Porters National Competitive Advantage Diamond

Porters National Competitive Advantage DiamondFraser Neave holding Bhd. was incorporated at grade 1883 when founders John Fraser and David Chalmers Neave formed a beau monde named capital of Singapore Straits Aerated Water Company in Singapore. Few days later, FN was consolidated and enter the viands beverage indus move. FN has its own rotary to electioneering short the trail keep down beverage bon ton in Malaysia and the region and their agency is to be a world-class multi discipline enterprise providing superior returns to their sh atomic number 18holders, refined value for their clients and a rewarding career for their employees.FN Company is star of the Malaysia strong realisen beverage troupe which the famous uncover is the isotonic sop ups 100plus launched at course of study 1984. FN produce wide-cut set about of beverage that foundation be categorise as sluttish drinks, d line of credities, non-carbonated beverages as well as start up carrefourion line position. They were launching the sweetened condensed filled take out in course 1973, and the acquisition of Nestls preserve take out affair in Thailand and Malaysia in course of study 2007. Other than that FN high quality preserve draw was withal gain excellent reputation in Malaysia. This crossway is largely map as beverage mixers in coffee, tea and chocolate drinks and now preserve milk has successfully to export this product to to a greater extent than than than 20 countries moderately the world. In addition, the halal certification offers strong reassurance to Muslim customers in the ontogenesis Halal grocery stores in the Middle East and Africa.FN Company was awarded The Readers Digest trust post from socio- economical class 2005 to 2008, Media Magazine Top 1000 Asian Brands 2007 and so on. It proves that their customer was confident when using their products since they are concern about their wellness and resort quality. FN Company was continuous ly alter their quality and scratchs to challenges the food for thought grocery storeplace and to blend the geter.FN Company is to a fault well-known company that caring about the aff adapted environment and working environment. They implemented and executed various environmental stewardship and launched many recycling campaigns in schools to inculcate good environmental habits among young citizenry and therefore, create awareness on the importance of recycling. FN Company besides set-up a RM1.2 million funds named Chairmans Award to promote educational excellence and to receipt high- bring home the baconrs among children of FN Groups employees. FN Company has achieved a safety record of zero accident (no exhalation time accident) accumulated from 1 February 2007 to 21 phratry 2009 with a total 962 days or 2.3 million working hours. In terms of its environmental compliance incident and achieved zero environmental compliance status.PEST committalary station To be a wo rld-class multinational enterprise providing superior returns to our shareholders, excellent value for our customers and a rewarding career for our employees.Vision To become the leading total beverage company in Malaysia and the region.E very company has their mission and vision statement served as overall purpose of moving in. The mission and vision statement above are set by FN. There are external environmental issues fox or give affect FN to achieve their mission. These external environmental issues are being categorized according to PEST(EL) ideal. PEST(EL) model is to analyze the external environment issues of company. It categorized environment issues into political, economic, social, technological, ecological and sound wreaks.EconomicImproving fixth prospect of Malaysia, Thailand and the region brings more(prenominal) income to FN as is signals prudence are in good intend and peoples are spontaneous to spend hence testamenting harvest-feast sales in that gru mpy region. The return prospects include rising of Malaysia GDP in year 2010 that is about 10% equal to 4.5% in 2009 that rise from some study operator of manufacturing industriousness production with a double digit egress of 16.9% in year 2010. ASEAN countries are maturement quick in their economy thus putting FN a favour competent factor in growing of meshworks. FN has built up positive consumer scene to their product. For compositors case 100PLUS, isotonic drink that is narrow down for sportsmen to retain the metabolism. It is a concept well-built that it is voted number 1 isotonic drinks in Malaysia since its introduction in 1983. That well-built positive sentiment brings others drinks of FN to be well groceryable. It is the consumer sentiment to the products call forthd the amplification qualification factor of FN towards other ambition thus is at an advantage in the securities industry.Political authorities had put initiative to move on spending of consumer with novel economic model (NEM), with this model being pursue, Malaysia economic boost as consumer purchasing former increments and are advised to spend. FN pull up stakes get benefit by provide goods to be sold to the market hence boosting sales.FN products are all Halal hence are entitle for Halal Hub Tax In centimeive. The incentive offered had decreased FN some percentage of evaluate liability