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FACULTY ECONOMICS AND MUAMALAT

STRATEGIC MANAGEMENT
MGB 4013
GROUP AASIGNMENT:
DUTCH LADY COMPANY
PREPARED BY: TMC 2
MEMBERS:
SITI ZAINAB BT MOHD ADAM

1121106

NUR SHAHIRA BT MOHAMAD NOR

1121112

SITI NOR NADIAH BT SHAHIMI

1121114

NURUL HAZERA BT MISRAN

1122333

NORFARHATI BT SATARNONG @ IBRAHIM

1122337

PREPARED FOR:
LECTURER NAME: MADAM SITI NURULHUDA BT NORDIN
DATE OF SUBMISSION:
8TH DECEMBER 2014

TABLE CONTENTS

NO
1
2
3
4
5

TABLE CONTENTS
COMPANY PROFILE
BACKGROUND OF DUTCH LADY
TOWS ANALYSIS
THE INTERNAL-EXTERNAL (IE)
MATRIX
INTERNAL FACTOR

PAGES
3-4 afiqah
5-7 nik
8-11 afiqah
12-13
14-15 afiqah

EVALUATION (IFE) MATRIX


6

EXTERNAL FACTOR

16-17

EVALUATION (EFE) MATRIX


COMPETITIVE PROFILE MATRIX

8
9
10

OF DUTCH LADY
SPACE MATRIX
Product life cycle
STRATEGIC PLANNING PROCESS

19-26
nik
27-32 nik

11

(PORTERS FIVE FORCES MODEL)


QUANTITATIVE STRATEGIC

33-35

12
13
14
15

PLANNING MATRIX (QSPM)


BLUE OCEAN STRATEGY
Sun tzu strategy
CONCLUSION
REFERENCES

36-38 zaty
zaty
39 zaty
40

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1. COMPANY PROFILE
Dutch Lady Milk Industries Berhad ("Dutch Lady Malaysia") is a leader in the
quality branded dairy business in Malaysia. It was incorporated in 1963, and was the
first milk company in Malaysia to be listed on Bursa Malaysia, the local Stock
Exchange in 1968. Its holding company is Royal FrieslandCampina, a Dutch
2

multinational corporation and one of the largest milk companies in the world.
Permodalan Nasional Berhad is the second largest shareholder in the Company.
Dutch Lady Malaysia manufactures and sells a wide range of quality dairy
products and fruit juices for the home and export market such as Infant Formula,
Growing-up Milk, Powdered Milk, Condensed Milk, UHT Milk, Sterilised Milk,
Pasteurised Milk, Cultured Milk, Yoghurt and Fruit Juice Drinks. The Company's dairy
products have a strong consumer following and are represented by strong brands
such as Dutch Lady, Frisolac, Friso, Completa, Omela and Joy.
The Company believes in product innovation and is well supported by its
holding company, Royal FrieslandCampina. The Company constantly strives to
improve its processes in order to deliver nutritious products of high quality to its
consumers. It was the first company in the world to introduce a growing up milk
powder specifically formulated for children from ages one to three. These products
are currently marketed in Malaysia as Dutch Lady 123 and Dutch Lady 456.
Besides supporting local industries by using substantial amount of local
ingredients in its products, Dutch Lady Malaysia is also the largest purchaser of local
fresh milk from the Veterinary Services Department. This is done via the Companys
Dairy Development Programmed, carried out in collaboration with the DVS with the
assistance of the Netherlands Embassy.
The quality of the Company's products is paramount. Quality Control and
Quality Assurance are prime considerations. In line with this, the Company has
continually been accredited with ISO 9001 certification since 1995. Strong emphasis
is also placed on food safety with HACCP (Hazard Analysis Critical Control Point)
System covering all its plants. In addition, the Company also has in place ISO 14001
Environment Management System and OHSAS 18001 (Occupational Health and
Safety Assessment Series). The Companys products are all halal-certified.
Dutch Lady Malaysias annual revenue in 2009 is RM692 million. The
Companys factory is located in Petaling Jaya and it employs 600 Malaysians.
Currently, Dutch Lady Malaysia is the market leader in key milk categories such as
UHT milk, Sterilised milk and Growing-Up Milk.

