leads to more export.
6. Annual growth rate of household expenditure increase 9.8 percent at the nominal value.

22
 c. Socio-Cultural Factors

Socio-cultural factors included demographic, population characteristics, consumer preference,

lifestyle, education levels, and fashion trends. Socio-cultural can impact HPG in terms of:

1. People consume snacks 4 to 5 times a day compared with other traditional meals
2. The worlds consumers are preferring something that would make them full with high-
carb and high protein snacks
3. The evolving trend in the global snack food market had contributed to the evolution of
fruit snacks and nuts.
4. Expected that the 2016 snack foods trends are the compound flavour between hot and
sweet combo.
5. In Malaysia, the snacks chips based products represent the biggest contribution. Thus,
it followed by fruit snacks, and nuts based product
6. sales of snacks account in large part are contribute by millennial which consume snacks
more than other group
7. the consumers in Malaysia are more sensitive and aware of health concern such as
diabetes, obesity and hypertension

d. Technological Factor

The advancement of technology can influence business environment in term of manufacturing

process, marketing and competitive advantage. Thus, for HPG, the technology factor can
impact with:

1. Enabling the companies to promote the product without spending much compared to
traditional forms of advertising such as billboards, TV commercials and radio
advertisements (pg 6)

3.2.2 Industry Environment Factors

Porters Five Forces Model is a common used model in evaluating the environment of the
involve industry and shaped the competitive nature. It is widely used for developing strategies
in many industries. These Porters Five Analysis list in Figure 2 are the analysis based on the
snack food industries, which HPG are in. These are consists of potential entry of new
competitors, bargaining power of suppliers, rivalry among competing firms, bargaining power
of consumers, and potential development of substitute product.

23
 PORTERS FIVE FORCES

Bargaining power of suppliers (Medium) Bargaining power of consumers (High)

Limited supplier Low switching cost
Many substitutes product
Large number of potential buyers

Rivalry among competing firms (High- strong) Potential development of substitute product
Large Number of competitors (High)
High competitive pressure
High substitute products
Less customer loyalty
Cheaper price

Potential entry of new competitors

New firms can easily enter the snack food industry
Figure 2: Porters Five Forces Model of HPG
a. BARGAINING POWER OF SUPPLIERS

The supplier HPG had significant bargaining power over the company because of the company
had tied-up with the business with less supplies. The company needs to get raw nuts outside
Malaysia (pg 8). The challenges when using import nuts, the industry would effect when the
currency drop, additional trade restriction and any such restriction. Thus, to face this problem
a good relationship with supplier are critical elements. The strong relationship with supplier
will increase the competitiveness of product through high quality nuts, pricing, reliability, and
share the trends of the market. For both parties, termination of contracts early form actual dates
would increase the cost for re-tendering, re-negotiating and others. Thus, build a good and long
relationship with supplier will reduce costs of failures (pg 9).

As well faced by HPG because they get raw materials from China (Appendix D3). However,
with the long term and good relationship with supplier (pg 8, 9), HPG can limited threat the
bargaining powers of suppliers. Thus, they also can cut the costs when buying in bulk.

This is because, if HPG allowed its supplier have the bargain powers, they can apply pressure
on the company to charge a higher price, adjust or control the availability of product quality
and on-time delivery (pg 9).

24
 b. BARGAINING POWER OF CONSUMERS

Power of buyer in the snack food industry is high. Low switching costs will easy for buyer to
switch to another brand because of the cost of product are affordable and cheap price (pg 4).
The existence of local snacks such as crispy chips from tapioca, banana, sweet potato and onion
will give many option for the customer to choose based on their own preference. Nowadays,
consumers become more concerned about health and find healthy snacks, as a result, HPG must
alert with this market trends (Appendix D3).

c. RIVALRY AMONG COMPETING FIRMS

The rivalry among competing firms tends to increase when the number of competitor increase.
There is a large number of competitors in the snack food industry included competitor from
international companies. When have a large number of competitors, it becomes a high
competitive pressure. This will give disadvantage the local company. The market for snack
food has evolved towards competition through the development of a brand, a range of products
on offer, advertising and packaging. (pg 6, 7).

