1.

INTRODUCTION OF THE ORGANISATION POWER ROOT (M) SDN. BHD. was founded on 23 July 1999 in Johor Bahru, Johor. It is a leading company to develop and promote herbal energy drinks fortified with two main rainforest herbs: Eurycoma longifolia Jack or commonly known as "Tongkat Ali" and Labisia Pumilia and Pathoina or "Kacip Fatimah". These herbs are indigenous to Malaysia and its properties for

promoting physical well-being are highly regarded by Malaysians. With the determination to promote these local products in the international markets, Power Root has invested heavily in research and development of these traditional herbs to create its own brand of products. In March 2001, Power Root established a marketing branch in Kuala Lumpur to better coordinate its logistic and serve its customers more effectively. In 2003, Power Root started its very own manufacturing plant in Johor Bahru to cater for growing demands. An 18-acre phase 1 manufacturing facility is expected to be completed early 2008, incorporating modern production technology to cater for the strong market demand locally, business development opportunities abroad and new formulations development. Power Root with its entrepreneur spirit, is committed to provide consumers with the ultimate choice of a high quality product. Concentrated efforts in research and development to develop new and improve existing products have also accelerated its success in the market. As such, the company was able to quickly establish a stable business foundation and thus, creates a very promising future for the company.

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MACRO- ENVIRONMENT The term macro-environment denotes all forces and agencies external to the

marketing firm itself. Some of these forces and agencies will be closer to the operation of the firm than others, e.g. a firms suppliers, agents, distributors and other distributive intermediaries and competing firms. These closer external constituents are often collectively referred to as the firms proximate macro-environment to distinguish them from the wider external forces found, for example, in the legal, cultural, economic and technological sub-environments. This consists of people, organizations and forces within the firms immediate external environment. Of particular importance to marketing firms are the subenvironments of suppliers, competitors and distributors (intermediaries). These subenvironments can each have a significant effect upon the marketing firm. 2.1 The supplier environment This consists of other business firms or individuals who provide the marketing firm with raw materials, product constituents, services or, in the case of retailing firms, possibly the finished goods themselves. Firms, whether they be retailers or manufacturers, will often depend on numerous suppliers. The buyer/supplier relationship is one of mutual economic interdependence, both parties relying on the other for their commercial well-being. Although both parties are seeking stability and security from their relationship, factors in the supplier environment are subject to change, such as industrial disputes which will affect delivery of materials to the buying company, or a sudden increase in raw material prices which forces suppliers to raise their prices. Whatever the product or service being purchased by the marketing firm, unexpected developments in the supplier environment can have an immediate and potentially serious effect on the firms commercial operations. Because of this, marketing management, by means of the marketing intelligence component of its marketing information system, should continually monitor changes and potential changes in the supplier environment and have contingency plans ready to deal with potentially adverse developments.

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The distributive environment Much reliance is placed on marketing intermediaries such as wholesalers, factors,

agents and distributors to ensure that their products reach the final consumer. To a casual observer, it may seem that the conventional method of distribution in any particular industry is relatively static. This is because changes in the distributive environment occur relatively slowly, and there is therefore a danger of marketing firms failing to appreciate the commercial significance of cumulative change. Existing channels may be declining in popularity over time, while new channels may be developing unnoticed by the marketing firm. Nowhere has this creeping change been more apparent over recent years in the UK and other parts of the world than in the retailing of fast moving consumer goods (fmcg). In the 1960s well over half of all fmcg retail trade was accounted for in the independent sector plus a further large proportion to the Co-operative Societies. Nowadays, the sector represented by the larger food multiples has well in excess of this proportion. 2.3 The competitive environment Management must be alert to the potential threat of other companies marketing similar and substitute product whether they are of domestic or foreign origin. In some industries there may be numerous world-wide manufacturers posing a potential competitive threat and in others there may only be a few. Whatever the type, size and composition of the industry, it is essential that marketing management has a full understanding of competitive forces. Companies need to establish exactly who their competitors are and the benefits they are offering to the market. Armed with this knowledge, the company will have a greater opportunity to compete effectively.