2. BACKGROUND OF DUCTCH LADY


50s
4

After World War II, sweetened condensed milk imported wholesale from its parent
company in Holland via local importers and wholesalers.
1954 : A trading company Friesland 9malaya) Pte Ltd, based in Singapore, was
formed to market Sweetened condensed milk imported from Holland in Malaysia
and Singapore, among several brands was a certain Dutch Baby Brand.

60s
1963: Pacific Milk Industries (Malaya) Sdn Bhd was interoperated in Malaysia with
the commissioning of a sweetened condensed milk factory in Petaling Jaya. The
present site is the first overseas production facility of the parent company.
1965:

The factory was operational and started to manufacture sweetened

condensed milk.
1968:

Pacific Milk Industry (Malaya) was converted into public company and

became the first milk company to be list on the stock Exchanges of Kuala Lumpur
and Singapore.

70s
1975: The name of the company was changed from Public Milk Industries (Malaya)
Berhad to avoid confusion in the trade and marketplace surrounding the name of
the Company and its main product: Dutch Lady Sweetened Condensed Milk.
-

In line with the Companys diversification programmed, the Company


commissioned and builds an Ultra Heat Treated Milk Plant. Locally packed
Dutch Baby Modified Baby Food was also introducing in the same year.

1979: A fruit ice drink under JOY brand name was introduced.

80s
5

1983:

Manufacture of Sterilized Milk in plastic bottle commenced.

1984:

The brand was change from Dutch baby to Dutch Lady for product

positioning reasons.
1985:

A three-story building was built to house the powder Packing Plant, as

business grew.
1987: The Company underwent an equity restructuring exercise to comply with the
Governments New Economic Policy.

The share capital was enlarged to RM 16.0

million.
1988:

Dutch Lady Yoghurt and Growing up Milk were introduced.

1989:

In compliance with the Government s national policy to promote the Kuala

Lumpur Stock Exchange, the Company delisted its shares from the

Stock

Exchanged of Singapore.

90s
A new warehouse was built to accommodate the company s growing

1994:

business. Human capital started to expand in line with organizational needs.


1995: The Company obtained certification under the ISO 9001 standards.
1999:

Dutch Lady received the Readers Digest Super Brands Gold Award for

being voted the preferred brand of milk products in Malaysia.


-The Dutch Lady UTH Plant received HACPP (Hazard Analysis Critical Control
Point) certification from the Ministry of Health.

2000s
2000

Dutch Lady received its second Readers Digest Super Brands Gold Award

for being voted the preferred brand of milk products in Malaysia.

The Company changed its name from Dutch Baby Milk Industries (Malaya)
Berhad to Dutch Lady Milk Industries Berhad, to be in line with its main brand
Dutch Lady with a new commitment Goodness for Life.

2001:

Dutch Lady received its third Readers Digest Super Brands Gold Award for

being voted the preferred brand of milk products in Malaysia.


2002:
2003:

Dutch Lady won the Brand Equity


Dutch Lady received its ISO 9001 (Version 2000).
Dutch Lady launched an updated range of products with DHA for infants

and children.
:

Dutch Lady Milk Powder Factory certified to Standard Certificate HACCP

(Hazard Analysis and Critical Control Point) - System Hazard Analysis and Critical
Control Point Dutch Lady awarded the Reader's Digest SuperBrand fifth Gold Award
because selected as the preferred brand of dairy products in Malaysia.

2004 : Nutrition for intelligence. - Dutch Lady brand image and packaging change
with the new corporate tagline "Get Ready for Life!" - Dutch Lady received the sixth
Reader's Digest Super Brand Gold Award be selected as the preferred brand of dairy
products in Malaysia.
2005 : Sweetened Condensed Milk Factory Dutch Lady received recognition HACCP
Certificate (Hazard Analysis and Critical Control Point)
: Systems Analysis Critical Control Point.
:
Dutch Lady received the award for the seventh Reader's Digest Gold
Award Super Brand selected as the preferred brand of dairy products in
Malaysia.
:
Dutch Lady Milk Industries Berhad is a Productivity Award winner in 2004,
which was recognized by the National Productivity Corporation in category
companies with a turnover of RM100 million and above.
2006 :

Dutch Lady has donated various products worth RM70, 000 Deputy Prime

Minister for flood victims in Johor.


