Marketing Project : TBS

Newcastle Business School

MNGT2001

Assessment Title: Preliminary publicly listed company environmental and key issues analysis

Company selected: Old Chang Kee Ltd.

Executive Summary:

In this report, we will be conducting an environmental and key issues analysis on a publicly listed company, Old Chang Kee Ltd. In our external analysis, we will be using the PESTEL framework and Michael Porter’s 5 Forces model to examine current megatrends and megaforces respectively, that impact Old Chang Kee Ltd. In our internal analysis, we will be determining its core competencies that produce a sustainable competitive advantage. Finally, we will employ the SWOT analysis to conclude on external opportunities and threats as well as internal strengths and weaknesses of the company.

1.0 Introduction

Old Chang Kee Ltd. is a Singapore-based investment holding company. It’s main activities are the manufacture and sale of over 30 food products including its signature curry puffs, in 80 outlets nationwide (Singapore Exchange Ltd, 2014). It also markets franchise rights, and manages subsidiaries such as Ten & Han Trading Pte Ltd., Old Chang Kee Manufacturing Sdn. Bhd. and sub-brands such as Mushroom, Take 5, Pie Kia and Curry Times (Old Chang Kee, 2014). This Financial Year, its gross profits increased by S$2.5 million (Old Chang Kee, 2014).

2.0 Strategic Analysis

Analysis of external and internal environments of the firm.

2.1 External environment analysis

Consists of general and specific environments.

2.1.1 General environment

Political, Economic, Socio-Cultural, Technological, Environmental and Legal (PESTEL) megatrends affect existing and future operations of companies (Oxlearn, 2009). Economic, Socio-Cultural and Technological are most relevant to Old Chang Kee Ltd. because Political, Legal and Environmental are relatively stable in Singapore where it is based.

· Economic

Asia is increasingly important, where economic integration is blossoming. The Asian Development Bank predicts that Asia will constitute half the global economic output and financial assets and institutions by 2050, hence more trade can occur (Alvin Foo, 2013). This increases investor optimism and growth potential in Singapore, a hub for Asia's growth, creating greater opportunities for sales and profits for Old Chang Kee Ltd.

It addressed this by granting franchise rights to more investors locally and from Asia, and by releasing an Initial Public Offering on the Singapore Exchange.

· Socio-Cultural

Ageing population is a megatrend in Singapore (Alvin Foo, 2013). The elderly typically require low salt, sugar, fat and cholesterol. This threatens Old Chang Kee Ltd. because it mainly sells deep-fried products that are unsuitable for the elderly. Then, there is a current social-media trend, “#fitspo” , with 10 million tags on Instagram alone (Jessica Murray, 2014). It advocates healthy-eating which greatly threaten Old Chang Kee’s popularity in the young and trendy demographic.

It addressed this by expanding overseas and re-formulating its recipe, reducing saturated fats as recommended by the Health Promotion Board (City Square Mall, 2014).

· Technological 

Agricultural mechanisation and technological advancements in logistics and manufacturing sectors (Automation World, 2014) provide great opportunity for lower production costs and higher productivity.

Old Chang Kee Ltd. introduced a central kitchen and implemented a Enterprise Resource Planning system that automatically replenishes stocks and reduces wastage (Way To Go Singapore, 2014).

2.1.2 Specific environment

Consists of megaforces: buyers, competitors, potential entrants, substitutes, suppliers and Government. Old Chang Kee Ltd. is more susceptible to Substitutes and Government hence these are most relevant.

· Substitutes

Old Chang Kee’s prices have been increasing to combat inflation. Today, 6 pieces of sotong balls from Old Chang Kee can buy a filling meal at a hawker centre. Fear of obesity-related diseases pose another threat as customers seek healthier products. The threat of substitutes is high.

Old Chang Kee has yet to reduce prices. If prices continue increasing, this threat will increase.

· Government

Singapore has low tax rates, and a Group Relief System that lessens the tax burden for the Old Chang Kee group. Additionally, the Government issued Old Chang Kee Ltd. $161,000 (Old Chang Kee, 2014) under the Wage Credit Scheme to help it cope with rising labour costs, or improve employee-productivity (Inland Revenue Authority of Singapore, 2014). These provide an opportunity to improve productivity and profitability.

However, during the Avian Influenza of 2004, imports of chickens and eggs from Malaysia, China, Thailand and even America, were suspended (AVA Singapore, 2014). Old Chang Kee Inc. relies heavily on fresh raw materials which are unavailable locally. Hence, it is unable to address the threats of Government import-policies and food-related diseases.

Opportunities and threats are high.