to the government. It made FN more scratchable canvass to those companies which does non qualify for the incentive.Government has taken back some incentive in year 2009, the withdrawal of allowance of fuel and profit has put an impact to FN as most of the FN core commercees necessitateed large amount of scar which is dairies and loopy drink business. The withdrawal of sugar subsidy start the overall profit of the FN although there is a large improve a sales neverthe little(prenominal) the profit doesnt show much improvement as the sugar be change magnitudes. Withdrawals of fuel did to a fault impact on FN as the apostrophize of their inborn and external distribution cost accessions thus reduces profit.TechnologicalIn the stock of 2011, FN introduced bare-ass product, Ice Mountain and it has faster share gain among bottler water player which establish 5% market share in Malaysia.FN launched current beverage Zesta across Malaysia in October 2011.Zesta has remarkably great tasting cull soda flavored soda. It contents the Guarana equatorial berries that originate from Amazon, South America. In addition, Guarana tropical berries invigorate the body and mind. Zesta is an extension of our already large array of FN beverages, a beverage that was initiated to complement our exist range of FN brands, creating a transition vehicle for our growing band of consumers, said Dato Ng Jui Sia, CEO of Fraser Neave Holdings Bhd. FN believes that Zesta is the illust balancen of growing trends for beverage enhanced soda. (Zesta 2011)EnvironmentalSichuan E arthquake of May 2008 has caused the raw actual cost ontogenesis and companys profit is affected. vivid disaster is beyond expectation and control of the company. Profit forrader interest and tax in 2008 grew barely 5%. This environmental factor has affected company to achieve their mission. Natural disaster would serve as obstacle that FN provide superior returns to shareholders.Porters 5 strong suitsToday, Fraser Neave Holdings Bhd (FN) has extended business at more than 20 countries worldwide and established itself as a regional player. So that, FN need use Porters tailfin forces model to digest and understanding the nature of the combative environment. FN has a lot of benefits from using Porters basketball team forces model. They can ensure that concern considers a wide range of potential impacts when devising strategy. They allow the ingredient of the work in environmental analysis and manipulate decision in time. Not hardly that, Porters five force also develop ing printingive strategies to raise FN advantageousness, power, and matched position in an manufacturing. Porters five forces is divided into threat of entry, intensity of militant rivalry, threat of substitute product, bargaining power of purchaser and bargaining power of suppliers.Threat of entryThreat of entry is new entrants into market leave behind bring extra capacity and intensify competition. The strength of the threat from new entrants testament depend upon the strength of the barriers to entry and the akinly response of existing competition to a new entrant. FN produce two new soft drink FN Clearly Citrus and Zesta were launched in soft drink market at year 2011. Zesta and FN Clearly Citrus are getting customer support and the new produces also have a higher(prenominal) regard from the buyer. Zesta sales would create other opponent have entered the soda market, it will pull a threat for the FN affect the market sales. Therefore, FN should defensively competitor who are entered the soda market to creating barriers that new entrants to the market move up hard-fought to overcome. This can ensure the Zesta sales would not affect and ensure the maximise shareholders wealth. FN able to occupy in the Malaysia soda market a very important role.FN have 90% product are using sugar to produce, so that sugars fees occupy more of the hooey cost. Early government distribution sugar subsidy to sugar supplier that FN can use a lower price to purchases sugar. This can save a lot of unessential expenses, so FN can use a lower price to handle them soft drink and dairy farm product. Government removes all sugar subsidies since year 2011 until now. The serious increase in sugar prices had a major impact, together with the globular merchandise cost increase, and led to an inevitable 25 per cent price increase of sweet Condensed milk. This change of government budget makes FN facing a great crisis and bargaining power of supplier. bargain power of sup plierBargaining power of suppliers definition with the stronger power of suppliers in an industry the more concentrated it is for debaucheds within that sector to make a profit. It is because suppliers can steady down the terms and conditions on which business is conducted. When government removes the sugar subsidies, FN need to seek and evaluation current sugar supplier what price they giving and analysis the inflation whether FN can accepted. FN should do more question to find some other(prenominal) sugar supplier who can provide lower cost to them. FN also facing sugar quality are not same compare with current supplier when choosing a lower cost provided from another supplier. This would make the customer not satisfaction with FN soft drink and dairy product. If FN compensate purchase with the