2007 :

Dutch Lady Milk Industries has donated various products Dutch Lady

which the value is RM115, 000 through the Ministry of Health to flood victims
in Johor. Dutch Lady has given the Chairman of the Education Excellence
Award 31 children in its people.
7

Dutch Lady Malaysia forge one more brilliance on the system of certification

of Environmental Management ISO 14001: 2004 Health and Safety Management


System OHSAS 18001: 1999 from SIRIM QAS International

3. TOWS ANALYSIS
STRENGHT(S)

OPPORTUNITIES (O)
Easy to existence
in the market.
High demand in
the market.
Expert in an
innovation.
High customer
loyalty
Get the
awareness from
customer
Healthy
campaign by the
government.
THREAT(T)

Market leader in the


high quality branded
dairy business in
Malaysia.
Have the highest
market share.
Good profit stability.
Export widely.
Deliver good
nutritious product.
All have halal
certificate
High quality of the
milk
Variety of flavors

WEAKNESSES(W)
Dutch Lady just
produces the milk
from cow milk.
Not produce milk for
the old folks.
Have high contain of
sugar
Rarely change their
packaging.
.

SO

Expand market to
international level.
Widen accessibility
of products via
online market.
Variety style of
products line.

ST

WO

Get another source of


milk.
Produce milk for the old
folks also.
Control the contain of
sugar in the milk.

WT
8

Many existence
competitors.
Many product
substitutions
Rapidly change in
tastes and
preferences of
customer.
Competitors price
Probability of
cows attack by
virus

Keep
maintain
the
quality of the milk and
maintain high quality
branded dairy business.
Make a new flavors of
the milk

Make a difference of
the milk and compete
to other competitors
Improve the
packaging with latest
design.

A SWOT analysis (alternatively SWOT matrix) is a structured planning


method used to evaluate the strengths, weaknesses, opportunities and threats
involved in a project or in a business venture. A SWOT analysis can be carried out
for a product, place, industry or person. It involves specifying the objective of the
business venture or project and identifying the internal and external factors that are
favorable and unfavorable to achieve that objective. Strengths: characteristics of
the business or project that give it an advantage over others. Weaknesses:
characteristics that place the business or project at a disadvantage relative to
others. Opportunities: elements that the project could exploit to its advantage.
Threats: elements in the environment that could cause trouble for the business or
project. Identification of SWOTs is important because they can inform later steps in
planning to achieve the objective.
First, the company should consider whether the objective is attainable, given
the SWOTs. If the objective is not attainable a different objective must be selected
and the process repeated. Users of SWOT analysis need to ask and answer
questions that generate meaningful information for each category (strengths,
weaknesses, opportunities, and threats) to make the analysis useful and find their
competitive advantage.
For the Dutch Lady Company, there is important for having SWOT analysis.
Their first strength is, market leader in the quality branded dairy business in
9

Malaysia.

Dutch

Lady Milk

Industries Berhad

(Dutch

Lady Malaysia)

is a

manufacturer of dairy products in Malaysia since the 1950s. Besides that, their also
have the highest in market share. Basically, market leader and market share have a
good related between each other. Good profit stability gives the meaning which
their achievement of profit always increases in the ranking. Export widely. Dutch
Lady Company produce their milk as a globally to the customer and also deliver
good nutritious product.
Besides, the milk is very healthy and suitable for the people. Dutch Lady
Company also has halal certification. The milk is priorities, and also has a halal
certificate. Consumer will using is confidently because of the halal labeling at the
Dutch Lady packaging can showing clear n obviously. Last but not least, the Dutch
Lady Strengths is high quality of the milk. That means, taste of the milk is a similar
at each that produces. The milk is genuine from fresh cows milk. Dutch Lady Milk
also has variety of flavors. For example of their flavors is chocolate, strawberry, low
fat, full cream, coffees. Their also have for powder milk which is vanilla and honey
that suitable for infants.

Weaknesses in Dutch Lady are first of all, they are just produce the milk from
genuine cow milk. That means, Dutch Lady not take another source of milk, focus
on cow milk. Not all people or customer can acceptance the cow milk as their
drinking because nowadays, have many type of milk and so variety. Might be also,
the cow milk is not suitable to certain customer that not flavor on it. Besides that,
their also not produce the milk for old folks. So, it is difficult to their get a customer
loyalty if they just focus on the ages for among children and adult also workers but
not the old folks. Because mostly, that old folks need the milk suitable for them in
their area of age to help them and give an extra energy and be health. Have high
contain of sugar in Dutch Lady Milk. That can prove by the customer testimonial.
Dutch Lady Company also rarely changes their packaging.
Opportunities in Dutch Lady are to maintain in the market. It is because,
Dutch Lady is already the market leader and the highest market shares in the
market. Other than that, Dutch Lady Milk also gets high demand in the market. So
the company will produce more the milk to fulfill the customer satisfaction.
10

