ajinomoto (half)

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Professor Kikunae Ikeda

Introduction Incorporated in 1961 HQ - Jalan Kuchai Lama, Petaling, Kuala Lumpur Type of business - flavor enhancer, and seasoning manufacturer Type of products AJI-NO-MOTO, VONO, TUMIX, SERI-AJI and etc. Main competitors Maggi, VEDAN, and CAMPBELL

A. General External EnvironmentDemographic Economic Political/Legal Sociocultural Technology Physical Environment The target customers of Ajinomoto: Housewife, Chefs & Restaurants Holding almost 80% market share in Malaysia SALAM (System Ajinomoto Lindungi Alam Msia) ASQUA (Ajinomoto System of Quality Assurance) Produce product that are suitable for every culture races in Malaysia Ajinomoto (M) conducted thorough studies and finally selected FlexProcess Follow the Eco-Guidelines of the Eco-Index for Container and Packaging to conserve the environment

B. Industry Analysis (Porters 5 forces)Threat of New Entrants Bargaining Power of Suppliers Bargaining Power of Buyers Threat of Substitute Products Rivalry Among Competing Firms Low, due to high entry barriers and involve large capital

Low, as Ajinomoto itself owns plantation that can produce itself Low, as seasoning price are standardized Only few brands to choose on High, seasoning product are not necessary Can be replaced by salt or sugar

Average, as Ajinomoto already a market leader Well established brand and strong reputation

C. Internal Environment Analysis Resources Tangible resources Organizational and technological Intangible resources Human resources and Reputational resources

TechnologicalNECs FlexProcess is an ERP solution designed specifically for the process industries and helps to build an information system that streamlines business processes, reduce TCO (Total Cost of Ownership), and adapts to changing business environments.

Chairman, Independent Non-Executive Director General Tan Sri (Dr.) Dato Paduka Mohamed Hashim Bin Mohd. Ali (Rtd) 75 years of age - Malaysian

Chief Executive Officer, Managing Director Hiroshi Amano - 49 years of age - Japanese

Non-Independent Non-Executive Director Adinan Bin Husin - 64 years of age - Malaysian

Human ResourcesISO 14001 awareness briefing

Team Building Program

Reputational Resources

"HALAL" Certification

Food Safety Programme

Quality Management System

C. The Firms CapabilitiesHuman Resources Have enough potential employees to achieve the company mission and vision Foster world-class human resources have been implemented Fair Employment for All Initiatives for Labor-Management and Human Rights -create rewarding work environment -labor-management council meetings to assess labor conditions

C. The Firms Capabilities (Contd) Research and development Strong ERP solution- Flex Process - Help to solve difficult to manually plan production. (because more than 100 products) - More accurate information on inventory level and the actual production situation and status - Efficiency management Using new bio-science and fine-chemical healthcare technologies and improve development in low fat, low sugar production.

VRIO AnalysisIs the resource or capability Valuable? Is the resource or capability Rare? Is the resource or capability costly to imitate? Yes Is the resource of capability Nonsubstitutable? Competitive Performance consequences implications

Yes

Yes

Yes/No

Sustainable competitive advantage

Aboveaverage return

Valuable - because Ajinomoto (M) ensure strict quality assurance from raw material procurement. - all products are qualified under Ajinomoto System of Quality Assurance (ASQUA) Rare - because It is the only company that provided seasoning products. - less rivalry business that can be competed in this industry Costly to imitate - has strong capabilities on its human resources and also research and development. - foster world-class human resources - high technologies skills and strong experiences (large capital enquire) Non substitutable - yes - because it is the only company that provide seasoning in Malaysia. - no - because people might look for natural species such as salt, sugar. - people might have a mind set that seasoning can cause unhealthy effect

Firm infrastructure Human Resource Management

- NEC s Flex Process as an ERP solution - Reduce total cost of ownership - Improve production planning and inventory management - Recruit qualified people - Provide intensive training program to employees - Trust on employee and a fair employment for all

Technology Development - Adopting Flex Process to strengthen production - More precise information pertaining to inventories - Improving nutrition by making food more delicious ProcurementInbound logistics *Raw material from Cameron Highland and Indonesia *Secure a stable supply of highquality raw materials

- Procurement raw material from local and also foreign country - Take advantage of buying in advance and in bulk - Procures the equipment from domestic manufacturersOperations *Process the raw material and packaging *Quality control * Uses flex process to control its inventory level of production Outbound Logistic *Distribute finished goods locally and also export *Endeavor to reduce environmental impacts during transportation Marketing and Sales *Deliver products in easy to understand packaging. *Advertising through television * invited celebrity chef conduct cooking demonstration After Sales Service *Customer helpline *Promptly reply to inquiries and feedback *Online cooking class with recipe

D. Business Level Strategy AnalysisCost leadership High-earnings structure Increase efficiency and flexibility

Reducing the cost

Nucleotides and amino acids

NECs FlexProcess (logistics and production)

E. Competitive Environment Analysis (i) Competitor Analysis

Market commonality MAGGI and VEDAN, Flavor enhancers market and seasoning market CAMPBELL

Resources similarity MAGGI strong parents company resources similarity such as technological knowledge, experience, and expertise

E. Competitive Environment Analysis (ii) Interfirm Rivalry

Likelihood of Attack(i) Organizational Size Ajinomoto (M) Market position, capability, and volume of business to achieve economic of scale Offer attractive pricing to gain enhanced market shares Maintain profitability of the firm (ii) Quality Quality of product is of prime importance to the firm Quality audits ISO 9001: 2000 Hazard Analysis and Critical Control Point (HACCP)

Likelihood of Response

(i) Reputation

(ii) Dependence on the Market

Responsive Key players in the market Predict the competitors likelihood

Monosodium glutamate products Strongly dependent on the market Strong response

E. Competitive Environment Analysis (iii) Competitive Dynamics

standard-cycle marketIntense competition Ajinomoto (M) has kept prices constant selling downsized packages Packages design and ease of availability are dimensions the competitive Innovation Had launched two new variants in their VONO instant soup line New Potato and Potato Mushroom variants

F. Corporate-Level Strategic Analysis

Moderate to high levels diversification retail and industry flavor enhancers and generates not more than 70% of its sales revenue

Related constrained diversification strategy Sharing primary activity or support activity in order to create value AJI-MIX and SERIAJI

G. Strategy Formulation I Matching StageStrength Strong quality control Safe and Halal Offer excellent service Customer Satisfaction Code of Conduct Weakness Heavily rely on advertising Too focus on a specific market Seasoning market

SWOT

Opportunities Healt concern Seasoning products nutrition issues

T reats Unpredicta le conomy ntense competition Maggi

H. Strategy Formulation II Current and Propose Strategies Business levelCurrent Distribution channel is inefficient Take advantage of the technology Propose A mobile computer and printer, paired with GPRS connectivity Wireless data processing and printing Increase field sales productivity Bringing down the cost indirectly

Competitive Strategy

Advertising r Adv rtisi are costly, while campaign are r l v tl stl , il i r relevantly cheaper. r. ample: blood donation, r l : l d recycle, free body check up l , r ody campaign campai n More campaign to be organi ed to create awareness campai n or ani and increase reputation of Ajinomoto(M) eputation are important as positive reputation resulted average return or otherwise This strategy may help Ajinomoto(M) to save more cost and generate profit.

Corporate LevelCurrent Concentrated resources in selected core market Deploying its technological strength to differentiate its well-known brand Promote products with emphasis on the Eat Well, Live Well concept Propose tilize existing plants and equipments with little hassle Develop new product line Expand its current product line

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