2.1.3 Conclusions on external environment threats and opportunities

We conclude that external environment threats and opportunities are relatively high for Old Chang Kee Inc. To combat threats, it should increase product diversification with healthier grilled or steamed varieties, and reduce the price of its products through set-meal promotions or loyalty program discounts. To take advantage of opportunities, it should utilise available technological advancements and conduct research into new innovative practices, using government grants whenever possible.

Overall, Old Chang Kee Inc. has good external management, with constant expansion in local and international markets.

2.2 Internal or competitive analysis

Consists of competitive strengths that satisfy the four criteria of a core competence environment. We will discuss Old Chang Kee’s sustainable competitive advantage and possible weaknesses.

2.2.1 Core competencies (strengths)

· Valuable

Old Chang Kee products fulfil the wants and needs of consumers, namely convenience and a distinctively nostalgic taste.

· Rare

Old Chang Kee has numerous outlets, all at strategic locations: near bus interchanges, MRT stations and high-traffic shopping malls. Competitors do not have the financial means of renting or owning such high-value assets, in equal volume.

· Non-substitutable

Old Chang Kee was established in 1956 (Old Chang Kee, 2014). It’s long history and rooted position in the hearts of local consumers cannot be easily replaced.

· Inimitable

Old Chang Kee has won numerous awards and accolades over the years. It’s best practices are difficult to mimic.

2.2.2 Sustainable Competitive Advantage (strength)

It’s key advantage is its brand name and monopoly of the market in Singapore where it is currently the leader.

2.2.3 Internal weaknesses

Possible weaknesses include product quality, where an unidentified insect found in it’s popular sardine puff caused a huge uproar and reduced Old Chang Kee’s sales for a period of time (Jeanette Tan, 2012). Poor Public Relations management worsened its reputation.

2.2.4 Conclusions internal strengths and weaknesses

We conclude that internal environment strengths are relatively higher than weaknesses for Old Chang Kee Inc. To overcome weaknesses, it should increase staff training in preventing future oversights and in mitigating situations should it occur again. It should maintain its strengths by buying strategically-located spaces, to prevent being subject to constant rental hikes that may eventually erode their competitive advantage.

Overall, Old Chang Kee Inc. has good internal management, winning multiple awards and securing its place as an F&B Leader and best-practice firm in Singapore.

2.3 Conclusions about organisation’s competitive position in its market.

In all, Old Chang Kee Inc. has superior internal and external management, that effectively manage its strengths, weakneses, opportunities and threats. In the next 3-5 years, we foresee Old Chang Kee Inc. expanding further and retaining it’s competitive position.

3.Strategic Directions and Strategic Objectives

Vision

A vision is the image that the company wants to achieve in the future as well as its long-term goals (Hitt, Ireland, and Hoskisson, 2009). The first vision of Old Chang Kee is to provide a variety of high quality finger food and ready to eat meals through standardized food preparation processes. Their second vision is to modernize their traditional recipes to appeal to multi-cultural customers. The last vision is to deliver convenient fast food for people on the go (Old Chang Kee, 2014). In order to achieve their vision, Old Chang Kee has been developing their product to suit the needs of a multi-cultural customers. For example, their famous curry puff are Malaysian, Singaporean and Thai snack. Moreover, their yam cake and fish ball onstik is a chinese dish and their gyoza onstik simillar as japanese gyoza.

Mission

A mission is the specific method that businesses choose compete and satisfy their customers (Hitt, Ireland, and Hoskisson, 2009). In addition, the company’s mission must be more specific than their vision. Old Chang Kee mission is to deliver high quality finger food and convenient meals at affordable prices in a clean and customer friendly retail environment (Old Chang Kee, 2014). Based on their internal environment, Old Chang Kee targeted to achieve their goal by ensuring innovation of their product, price and retail store.

Strategic Objectives

Stakeholder Analysis Table

Stakeholders	Salience	Stakeholders demands/needs that must be satisfied	Strategic Objectives to address stakeholder demands/needs
Shareholders	Definitive	· Profits · Dividends · Share value	· Ensure growth in sales and profits · Ensure interests of shareholders are protected · Ensure strong credit rating · Ensure healthy financial ratios
Customers	Dominant	· Fast · Convenient · Efficient · Good quality · Affordably prices · Variety of products	· Ensure products are produced and sold at affordable prices · Ensure products are produced with high quality and efficiency · Ensure continuous improvement in productivity · Ensure product differentiation and diversification
Suppliers	Dominant	· Respect of suppliers · Timely payment · Recurring orders	· Ensure products are produced efficiently · Ensure growth of sales
Employees	Dominant	· Workplace safety · Fair wages and salary · Job security · Good working conditions	· Ensure efficient human resource management · Ensure the creation of a friendly and positive atmosphere · Ensure constant feedback by employees
Community	Dominant	· Minimize pollution · Reduce waste of raw materials, water and electricity	· Ensure production process is efficient · Ensure wrappers and boxes are environmentally friendly · Ensure staff reduce, reuse and recycle

Old Chang Kee aims to meet the needs and demands of their stakeholders by ensuring that their strategic objectives meet these needs. By ensuring their strategic objectives are relevant and effective, they would have to constantly review and obtain feedback from their stakeholders so that the company can modify them so meet the changing needs of their customers.