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ELEMENTS OF MICRO-ENVIRONMENT Major external and uncontrollable factors that influence an organization's decision

making, and affect its performance and strategies. These factors include the economic, demographics, legal, political, and social conditions, technological changes, and natural forces .

Chart: Influential elements of macro environment.

3.1

Demographic Environment Demography is the study of human populations in terms of size, destiny, location,

age, gender race, occupation and other statistics. The demographic environment is of major interest to marketers because it involves people.

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Economic Environment Marketers require buying power as well as people. The economic environment

consists of factors that affect consumers purchasing power and spending power/ patterns. Marketers must pay close attention to major trends and consumers spending patterns. 3.3 Natural Environment The natural environment involves the natural resources that are needed as inputs by marketers or they are affected by marketing activities. Environmental concerns have grown steadily during the past three decades. Marketers should be aware of several trends in the natural environment. 3.4 Technological Environment The technological environment is perhaps the most dramatic forces now. Technological environment involves forces that create new technologist creating new product and marketing opportunities. 3.5 Political Environment Marketing decisions are strongly affected by developments in the political environment. Political environment consists of laws, government agencies, government itself and pressure groups that influence or limits various organizations and individuals in a given society. 3.6 Cultural Environment The cultural environment is made up of institutions and other forces that affect a societys basic values, perceptions, preferences and behaviors. There are few cultural values which affect marketing decision making. These are, persistence of cultural value, shifts in secondary cultural value, people views of organization/ others, etc.

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IMPACT OF MACRO-ENVIRONMENT OVER POWER ROOT SDN BHD

4.1

IMPACT OF DEMOGRAPHIC ENVIRONMENTS For a businessman the first and foremost considerable topic is population or

market size. Without population there is nothing for a market. For this reason before entering into a marketing one must keep in mind about the changes about population. Effect of changes on demographic environment is given below: 4.1.1 Age Structure of the Total Population and Its Changes The number of different ages of people such as the number of children, teenage, youth, old person should be kept in mind at the time of doing marketing strategy. This is because a product cannot be satisfied for every ages of customer. Moreover, at the time of increasing of population, the growth of demand of product rises should be noticed otherwise marketing process wont be effective at all. On the contrary at the time of the decrease of population the demand falls. This is the reason at the time of doing marketing strategy the matter of population must be analyzed. For example, Tongkat Ali Coffee is well known and more consumables between middle ages to old people but less popular for teenage and youth. To attract this group of ages, Power Root has appointed a young and famous Hong Kong actor, Raymond Lam as Tongkat Ali Coffee spoke person. By using the influence of the celebrity, Power Root will gain the popularity of the product among the young ages group.

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Changed Family Life Now a days one can easily identify the changes of family life style such as the

growth of working class women, income capability of women, adult marriage of women and the right of divorce of women etc. also important for doing marketing strategy. Actually the development of food and beverage industry has created this problem. For this reason people are eager to do a less physical labored task, and prepared food, half cooked food, bread, washing machines etc. are used more. So, now we use packet mashla, pressure cooker, rice cooker, washing machine, go to restaurants for food for save our time but those things created market for the product and the marketers getting benefit from their work and growing rapidly. By witnessing this kind of trend, Power Root decides to come out their products in instant form such as: 3 in 1 sachet and drink can. This forms will ease the consumers in preparation process.

4.1.3

Education and Profession Education rate and job distribution also be remembered at the time of doing

marketing strategy. Because the taste, choice, habit, communicating process cannot be same of an educated and a non educated person. Some thoughts is applicable for the people of different working people. Our education rate is increasing on a regular basis. Now people are eager to do industrial job or service more than farming. These changes are very important for marketing strategy. Educated people will more concern about the food or drinks that put inside their mouth. They concern about the food ingredients,

chemical levels and nutrition facts. Tongkat Ali Coffee is a herb drinks thats not only good in taste and good for health too. 4.1.4 Geographical Shift in Population Geographically living of population and the shift of geographical living of population create impact on marketing. For a lot of reason people tend to go to big cities. For this reason, peoples life style and their demand style are changing. In Malaysia, people want to shift in Kuala Lumpur rather than other cities. So, market of this mega city is bigger than others. The marketing strategy of Power Root will more concentrates in big city rather than rural places. You can easily purchase the products of Power Root in any of the department stores in the city. Sometimes, u even can taste the launching of new products in those stores.