Therefore, Dutch lady also experts do the innovation. Dutch Lady Company makes
an innovation in term of the packaging and labeling. The last opportunity that Dutch
Lady has which is high customer loyalty. Customer is already aware about the milk
and makes them to be loyal to that milk.
Besides, Dutch lady Company already gets the highest awareness from
customers. They held its first election as a part of the celebration of World Milk Day.
They also ran Dutch Lady Kid and Dutch Lady School campaign and involved in
government program which is Program Susu 1Malaysia.
For the threats, Dutch Lady Company are facing such have many existence
competitor. That means, there are many of company that produce milk with the
same like a Dutch Lady already produce. Thats can called as a copy right because
in term of their variety of flavor and taste is homogenous. Probability for customer
chooses another brand of milk also can be happened. Besides that, there are many
product substitutions in the market. It is because of Dutch Lady Milk just produce
milk from fresh cow milk and others company not produce milk from cow milk. For
those who are not drink cow milk they must to buy milk. So, it does will be
decreasing the Dutch Lady profit. Rapidly change in tastes and preferences of
customer.

Usually customer easy to feel bored, so their will make the variety of taste and
preferences based on want they want and like. Next threat is competitors price. As
we know, there are many of milk is cheaper rather than Dutch Lady Brand. Last but
not least, the threat for Dutch Lady Company is probabilities of cows attack by virus
are very high. Nowadays, there are many viruses that usually attack not only at the
people but also will be attack to the animal. It is very risk for the Dutch Lady if the
cows are also attack by the virus. It is because, the cows is the main sources of the
milk for the Dutch Lady Company.

11

4. THE INTERNAL-EXTERNAL (IE) MATRIX


Definition
IE stands for Internal external as the name suggest that its based upon
internal and external factors of the organization. The IE is an important strategic
tool which comes under the portfolio management considered much similar to BCG
Matrix. The IE matrix used to plot the organization divisions in nine cell diagram,
each cell have some meaning associated which suggest strategies. The IE matrix is
based on the following two criteria which are score from the EFE matrix and score
from the IFE matrix.
12

Besides that, The EFE matrix score is plotted on the y-axis. While, the IFE
matrix score is plotted on the x-axis.The IE matrix works in a way that you plot the
total weighted score from the EFE matrix on the y axis and draw a horizontal line
across the plane. Then you take the score calculated in the IFE matrix, plot it on the
x axis, and draw a vertical line across the plane. The point where your horizontal
line meets your vertical line is the determinant of your strategy. This point shows
the strategy that company should follow.
The IE matrix can be divided into three major regions that have different
strategy implications. Firstly, the prescription for divisions that fall into cells I, II,
and III suggest the grow and build strategy. This means intensive and aggressive
tactical

strategies.

This

strategies

focus

on

market

penetration,

market

development, and product development. From the operational perspective, a


backward integration, forward integration, and horizontal integration should also be
considered.
Secondly, divisions that fall into cells IV, V, and VI suggest the hold and
maintain strategy. In this case, the tactical strategies more focus on market
penetration and product development. Lastly, divisions that fall into cells VII, VIII,
and IX are characterized with the harvest or exit strategy. This strategies focus
on retrenchment, divestiture and liquidation If costs for rejuvenating the business
are low, then it should be attempted to revitalize the business. In other cases,
aggressive cost management is a way to play the end game.

Benefit using IE matrix


1. Easy to understand. The input factors have a clear meaning to everyone
inside or outside the company. Theres no confusion over the terms used or
the implications of the matrices.
2. Easy to use. The matrices do not require extensive expertise, many
personnel or lots of time to build.
13

3. Focuses on the key internal and external factors. Unlike some other
analyses (e.g. value chain analysis, which identifies all the activities in the
companys value chain, despite their importance), the IFE and EFE only
highlight the key factors that are affecting a company or its strategy.
4. Multi-purpose. The tools can be used to build SWOT analysis, IE matrix, GEMcKinsey matrix or for benchmarking.