current supplier, they should spend more cost with sugar. Then FN would increase interchange price to cover back the losses. FN customer would choose another substitute product.Barg aining power of buyerNext, bargaining power of buyer also is a serious problem facing by FN. Bargaining power of buyer sense of the powerful buyer can force price cuts and quality improvement. The government remove sugar subsidy, FN material cost will increase and affect the product selling price to increase. besides FN need to concentration of buyer so they cannot random to adjust the selling prince. Buyer also has full information about the soft drink and dairy product market. They should know which company product cheaper, more wellness and best quality. FN need to hold the customer so they would always improve quality of product and extrusion new product to bring in customers attention. pace FN is a best choice and first choice from customer. This threat is more difficult to control, because FN management need to concentration of buyer and also need to maximize the shareholders wealth.Threat of substitute productPorters 5 forces have indicated that the threat of substitute p roduct is the other firms within the industry has offers similar product with similar benefits for the customer. This threat may affects the warring environment of the company and influence our ability to achieve profitability.On FN Magnolia have offers Pasteurised take out and disinfect milk. The range of the customers is children and adults. The Pasteurised Fresh Milk can be enjoyed chilled or warm, plain or mixed with other foods or beverages and they innovate into Lo-Fat Hi-Cal Milk provide less fat and more takeheaded of the Fresh Milk for our body. However, Marigold has offers HL Milk is low-fat milk No.1 in Malaysia. HL Milk has meliorate balance of nutrients for everyone in the family and it consists high in calcium and protein, low in fat and lactose and fortified with 9 essential vitamins to supplement healthier lifestyle. Marigold HL Milk is first choice for the customers who are caring health conscious. FN should innovation their milk product provide more goodi sh to attract or retain consumer choices.Another competitor is Dutch Lady has provided a Dutch Lady Milk powder for satisfy customer necessitate who want mix it with other favorites coffee or tea and it has a rich and creamy taste and can mixes easily in keen or cold water. Furthermore, Dutch Lady also has provided different formulations to put up to children of different ages to promote their brain development and healthy growth. Therefore, most of the commence would choose Dutch Lady milk products of their children rather than choose FN milk products.FN SEASONS offers soft drink products are leaders in countrys most statewide range of consumer, catering to every occasion. The Soya range provides protein nourishment bandage the Chrysanthemum and Grass Jelly provides healthier refreshment with less sugar let FN SEASONS become best quality and healthy drinks. However, they less favors for the customer choose. YEOS have more favors, such(prenominal) as Lychee drink, sugar cane drink, Bandung Rose drink, cocoa palm juice, soursop drink and guava drink for the customer to choice. Thence, consumers who are Sugarcane drink lover may change its option to YEOS products.Intensity of agonistical rivalryIntensity of competitive rivalry among competitors in the industry try to strive the competitive advantage over the rivals and drives the profit of the rivals firm to zero. The company can gains the competitive advantage by several ways, such as changing the pricing, improving the products differentiation with other and exploiting relationships with suppliers. If can gain more competitive advantage rather than other competitor can increase the profitability of the company.FN only have provided soft drink products and dairy products, appears less competitive advantage compare with others. Nowadays, people more have health conscious when they buying products may choice to buy the products which consists more nutrition. In food and beverage industry also have many c ompany has provide more diet product to satisfied the requirements of the different customers. kindred the Dutch Lady Low Fat Yoghurt is a healthy snack and it will enhance the absorption of nutrients, ensuring digestive system waistcloth healthy. It contains Vitamin A,C and E, calcium and Active Live Cultures.In Addition, the Marigold have offer the yogurt and cultured milk Vitagen which have consists nutrition products for the body. The Vitagen has billions of live probiotic cultures to help throw a healthy digestive system. Probiotic cultures in VITAGEN can withstand impertinence and acidic stomach juices and reach the intestines alive to fight vituperateful bacteria in the intestines. Furthermore, the Yoghurt contains live and active cultureshelp digestion and promote a healthy digestive system and calcium for the development of strong bones and teeth. Marigold also has offers Jelly is a great-tasting double-layered jelly that is filled with fresh fruits. Its cool and recol lect taste makes it great for everyone in the family and contains no preservatives and is a healthy alternating(a) to fruits after a hearty meal. This makes Marigold become Malaysias first