HPG products are same with the competitors products, but the competitors seem offered better
marketing effort than HPG (pg 7). Low level of product differentiation will led to high levels
of rivalry. Relating to that, brand identification is important to constrain rivalry. Since the
implementation of GST take off, customers are looking low purchase cost. Thus, the company
who offered better prices would be preferred.

d. POTENTIAL DEVELOPMENT OF SUBSTITUTE PRODUCT

Threats of substitute product are high to HPG because of the large number of substitute product.
Customer can easily find other products, this situation give advantage to the buyer. The
existence of local snacks such as crispy chips from tapioca, banana, sweet potato and onion
will give many option for the customer to choose based on their own preference (pg 4). There
were many companies in the snack food industry offer cheaper price in order to increase their
sales.

HPG plan to tap more foreign market (pg 1) which would make their product are still new in
the market. As for snack food industry, there are lot of strong brands that surely will have loyal
customer. This substitute strong brand product (Appendix D1) may effect HPG in order to tap
new market.

25
 e. POTENTIAL ENTRY OF NEW ENTRANCE

Threats of new entrants that would face by HPG if they want to enter more global market is
high due high in cost and high number of competing firms (Appendix D1). However, seems
the market is easy for new players to enter because many opportunities for the entrepreneur to
come out snacks food product such as using the Small and Medium Enterprise Industries
(SME) medium. The New Economics Model (NEM) announced by Prime Minister Datuk Seri
Najib Tun Razak in June 2011 had envisioned Malaysian economy, thus, SME Bank has been
one of master mind to help Malaysian small medium enterprise (SME) to tap into global halal
market (Appendix D4).
However, it may give challenge to HPG due the customers would prefer establish and
acceptable brand. There are a lot of huge brands that are well known with the quality and taste
in the global market (D1).

4.0 A COMPREHENSIVE STRATEGY-FORMULATION ANALYTICAL FRAMEWORK

Important strategy formulation techniques can be integrated into three-stage decision making
framework. The tools presented are compatible to all sizes and types organization and can help
to identify, evaluate and select strategies (Strategic Management, 15 th edition). Stage 1 as
known as input stage would represents formulation framework consists of the EFE matrix, and
IFI Matrix. Then, for the second stage which called the matching stage focuses on generating
feasible alternative strategies by aligning key external and internal factors. For HPG, TOWS
Matrix, Porters Competitive Analysis Model would be uses as alternative strategies. The stage
3 will involve decision that would be suggest to HPG.

a. Stage 1: Input Stage

External Factor Evaluation Matrix (EFE) and Internal Factor Evaluation Matrix (IFI) that data
that had been provided in this stage would give the information for the matching and decision
stages

26
 HPGs External Factor Weighted Score Analysis (Opportunities and Threats)

Gap between
Relative relative Threat
Weighted Opportunity
Importance Weight (B) Score (C) importance & (G)
No Aspects Factors score (E) [largest
Ratings [B=AA] [1-10] capability (F) [largest
(D)=(B x C) D]
(A) [1-10] largest [A F]
C]

Marketing strategies using

17 technology technology 10 0.04 3 0.12 7 T1
threats of
24 competitors strong brand image 10 0.04 3 0.12 7 T2
1 politics government forced 9 0.037 3 0.11 6 T3
threats of
26 competitors strong marketing strategies 9 0.037 4 0.148 5 T4
threats of new compete with existing famous
30 entrance brands 10 0.04 5 0.2 5 T5
power of
19 supplier a good relationship with supplier 10 0.04 8 0.32 O1
power of
20 supplier termination of contracts 10 0.04 8 0.32 O2
Devaluate of Malaysian ringgit
8 economics can attract foreign investor 10 0.04 8 0.32 O3
2016 snack foods trends are the
compound flavour between hot
13 socio-cultural and sweet 9 0.037 8 0.296 O4