5. INTERNAL FACTOR EVALUATION (IFE) MATRIX


Definition
Internal Factor Evaluation (IFE) matrix is a strategic management tool
for auditing or evaluating major strengths and weaknesses in functional areas of a
business. IFE matrix also provides a basis for identifying and evaluating
14

relationships among those areas. The Internal Factor Evaluation matrix or short IFE
matrix is used in strategy formulation.The IFE Matrix together with the EFE matrix is
a strategy-formulation tool that can be utilized to evaluate how a company is
performing in regards to identified internal strengths and weaknesses of a company.
The IFE matrix method conceptually relates to the Balanced Scorecard method in
some aspects.
IFE matrix can be constructed by following those five steps:(1) Construct a
list of key factors, determining the success of the organisation's activities. Use
10~20 internal factors, separated between strengths and weaknesses. Be as
specific as possible, using percentages, ratios and comparative figures.(2) For each
factor, determine Weight in the numerical range, from 0 (not important) to 1
(very important). The sum of all weights must be 1! Weight marks the relative effect
of each factor to influence the success or failure of the enterprise in the industry. (3)
Assign for each factor a score. An important weakness is represented by 1, 2 for
minor weakness, 3 for minor advantage, important advantages are represented by a
score of 4. Notably, the score of advantage must be 4 or 3, the score of weakness
must be 1 or 2. The score is specific to the company, while the weights are based on
industry benchmarks.(4) Multiply the weight of each factor by its score, to
obtain the weighted score of each factor.(5) Sum the weighted scores of all the
factors, to get the total weighted score of enterprises.
As the IFE matrix contains many factors, the total weighted score range is
from the lowest 1 to the top 4, the average score being 2.5. Total weighted score
significantly lower than the 2.5 of enterprise's signalls that the internal situation is
weak, while the score much higher than 2.5 of the enterprise's internal situation is
strong.

INTERNAL FACTOR EVALUATION (DUTCH LADY)


(IFE) MATRIX
15

STRENGTHS

RATING
(1-4)

WEIGHTE
D

WEIGHTE
D SCORE

0.09

0.27

4
3
3
3
4
3
2

0.1
0.08
0.08
0.08
0.1
0.08
0.07

0.4
0.24
0.24
0.24
0.4
0.24
0.14

WEAKNESSES

RATING

1) Dutch Lady just produces the milk


from cow milk.
2) Not produce milk for the old folks.
3) Have high contain of sugar
4) Rarely change their packaging

WEIGHTE
D
0.09

WEIGHTED
SCORE
0.27

3
3
1

0.09
0.08
0.06

0.27
0.24
0.06

TOTAL

35

1.0

3.01

1) Market leader in the high quality


branded dairy business in Malaysia.
2) Have the highest market share
3) Good profit stability.
4) Export widely.
5) Deliver good nutritious product.
6) All have halal certificate
7) High quality of the milk
8) Variety of flavors

EXPLANATION
The diagram was show the internal factor evaluation, that the strengths are more
higher than the weaknesses of the Dutch Lady Company. The highest scale that we
put at the strengths is 4 which is Dutch Lady have the highest market share
because Dutch Lady is the market leader. Second is the entire product of Dutch
Lady having Halal certificate from JAKIM. The lowest scale which is 1 for weaknesses
is rarely changing their packaging.

16

6. EXTERNAL FACTOR EVALUATION (EFE) MATRIX


Definition
The External Factor Evaluation (EFE matrix) is the strategic tool used to
evaluate firm existing strategies, EFE matrix can be defined as the strategic tool to
evaluate external environment or macro environment of the firm include economic,
social, technological, government, political, legal and competitive information.The
EFE matrix is similar to IFE matrix the only difference is that IFE matrix evaluate the
internal factors of the company and EFE matrix evaluate the external factors.
The EFE matrix process uses the same five steps as the IFE matrix. The first
step is to gather a list of external factors. Divide factors into two groups which
is opportunities and threats. Opportunities are the chances exist in the external
environment, it depends firm whether the firm is willing to exploit the opportunities
or may be they ignore the opportunities due to lack of resources. While, threats are
always evil for the firm, minimum no of threats in the external environment open
many doors for the firm. Maximum number of threats for the firm
reduce their power in the industry. The second step is assign a weight to each
factor. The value of each weight should be between 0 and 1 (or alternatively
between 10 and 100 if you use the 10 to 100 scale). Zero means the factor is not
important. One or hundred means that the factor is the most influential and critical
one.
The total value of all weights together should equal 1 or 100. The third step is
rate factors which is assign a rating to each factor. Rating should be between 1
and 4. Rating indicates how effective the firms current strategies respond to the
factor. 1 = the response is poor. 2 = the response is below average. 3 = above
average. 4 = superior. Weights are industry-specific. Ratings are company-specific.
The fouth step is multiply weights by ratings. Multiply each factor weight with its
rating. This will calculate the weighted score for each factor.lastly, total all
weighted scores which is add all weighted scores for each factor. This will
calculate the total weighted score for the company.