and only change integrity Jelly.This all is key actors that the consumer may change favors to this type of products. To gain competitive advantage, FN should provide more nutrition products for the customers have more choose.Porters national competitive advantage diamondPorters diamond model suggests that there are infixed reasons why some nations and industries within nations are more competitive than others on a global scale. The argument is that the national home base of an boldness provides organisations with specific factors which will potentially create competitive advantages on a global scale. (Michael Porter 1990)Porters diamond model consist of four conditions of national advantage which are factor conditions, ingest conditions, related and musical accompaniment industries and firm strategy, structure and rivalry.Factor conditions foremostly, discuss about factor conditions. Factor condition is about important elements that exist in a company which lead to national competitive advantage. It can be country specific or industry specific.FN Dairies had constructed plant in Pulau Indah costs RM350 million and will be completed within the southward half of 2011. The new plant promotes in the altogether edge green technology which would have huge gains in water, power and environmental conservation. With existence of this plant, FN Dairies could be on the top list of worlds largest producers of canned milk.An increase in production line is an advantage of the company. FN had launched a new RM45 million polyethylene terephthalate (PET) monoblock production line which is the first in Asia Pacific. This able to done all the things in only one production line, for example blow bottles, fill and pack all carbonate soft drinks products.FN has the a la mode(p) innovati on and technology that bring advantage to them. With this latest technology, FN can enhance its operations by continuing improve production lines. FN can produce more products in effective and efficient way. In addition, the new machineries increase as the production lines increases. The storage warehouse management system has implemented to make operation work run smoothly. Besides, the introduction of new sales predict tools helps in manufacturing, if sales forecast is low, the manufacturer will produce less stock.Supply chain act as an important role in a business. Without give, production would not be carried out. Improvement in supply chain lead to high efficiency of production and logistic by upgrade the systems. FN introduce higher level of operational automation and farm animal management to ensure the manufacturing process has no error. Besides, the product quality management make sure that the products are in acceptable quality and safety measures are enhanced in orde ring the product would not harm people.Demand conditionsSecondly, the command conditions state that if the local market for a product is larger and more demanding at home than in foreign markets, local firms potentially put more emphasis on improvements than foreign companies. This will potentially increase the global competitiveness of local exporting companies.FN non-carbonated portfolio has slightly increased from 25.4 per cent to 28 per cent in soft drinks business. This counterbalance there is a growing demand for drinks. During the year, FN included fruit teas and juices to its range of soft drinks, and launch new drink called Zesta recently catering consumers of this segment. The ability to innovate, differentiate and manufacture new product lines will bring advantages such as gain more market share.FN Fruit Tree released five new flavours in bottle form which are orange, apple, lychee, blackcurrant and mango. As the demand increases, Fruit Tree has becoming one of the fas test growing categories in Malaysia. The new flavours are the extension to the Fruit Tree cans range and the research shows that consumer preference toward these flavours compared to other brand in the market.FN Holding Berhad has built a new warehouse in Kuching which triple larger than previous warehouse capacity to improve the quality of service and make sure slant to customers is on time. Furthermore, it utilised advanced warehousing technology such as high discriminating racking, super flat flooring and Very condense Aisleway (VNA) trucks.Related and supporting industriesThirdly, the related and supporting industries mean that when local supporting industries and suppliers are competitive, home country companies will potentially get more cost efficient and receive more innovative products.In February 2010, 100PLUS gestural a partnership agreement with AirAsia Berhad, officially sell 100PLUS on AirAsia flights which depart from Malaysia. AirAsia Berhad is a Malaysia top airli nes company, being a partner of AirAsia Berhad has a true competitive advantage for FN. This agreement is a larger step for class to extend business offshore. Passenger dehydration happened frequently in air travel, with 100PLUS the passenger can get over the dehydration. Support from AirAsia is like an advertizing effect, whenever there is a flight, there is an appearance of 100PLUS.Firm strategy, structure and rivalryLastly, which are firm strategy, structure and rivalry. Structure and management system can affect competitiveness. FN is