27
 The market is easy for new
threats of new players to enter by using SME
29 entrance medium 9 0.037 8 0.296 O5
2 politics Implement on GST 6 0.024 5 0.12
3 politics New Economics Model (NEM) 9 0.037 7 0.259
spent of global consumers on
4 economic snack food increases 8 0.032 7 0.224
Europe and North America
make up the majority of
5 economic worldwide snack sales 7 0.028 5 0.14
Malaysias snack industry is
6 economic growing rapidly 6 0.024 6 0.144
7 economics GDP in Malaysia decreased 6 0.024 7 0.168
Annual growth rate of
9 economic household expenditure increase 7 0.028 6 0.168
People consume snacks 4 to 5
10 socio-cultural times a day 8 0.032 5 0.16
consumer prefer high-carb and
11 socio-cultural high protein snacks 8 0.032 6 0.192
the evolution of fruit snacks and
12 socio-cultural nuts. 9 0.037 5 0.185
sales of snacks account in large
14 socio-cultural part are contribute by millennial 6 0.024 6 0.144
snacks chips based products
represent the biggest
15 socio-cultural contribution in Malaysia 5 0.02 5 0.1
consumer are aware with health
16 socio-cultural concern 8 0.032 6 0.192
power of
18 supplier limited supplier 9 0.037 7 0.259

28
 power of
21 buyer change of consumer preferences 8 0.032 5 0.16
power of
22 buyer snack foods price are cheaps 9 0.037 7 0.259
threats of
23 competitors large number of competitors 9 0.037 5 0.185
threats of
25 competitors price war 7 0.028 7 0.196
threats of
27 competitors product differentiation 9 0.037 5 0.185
threats of
28 substitude the existance of local snacks 7 0.028 7 0.196
Sum of relative importance A
(A) = 247

29
 HPGs Internal Factor Weighted Score Analysis (Opportunities and Threats)

Relative Gap between

Weighted
Importance Weight (B) Score (C) [1- Strong (E) relative importance Weakness
No Aspects Factors score (D)= (B
Ratings [B=AA] 10] [largest D] & capability (F) (G)[largest F]
x C)
(A) [1-10] largest [A C]

The establishment of
19 operation internal audit 10 0.062 9 0.558 S1 2
Strong halal supply
15 operation chain 10 0.062 9 0.558 S2 1
Production and
operation audit
18 operation checklist 10 0.062 8 0.496 S3 2
Serves in-flight
8 marketing catering 10 0.062 8 0.496 S4 2
Halal products in high
growth market
11 marketing segments 9 0.056 8 0.448 S5 1
Weak marketing
10 marketing strategies 10 0.062 3 0.186 7 W1
Only focus nuts as a
6 marketing main production 8 0.031 3 0.093 5 W2
Focus to be supplier
7 marketing of nuts 8 0.031 4 0.124 4 W3
Strong foreign
9 marketing customers 10 0.062 6 0.372 4 W4
Constant generate
20 financial profit 10 0.062 6 0.372 4 W5
1 management Family business 5 0.031 9 0.279 -4

30
 Most of the workers
2 management are foreigner 7 0.043 8 0.344 -1
3 management Proper job schedule 9 0.056 6 0.336 3
Implemented the
performance-appraisal
4 management approach 9 0.056 6 0.036 3
The workers are keep
constant doing the
5 management same job tasks 3 0.018 5 0.09 -3
High level of
consumer trust on
Malaysians halal
12 marketing certificate 9 0.056 8 0.448 1
High quality products
certified from
13 marketing international standard 9 0.056 7 0.392 2
14 marketing Marketing research 9 0.056 6 0.336 3
Strong relationship
16 operation with supplier 10 0.062 7 0.434 3
Outsources
transportation
17 operation services 6 0.037 6 0.222 0
Sum of relative
importance A (A) =
162

31
 b. Stage 2: The Matching Stage

The use of TOWS and Porters Competitive Analysis models are employed to assist in formulating the solution and the strategies.