4.2

IMPACT OF ECONOMIC ENVIRONMENT In market not only people but also their buying ability is needed, and buying

ability rely on peoples earning condition, price of a product, savings and debt facilities. At the time of doing marketing strategy, one must remember the shift of earning as well as the spending. And by analyzing these, one should make their marketing policy. How economic environment effect marketing decisions are given below: 4.2.1 Changing Income Our income per capita grows slightly causes customers real purchasing power falls for these few years. Increase rate of inflation, increase rate of unemployment, taxes, economic uncertainty also responsible for the downward shift of economic condition of customer. For trade and foreign support, some peoples purchasing power are increasing but limited earned peoples condition getting worse day by day especially for people in rural places. In future, price may increase so people tend to buy product and storage. For this reason, Power Root is applying effective techniques for rural class people. TV advertisement, mini pack of product, buy with free gift etc are the major example of this initiative.

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Changing Consumer Spending Patterns

The spending patterns are different basis on earning patterns so their buying patterns also different. Food, housing and transportation use up the most house hold income. As family income rises, the percentage expense on food declines, spent on housing remains constant, and both the percentage spent on most other categories and that devoted to saving categories. At the time of increasing of income the eating habit gets changed. Again the storage of product or the shortage of product may cause the change of demand. Changes in major economic variables such as income, cost of living, interest rates, and savings and borrowing patterns have a large impact on the market place. Companies watch these variables by using economic forecasting. Business does not have to be wiped out by an economic down turn or caught short in a boom. With adequate warning they can take advantage of changer in economic environment. We can say that now those demographic and economical environments help to make marketing decisions. For this reason, Power Root comes out with different size of product packaging. These packaging provides the choices of consumers to choose the quantity and price they willing to spend.

4.3

IMPACT OF NATURAL ENVIRONMENT Our natural environment is getting ruined due to different types of business task

and industrial activities. As a result of these situations, before doing marketing strategy one has to be conscious about the danger of natural environment. From 1960s people are started to think about the world natural losses. Since 2 decade this pressure is getting larger. The air, water and sound pollution gets out of control in a lot of cities. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. So a marketing manager must concentrate on some natural issue. Such as:

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Shortage of Raw Material Assets can be divided as limitless but not increasable and limited but increasable.

As an example: air and water is unlimited but for some industrial reason these resources gets polluted. For this reason mass consciousness is raised or some countries enforced law. Forest and food is limited but it is possible to increase its production. To make run the forest or wood related businesses we should start taking tree plantation measures. On the other hand oil, gas, coal etc natural resources are also problematic. Though these resources are enough in some cases available but the expenses to use these resources are increased a lot. So the alternative resources are looked for or experimenting is going on to lessen the expenses. Power Root is a herb drinks company. The raw material to produce its product are the Malay traditional herbs: Tongkat Ali and Kacip Fatimah. The company can get the materials from the local farmers, but the quantity and quality may not satisfied the production. To overcome this problem, a huge plantation for these two herbs might be the long term investment for the company.

4.3.2

Increase of Pollution Some industrial activities are undoubtedly harming the nature. The filth of

factories consisting of poison is polluting both soil and water. As a result taking food seems threatening. Now people are unwilling to take some type of food. In this case,

Power Root choose to position themselves as the health and natural products. The awareness of healthcare among Malaysian are increasing in a decade, consumer will trend to choose health drinks than carbonate drinks.