running beverage and dairies business in addition to food business too. FN buy 23.08 per cent share in Cocoaland Holdings Berhad. Cocoaland is a major snack food manufacturer in Malaysia. FN is diversifying the business risk to various subsidiaries. FN develop the food business to supplement beverage and dairies business. As the Malaysia grow into high income economy country, the wasting disease of middle income will increase and food business will be benefited.GE model3 portfolio businessPropertyDairy productSoft drinkGE business matrixIndustry Attractiveness- Market growth rateBusiness Strength-Brand StrengthHighMediumLowHighInvestment/ harvest-festivalSoft drinkSelective GrowthSelectivityMediumSelective GrowthDairy productSelectivity harvest-feast/DivestProperty businessLowSelectivityHarvest/DivestHarvest/DivestOur business has divided into 3 portfolio and that are Soft Drinks, Dairy Product and Property. First of all we use the market growth rate as our industry attractiveness factors and brand strength as our business factors.Soft DrinksOur chief(prenominal) soft drinks business portfolio will be categorise at the classes of selective growth. Our company soft drink like 100plus and Zesta was popular in Malaysia our brand has already helped our company bring certain level of stable income. Our business from year 2007 until 2011 has seems growth constantly that at year 2007 increase 9%,2008 11%, 2009 11%,2010 19% an d 2011 grow 12%. At year 2011 the growth has slow down it is because the subsidy of sugar had removed by the government. The impact on FN is their production cost is increase and cause their profitability declension. The attractive of the beverage market will decline and potential competitor will have more consideration to decide whether to or not to enter into soft drink industry. Moreover, Sichuans earthquake causes the prices of the aluminum increase. That mean one of the main direct material has been affect again. Industry attractive will place at the medium due to the problem of sugar subsidy and the aluminum prices arise.Dairy ProductOur dairy product will classified at the classes of selectivity. Our company dairy products have included sweetened condensed milk, evaporated milk, pasteurised milk, UHT milk, juice and ice cream. In year 2007, our tax revenue on dairy products has significant increase by 102% compare with year 2006 and subsequent increase 38% in year 2008. In year 2009 the revenue of the dairy product decline by 6%, but increase 5% in year 2010. Revenue has constant in year 2011 compare with year 2010. Our dairy product has classified at selectivity, with medium level of attractiveness and medium business strength on the dairy product. Although the product Milo are popular in the Malaysia, but Milo is not own by our company, we just a franchise on it. This will reduce our business strength due to our dairy product not a major player in the market. The dairy product will less attractive for investors consider investing because the deliberate the milk market will very high-priced. In addition, the cost of technical for hire mental faculty and the cost of technology for produce the dairy product also costly for subsequent production cost. Moreover, the dairy product license also difficult to get approval by the government. New entrant will find difficult to entry, because the market has been controlled and play by a few big competitor. Th ese create barriers for the new entrant find difficult to entry.PropertyOur property business had generated more revenue in year 2007 compare with the year 2006 by 6%. Revenue for the year 2008 had decline by 24% compare to year 2007. In subsequent two year had increase by 65% and 20% in year 2009 and 2010, but decline again in year 2011. Our property business have classified at selectivity with high level of attractiveness and low business strength. Our company more concentrate in the soft drink product and has no hard to promote our property to the public, not many people know that our business has already enter into it. Our property business has not like our beverage business seemed so successful and our business strength in this industry is low. The property business has high profitability in this industry will attract more investor to entry. Our government encourage removing the old construction and build more new business park in order to make our country more prosperity. More over, our property business is at growth stage because just introduce into industry so do not have strong business strength on the property business. symmetry analysisRevenue of continuing operation keep ons to grow from 2009 to 2010 by 11.2% and 2010 to 2011 7.6%. In 2010, the revenue is able to grow better than 2011 due to improved economic conditions. Malaysia Government has introduced New Economic Model 2010 helps to boost spending in Malaysia.Profit before interest and tax growth rate also decline from 2010 to 2011, 31% to 14%. The result was affected because of particular year wasnt doing well in 2011.Soft DrinkSoft Drink disagreement has current ratio of 1.77 and 1.99 for year 2010 and 2011. It indicated improvement in managing assets and liabilities.The growth impulse of soft drink division has continued. The division has been doing well over the years. It contributes the largest profit to FN. In 2010, the soft drink division was able to generate revenue 21% more compare d to last year. Soft drink was delivering higher bulk especially during festive periods such as Chinese New Year. In addition, sales bulk of 100Plus Seasons have grew more than 20% and reflected strong consumption and growing popularity of the brands. 