TOWS Matrix

STRENGHTS WEAKNESSES
TOWS MATRIX 1. The establishment of internal audit 1. Weak marketing strategies
2. Strong halal supply chain 2. Only focus nuts as a main production
3. Production and operation audit checklist 3. Focus to be supplier of nuts
4. Serves in-flight catering 4. Strong foreign customers
5. Halal products in high growth market 5. Constant generate profit
segments
OPPORTUNITIES STRENGTH & OPPORTUNITIES(SO) WEAKNESSES & OPPORTUNITIES(WO)
1. Marketing strategies using technology S1,S2,S3, S4, S5, O4= use halal status to enter more W1,O1,O4= use technology medium to market
2. strong brand image Muslim country their products
3. government forced S1,S2,S3,S4,S5,01=can use technology as a medium W2,W3,O2= focus to boost market strategies due
4. strong marketing strategies to promote company competitive advantages the opportunity to attract customers are based on
5. compete with existing famous brands strong brand image
THREATS STRENGTH & THREATS (ST) WEAKNESSES & THREATS (WT)
1. a good relationship with supplier S1,S2,S3,S4,S5,O3= by strong halal products, HPG W1,W2,W3,T4,T5= Improve available website
2. termination of contracts can attract foreign investor and create application to ease consumers in
3. Devaluate of Malaysian ringgit can attract foreign getting information on halal products
investor W2,T4= product development by offer new
4. 2016 snack foods trends are the compound flavour product based on current trends.
between hot and sweet
5. The market is easy for new players to enter by
using SME medium

32
The TOWS Matrix Analysis

The TOWS matrix is an important tool that would help to develop four types of strategies: SO (strength-opportunities) strategies, WO (weakness-
opportunities) strategies, ST (strength-threats) strategies and WT (weakness-threats) strategies (strategic Management, 15th Edition). These would
determining strategic alternatives by examining external issue in the company compared to internal analysis, the company strong and weakness.
Consequently, it would help Home Peanut Garden to improve the company performance.

STRENGTH & OPPORTUNITIES (SO)

This strategy come from strengths and opportunities, HPG needs to penetrate a new market. Being well known in the Middle East, the company
can use this opportunity to enter the Europe and North America which show the make-up of the majority of worldwide snack sales. These will
give the opportunities to home peanut garden to promote their product as well as Malaysia halal certification. They also can participate halal
exhibition. In the other hand, experience to supply nuts to Malaysia Airline, HPG had familiar with the procedure for the airline. So, these chance
can give them opportunities to relate with high corporate customer. Besides that, the company can use technology medium to promote their
products.

33
STRENGTH & THREATS (ST)

Home peanut garden specializes in handling halal products and capable of producing high quality products. With the devaluation of Malaysians
ringgit HPG can attract foreign customer to invest in the company. Ones man trash is another mans treasure. This quote describe HPGs
opportunity because exports goods will benefits from this scenario. The investors seems to take this opportunities to purchase Malaysian-made
goods as they become more affordable to do so.

WEAKNESSES & OPPORTUNITIES (WO)

In the other hands, the rapid growth of technology had vast many opportunities for all people around the worlds. For instance, the marketing
aspects can be more efficient and effective by enabling the companies to promote the product without spending much compared to traditional
forms of advertising such as billboards, TV commercials and radio advertisements. As for now, HPG itself must updated and searching the
opportunities to market the products. For example by introduce varied the flavour of the product suitable on consumer preference. For example,
make tom yam flavour to cater the Thailand market. Home Peanut Garden have to try build own brand name rather being a supplier. This is because
when a company does not have a strong brand, even they offer high quality products it can make them competitive. Its time for Home Peanut
Garden to focus on branding by doing more market research about the current trends.