Conclusion on Organisation’s Strategic Directions and Strategic Objectives

In summary, we can see that Old Chang Kee has spelt out their vision, mission and strategic objectives very clearly. By doing so, the company’s employees and respective stakeholders are able to work towards ensuring that the company’s long term, medium term and immediate goals and aims are met. Without these three factors, the company would have no direction and would be wasting time and resources trying to do too many things at once. At the end of the day, the company would have to satisfy the needs and demands of their stakeholders otherwise conflict would result and disrupt the operations and survival of the company.

References:

Old Chang Kee, 2014, http://www.oldchangkee.com/our-heritage.htm retrieved 18 September 2014

EMIS, 2014, http://www.securities.com/Public/company-profile/SG/Old_Chang_Kee_Ltd_en_2384632.html retrieved 18 September 2014

Old Chang Kee, 2014, http://oldchangkee.listedcompany.com/chairman_message.html retrieved 18 September 2014

PESTLE - Macro Environmental Analysis. (2014). Retrieved from http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31 

Inland Revenue Authority of Singapore, 2014, http://www.iras.gov.sg/irashome/WCS.aspx

How Technology and People Are Steering Manufacturing's Future | Automation World. (2014, September 16). Retrieved from   http://www.automationworld.com/how-technology-and-people-are-steering-manufacturings-future 

 

Old Chang Kee - Quality Food in Singapore. (2014). Retrieved from  http://www.oldchangkee.com/our-heritage.htm 

 

PESTLE - Macro Environmental Analysis. (2014). Retrieved from http://www.oxlearn.com/arg_Marketing-Resources-PESTLE---Macro-Environmental-Analysis_11_31 

 

Population hits 5.47m but growth slowest in a decade | TODAYonline. (2014, September 26). Retrieved from http://www.todayonline.com/singapore/population-hits-547m-growth-slowest-decade 

 

Singapore economy to expand 3.3% in 2014: MAS survey - Channel NewsAsia. (2014, September 11). Retrieved from http://www.channelnewsasia.com/news/business/singapore/singapore-economy-to/1354826.html 

Alvin Foo, 2013, The Straits Times, http://www.timesbusinessdirectory.com/Singlenews.aspx?DirID=86&rec_code=857991&title=S'pore%20'set%20to%20benefit%20from%20megatrends'

Jessica Murray, 2014, Elle Canada, http://www.ellecanada.com/blog/2014/08/22/fitspo-is-the-latest-fitness-craze-helpful-or-harmful/

Systematics International Limited, 2013, http://www.systematics-int.co.uk/agricultural-development-and-mechanisation-in-2013/

Singapore Exchange Ltd, 2014 https://www.google.com/finance?cid=763002075636753

Alvin Chua, 2010, http://eresources.nlb.gov.sg/infopedia/articles/SIP_1671_2010-06-16.html

City Square Mall, 2014, http://www.citysquaremall.com.sg/shops-foodgalore.php?page=1&shop=19

https://www.facebook.com/oldchangkee1956 Facebook, 2014,

http://www.waytogo.sg/news-case-studies/casestudy/Id=NDUxZmI0MzYtNzg2Yi00NzQyLTlhYTItNzJiMGVmNDhhMjVl Way to go Singapore, 2014,

http://www.ava.gov.sg/NewsEvents/HotTopics/BirdFlu/ AVA Singapore, 2014

http://thefinance.sg/2008/01/07/old-chang-kee-ipo/#sthash.Fc778bxq.dpuf The Finance, 2008

http://smartkpis.com/blog/tag/five-forces-model/

http://www.smartkpis.com/blog/wp-content/uploads/5-Forces-Model1.png

(Karagiannopoulos, Georgopoulos, & Nikolopoulos, 2005)

Bibliography

Karagiannopoulos, Georgopoulos, & Nikolopoulos. (2005). Fathoming Porter's five forces model in the internet era. The journal of policy, regulationand strategyfor telecommunications, information and media , 7 (6) , 66-76.