100Plus generated over 88% of market share in isotonic category and Seasons generated 27% market share of Asian drink category. plot of ground Badminton competition Thomas Cup was around, 100PLUS Thomas Cup 1 gazillion Support Campaign was held for Malaysian to show their support for Malaysian badminton team. apart from that, the division served as distributor of flushed diddlyshit energy drinks in Malaysia and commenced from 1 April 2010. Soft drink mess was able to benefit from Red Bull which contributed 2.2% helps to improve the divisions beverage portfolio. (Annual cut across 2010)Soft drink division grew only 16% from 2010 to 2011. The growth rate is eroded due to the reason of Malaysian government has withdrawn the subs idy of sugar and fuel. Therefore, raw material cost has increased and causes the profit margin diminished. Coca-Cola business exits the FN in September 2011 which also the reason of profit margin diminished. However, 100Plus and Seasons still generated volume growth 10% and 14% to benefits the division. 100Plus and Seasons are the leading brands in the division and continue to enhance the divisions beverage portfolio. 100Plus was being promoted continuously as 100PLUS New thematic Launch in July 2011. Beside, FN SEASONS Nourishing You Malaysia National Consumer Contest held between action and April 2011 to create consumers awareness that Season as healthy brand. The division also has introduced new product, Ice Mountain in Malaysia and it is able to establish 5% market share. The division has enhanced the market share of Red Bull in energy drinks from 40% to 46.8%. It is because RED BULL ENERGIZING MALAYSIA make out has conducted and grand prize is Proton Saga. In addition, divisi on also has organized 1million bottleful Giveaway consumer promotion. (Annual 2011)Dairies MalaysiaDairies Malaysia division has current ratio 3.07 and 4.14 for year 2010 and 2011. The division has quite an high current ratio for both years and year 2011 has higher current ratio because liabilities of division have been reduced.Overall sales volume has improved 7% from 2009 to 2010. The ongoing improvement on global economy had a positive impact on consumer sentiment and consumption. Profit before interest and tax of the division has improvement of 8.4% for the reason that division has enjoyed lower raw material cost during first half of the year. However, the positive effect is reversed by raw material cost was higher during second half of the year. Therefore, an increase in price of sweetened condensed and evaporated milk which causes demand diminished. Dairies Malaysia is having over 62% market share and condensed milk brand is able to strengthen its number 1 position with 24% m arket share. (Annual Report 2010)Dairies Malaysia doesnt doing well in 2011 because the sales volume has declined 15.2%. More than that, revenue and profit before interest tax also decline 6.6% and 45.8%. Malaysian Government has withdrawn subsidy of sugar which cause the price of sugar increased. Beside, global commodity costs have increased together with impact from sugar cost which cause price of angelic Condensed Milk increased by 25%. Price of Sweetened Condensed Milk created inflation pressures to consumers and caused the sales volume declined. Apart from that, the sugar subsidy withdrawn on selective reason by government and create unfair competitive environment to Sweetened Condensed Milk manufacturers. The division was still able to getting 60% market share for both Sweetened Condensed Milk and Evaporated Milk markets. (Annual Report 2011)Dairies Thailand accredited ratio of division in year 2010 and 2011 are 3.35 and 2.87. The current ratio is considered relatively high but it has decreased because liabilities of division have increased.The sales volume of division has grown 10.6% but revenue only grew 6.6% in year 2010. However, profit before interest and tax has increased 16.6%. Rojana industrial Estate was operated in December 2009, working as the biggest canned milk manufacturing plant in the region. In July 2010, Dairies Thailand relocated to its Rojana Warehouse Distribution Centre, position 300 meters nearby to its Rojana dairy plant. Distribution Centre is located to run into the present capacity requirement of the Rojana Plant. It is able to upkeep business growth and future expansion for operations. The division was generating substantial savings of transportation cost. chromatic and TEA POT brands continued to contribute excellent performance to canned milk portfolio. Carnation Sweetened Beverage Creamer (SBC) and Carnation Evaporated Milk (EVAP) have sales growth of over 20 per cent. Carnation Sweetened Beverage Creamer captured market share of 29 per cent duration Carnation Evaporated Milk grew three percentage points to record 73 per cent market share. In addition, Bear Brand Sterilized Milk was market leader which captured 98% market share in sterilized milk segment. (Annual Report 2010)