34
WEAKNESSES & THREATS (WT)

Home Peanut Garden must compete with other competitors. The promotion that been done by Home Peanut Garden is weak compared to its rivals.
HPG should improve and upgrade marketing strategies. Its rival are constantly making changes and study of best results to ensure their products
are the best from the other products, thus these strategies must also be followed by HPG. This is because, the companys web is still less attractive
and not updated well which would affected the customers perspectives. The company must grip the opportunities of current technologies to boost
its marketing performances.

Based on TOWS Matrix Analysis, there are four types of strategies that the company can implement which are:

Market Penetration Greater marketing efforts (packaging)

Market Development (increase export to other region)
Product Development (add variety of nuts and flavour)
Related Diversification (adding more snacks product)

35
Porters Five Forces Model Analysis

Porters Five Forces analysis represents the competitive advantage environment of the firm. Porter had identified five competitive forces from
external factors analysis that shape every industry and market. Based on the information derived from the Five Forces Analysis, the management
could strategies how to influence or to exploit particular characteristics of their industry. The average score of every analysis affected would help
derive the appropriate strategies.

Porters Five Forces Factors Weighted Score Analysis (from EFA)

HPG Industry
Relative Weighted
No Importance Capability score capability
Ratings Score (B) total (C) (D)=(C Score (E) Total (F)
Aspect factors (A) [1-10] [1-10] [A x B] A ) [10 B] [A x E] Weighted Score (G) [F A
1 limited supplier 9 7 63 3 27
power of a good relationship with
2 supplier supplier 10 8 80 2 20
3 termination of contracts 10 8 80 2 20
Total () 29 223 7.69 67 2.31
power of change of consumer
4 buyer preferences 8 5 40 5 40
5 snack foods price are cheaps 9 7 63 3 27
Total () 17 103 6.09 67 3.94

36
6 large number of competitors 9 5 45 5 45

7 strong brand image 10 3 30 7 70

threats of
8 competitors price war 7 7 49 3 21

9 strong marketing strategies 9 4 36 6 54

10 product differentiation 9 5 45 5 45
Total () 44 205 4.66 235 5.34
threats of
11 substituted the existance of local snacks 7 7 49 3 21
Total () 7 49 7 21 3
The market is easy for new
players to enter by using SME
12 medium 9 8 72 2 18
threats of
new compete with existing famous
13 entrance brands 10 5 50 5 50
Total () 19 122 6.42 68 3.58

37
 Porter's Five Forces Analysis Charts
HPG capabilities industry
supplier
8
7
6
5
4
3
new entrance 2
buyer
1
0

substituded competitors

38
HPGs Competitive Advantage Factors Weighted Score Analysis (from IFA)

N Aspects Factors Relative Importance Score (B) [1- Total Score (C)=(A Weighted
o Ratings (A) [1-10] 10] x B) score (D)= [C
A ]
1 Family business 5 9 45
2 Most of the workers are foreigner 7 8 56
3 Manag Proper job schedule 9 7 63
ement
4 Implemented the performance-appraisal 9 7 63
approach
5 The workers are keep constant doing the same 3 7 21
job tasks
Total () 33 248 7.52
6 Only focus nuts as a main production 5 8 40
7 Focus to be supplier of nuts 5 6 30
8 Serves in-flight catering 10 8 80
9 Strong foreign customers 10 7 70
10 Marketi Weak marketing strategies 10 3 30
ng
11 Halal products in high growth market 9 9 81
segments

39
12 High level of consumer trust on Malaysians 9 9 81
halal certificate
13 High quality products certified from 9 8 72
international standard
14 Marketing research 9 6 54
Total () 76 538 7.08
15 Strong halal supply chain 10 9 90
16 Strong relationship with supplier 10 8 80
17 Operati Outsources transportation services 6 8 48
on
18 Production and operation audit checklist 10 8 80
19 The establishment of internal audit 10 9 90
Total () 46 388 8.43
20 Financi Constant generate profit 10 7 70
al
Total () 10 70 7

40
STRATEGIES RECOMMENDATION FOR HPG FOOD INDUSTRIES SDN.BHD

Several strategies had been identified and recommended to ensure success of by using TOWS and Porters Five Forces models. The four
consolidated strategies now will be shortlisted into top three strategies.