4.4

IMPACT OF TECHNOLOGICAL ENVIRONMENT Technological environment consists of some elements by which new product are

being developed. For this reason, marketing has to face new threats, problems & sources of creation. 4.4.1 Faster Pace of Technological Change Technology is changing day by day. A company must have to fix their step accordance with the technological changes. Otherwise, it is impossible to survive in the market competition. At the present day all types of communication are done by modern technology. Power Root has to stay connect with modern technology. Now think about the communication process of the organizations: In past, they used the classical telephone for communication which sometimes makes disturbance & non-transferable. But at a present day they use mobile which is easier than telephone. One should take the advantages about the modern technology. 4.4.2 High Research & Development Budget For better production, one company may require a group of people for research the market & require a group of expertise for proper budget in production which will help to take part in competition with others. Power Root also strongly emphasizes on product research and development, it has invested considerable amount of money in setting up its own R&D centre with the best facilities as well as training and sourcing of its human resources. With sheer innovation and determination, Power Root's R&D team has developed more quality products under highly professional and clinical environment.

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IMPACT OF POLITICAL ENVIRONMENT One of the important parts of the macro environment is political environment. In

general, law of the state, government agencies & other controlling groups put a great impact in the whole marketing system. Impact of this environment in marketing goods is classified into three major groups. These are: 4.5.1 Legislation Regulating Business

Now a days controlling act has been increased. There are three reasons. Thats are To protect the company Save consumer against unfair performance of producers Save the society against dishonest business man

Malaysian marketing system are influenced by the following act Patent act-291 of 1983 Design act-1996 Trade mark act-1976 Halal Act

All of these have a great impact in marketing a new goods or services. Marketers have to open eye relating to law when launch a new product or even services. All ranges of Power Root products are following the acts listed above, that is the reason Power Root can market all the races in Malaysia. 4.5.2 Changing Government Agency Enforcement In every country including Malaysia have some agencies which are observing whether the act is being followed or not. Sometimes they are become so much active & sometime it becomes freeze. All of the employees of those agencies are expert of this matter. Their decision left a great impact in marketing goods & services. Power Root products are following the standard of the acts and cooperate closely with those agencies in Malaysia.

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Increases in Public Interest Group Public interest group is now one of the major agency in the marketing system.

They increase the consumer power and rise voice against unfair activities. In Malaysia there has some agencies but the major one is Consumer Association of Malaysia. In general they work for consumers well being. These groups also have an impact in marketing goods. All of these types of group are formed only to save the consumers from the unfair business man. They publicity the consumer laws in countrywide for increasing awareness among the customers. For this reasons, Power Root has to make sure prices and quality of their products are acceptable and fair to the consumers.

4.6

IMPACT OF CULTURAL ENVIRONMENT This is perhaps the most difficult element of the macro-environment to evaluate,

manifesting itself in changing tastes, purchasing behavior and changing priorities. The type of goods and services demanded by consumers is a function of their social conditioning and their consequent attitudes and beliefs. Core cultural values are those firmly established within a society and are therefore difficult to change. They are perpetuated through family, the church, education and the institutions of society and act as relatively fixed parameters within which marketing firms are forced to operate. Secondary cultural values, however, tend to be less strong and therefore more likely to undergo change. Marketing firms have also had to respond to changes in attitude towards health, for example, in the food industry people are now questioning the desirability of including artificial preservatives, colorings and other chemicals in the food they eat. Power Root has done this by labeling their product as health drink rather than soft drink. This is because the conscious of public about the healthcare increasing year by year.

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SUMMARY Power Root is considered as a success food and beverage company in Malaysia.

The expansion of the company and distribution of its products has opened up in more than 10 countries in Asia and Middle East. The succeed of Power Root has discussed in the elements of macro environment of the marketing in Malaysia. By analysis one-by-one elements of macro environment, we found that Power Root follow the rules and applying the market strategies base on these elements. In the span of the last few years, Power Root has established a strong and aggressive marketing network in Malaysia. These high quality products combined with aggressive promotional and marketing campaigns have made Power Root a leading brand in the Malaysia market. On the export front, Power Root has tie-ups with foreign distributors in the countries where its products are marketed. With its acute awareness of shifting lifestyle trend, the company will continuously improve and target the market with different products. Power Root believes in long-term development and operates with the objective to produce high quality products that exceed customers' expectations, which will subsequently improve the quality of its customers lifestyle. Power Root plans to continuously expand its product in the international markets and ultimately, to make its brand "Power Root" a household name globally.