Market Penetration Greater marketing efforts (packaging, web developments)

Market Development (increase export to other region)
Product Development (add variety of nuts and flavour)
Related Diversification (adding more snacks product)

IMPLEMENTATION AND CONCLUSIONS

Consequently, HPG could takes further action and implement these three prioritizes strategies. With the rapid growth of technology had vast many
opportunities for all people around the worlds. For instance, the marketing aspects can be more efficient and effective by enabling the companies
to promote the product without spending much compared to traditional forms of advertising such as billboards, TV commercials and radio
advertisements. So, HPG can takes this opportunity to market the products through the technology medium without being spent much money.

In the other hands, the market for snack food has evolved towards competition through the development of a brand, a range of products on offer,
advertising and packaging. The change is the only continual aspect to the company to deal. It can happen in both target market and the industry
that the company involve. HPG can takes this opportunity to increase its product offering. For example emerge in snacks chips based product due
this type of snacks shows the biggest contribution to Malaysia market, thus the company also can add more interesting flavour such as cheese,
wasabi, caramel, satay, and other local and broad preference. The company should conduct a marketing research to be more alert with the current
food snacks trends. Besides that, the company can improve the packaging by adding catchy and convenient packed snack to attract kids.

41
Strong marketing efforts are the significant to all company to be marketable. Thus, this aspect would be the priorities strategies to be implement
in HPG Food Industries.

42
APPENDICES

Picture 1: Home Peanut Garden Packaging

43
Picture 2: Nut Selection

44
Picture 3: Mr Simon and Ms Christine

45
Picture 4: Product of HPG

46
Picture 5: Bulk pack Nuts

47
Picture 6: HPG Premise

48
Picture 7: List of Certifications

49
Picture 8: Area of Export Country

50
51
D1 OVERVIEW OF SNACK FOOD GLOBAL MARKET

It has been sustainable increasing the demand of convenience foods and snacks throughout the years (Keynote, 2003). The spent of global
consumers on snack food in 2015 are worth than $374 billion, a year over year increase of 2 %, this is based on a new global report release by
Nielsen (American Global Information and Measurement Company). It shows Europe and North America make up the majority of worldwide
snack sales. While snack food market trends in Asia Pacific and Latin America constantly growth between 6% and 7% respectively, followed by
the Middle East and Africa spent about $7 million with grew of 5% (Businesswire.com). For this situation, there were high demand of worlds
famous snack food brands such as Pringles, Lays, Fritos, Ruffles and other famous brand which had receiving high income from high consumer
consumption.

D2 GLOBAL INDUSTRY TRENDS

Currently, snacking is not being a small portion any more. People consume snacks 4 to 5 times a day compared with other traditional meals.
Table 1 indicates the global consumption of snacks based on consumer reasons to consume. As for that, consumers are preferring something that
would make them full with high-carb and high protein snacks. Nuts, tortilla and corn chips snacks become the preference within worldwide
consumers (Businesswire.com). The evolving trend in the global snack food market had contributed to the evolution of fruit snacks and nuts. There
are switch from sweet to less sugar snacks followed by salty, spicy and sour. Expected that the 2016 snack foods trends are the compound flavour
between hot and sweet combo.

52
Table 1: Global consumption of Snacks
Reasons to consume snacks Percentages
Eat snacks to satisfy hunger between meals 76
Meal alternatives 45
Breakfast 52
Lunch 43
Dinner 40

D3 IN MALAYSIA

Previous data shows that Malaysias snack industry is growing rapidly with the sales figure RM 200 million (66 Million USD). Based on the
growth data of countrys snack industry by Federal Agricultural Marketing Authority (FAMA), the snacks chips based products represent the
biggest contribution. Thus, it followed by fruit snacks, and nuts based product. According to Euromonitor, sales of snacks account in large part
are contribute by millennial which consume snacks more than other group. Consequently, the millennial snacks had reshaping the manufacturer
trends to market the products. The plant-based protein are doing very well, for instance, beans, peas, lentils and nuts. It had followed by nuts milk
such as Brazil nuts and pistachio.

Almonds, cashews, cereal bar, granola, macadamia nuts, peanuts, pine nuts, pistachio, popcorn, pumpkin seed, soy nuts, sunflower seeds and
walnuts indicates the example of seed, nuts, legumes and grain which is based on Malaysians plant-based product consumption, there had been

53
categorised as packaged food product. As the current trend for snack food, the consumers are more sensitive and aware of health concern such as
diabetes, obesity and hypertension. These packaged food manufacturers must concern to meet their demands for healthier packaged food product.
There are those with less sugar, lower fat, no sugar, high calcium and fibre levels (Euromonitor International, 2013)

The Country and Lifestyle statistics release by Euromonitor International in the latter part of 2015 shows that economic growth in Malaysia had
decreased from 338,882.8 million in 2014 to 296,160.8 million in 2015. This is because, the slump in oil prices and the increases of US interest
rate had devaluate Malaysian ringgit, and thus, all currencies against dollars also drop. About 174 global currencies include Malaysia had faced
this situation but only 18 currencies stay consistent compared to dollar. This totally influence the snacks food industries especially for the exporter
(Inter-Pacific Research Sdn.Bhd). Ones man trash is another mans treasure. This quote describe Malaysians currencies due the domestic
residents will find import more expensive, but exports goods will benefits from this scenario. The investors seems to take this opportunities to
purchase Malaysian-made goods as they become more affordable to do so. Contrast with this, the once that use the raw materials from foreign
market will see that these imported goods was increase. As a resulted, they would sell their goods at higher price.

The Report on Household Expenditure Survey 2014 conducted by Department of Statistics Malaysia showed that the annual growth rate of
household expenditure increase 9.8 percent at the nominal value. In situations, when negative growth is taking place, the real wages is increasing
made consumers still feel as the economic condition is staying the same.

However, the snack food data was effected due to the implementation of Good and Service Tax (GST) in 2015. This Malaysias near term economic
outlook despite some risks. It had make the consumer are more price conscious and cut down on snacks. There were preferred to consume during
promotional periods and bulk sales affairs by retailers. Aware of these price concern in 2015, the manufacturers had collaborated with retailers to
introduce the discount price, distributed brochures and catalogues to promote their products (Euromonitor, 2015).

54
D4 TRANSFORMING MALAYSIA ECONOMY

Malaysia had done well to boost its economic growth. Begun as a developing country upon commodities and agriculture before, Malaysia is now
one of the top 20 trading nations. The New Economics Model (NEM) announced by Prime Minister Datuk Seri Najib Tun Razak in June 2011 had
envisioned Malaysian economy which Malaysia can refer (Khalid et al, 2012). Implementation of productivity enhancing aim to increase
competition in economy, thus, secure lasting place in high-income economies. In an effort to help push Malaysian economy, the halal industry had
been listed as one of the focus point. As for that circumstances, SME Bank has been one of master mind to help Malaysian small medium enterprise
(SME) to tap into global halal market.
The demand of halal based product are increasing across the globe in recent year. It is no longer as religious requirement but a new engine to drive
economy. On the whole, SME bank recently announced to add RM 200 million under Halal Industry Fund that can assist SME to add value or
improve their halal products

55