17

EXTERNAL FACTOR EVALUATION (DUTCH LADY)


(EFE) MATRIX
OPPORTUNITIES
1) Easy to maintain in the market.
2)
3)
4)
5)

High demand in the market.


Expert in an innovation.
High customer loyalty
Get the highest awareness from
customers
6) Healthy campaign by the
government
THREATS
1) Many existence competitors.
2) Many product substitutions
3) Rapidly change in tastes and
preferences of customer.
4) Competitors price
5) Probability of cows attack by virus
TOTAL

RATING
(1-4)
4

WEIGTHE
D
0.1

WEIGHTED
SCORE
0.4

3
2
3
4

0.09
0.07
0.08
0.1

0.27
0.14
0.24
0.4

0.1

0.4

RATING
(1-4)
4
3
2

WEIGHTE
D
0.1
0.09
0.08

WEIGHTED
SCORE
0.4
0.27
0.16

4
3
36

0.1
0.09
1.0

0.4
0.27
2.95

EXPLANATION
The diagram was show the external factor evaluation, that the opportunities
are more than the threats of the Dutch Lady Company. There are six opportunities
that we state for the Dutch Lady. We put rate 4 which is the highest rate for the
opportunities for the Dutch Lady is easy to maintain in the market because Dutch
lady have high market share leader in the growing up of milk segment. Next, the
opportunity is get the highest awareness from customers because Dutch Lady
involve in government program.

At the same time, Dutch Lady Company also join

the Healthy campaign that implement by the government because the mission of
Dutch Lady Malaysia is to help Malaysia move forward in life with a reliable dairy
18

nutrition. Besides, for the threat Dutch Lady Company, we put 4 scale rates for
threat that Dutch Lady has many existence competitors because there are many of
company that produce milk with the same like a Dutch Lady already produce. Next
the highest rate scale threat is competitors price. As we know, there are many of
milk is cheaper rather than Dutch Lady Brand

7. COMPETITIVE PROFILE MATRIX OF DUTCH LADY


NESTLE
Critical
success factor

Weigh
t

Advertising

DUTCH LADY

MARIGOLD

Rating

Score

Rating

Score

Rating

Score

0.1

0.4

0.3

0.1

0.1

0.4

0.4

0.3

0.1

0.4

0.4

0.4

Management

0.1

0.3

0.3

0.3

Financial
position

0.2

0.8

0.6

0.4

Consumer
Loyalty

0.2

0.8

0.6

0.4

Market Share

0.1

0.4

0.3

0.3

Total

1.00

27

3.5

23

2.50

18

22

Product
Quality
Prices
competitiven
ess

SCALE
1Major Weakness
2-Minor Weakness
3-Minor Strength
4-Major Strength

19

8. SPACE MATRIK
Definition
The SPACE matrix is a management tool used to analyze a company. It is
used to determine what type of a strategy a company should undertake. The
Strategic Position & Action Evaluation matrix or short a SPACE matrix is a strategic
management tool that focuses on strategy formulation especially as related to the
competitive position of an organization. The SPACE matrix can be used as a basis for
other analyses, such as the SWOT analysis, BCG matrix model, industry analysis, or
assessing strategic alternatives (IE matrix). The SPACE matrix is just a little bit more
complex than the SWOT analysis. The SPACE matrix evaluates different variables
and assigns them a score considering how important they are for the situation of
the company. It analyzes four different areas (two internal to the company and two
external) that will represent four quadrants in a graphic.
The SPACE matrix is broken down to four quadrants where each quadrant
suggests a different type or a nature of a strategy which is aggressive,
conservative, defensive or competitive. Besides that, the SPACE Matrix analysis
functions upon two internal and two external strategic dimensions in order to
determine the organization's strategic posture in the industry.
The internal strategic dimensions represented by the financial strength
(FS) and the competitive advantage (CA); and the external strategic dimensions
represented by the environmental stability (ES) and the industry strength (IS). There
are many SPACE matrix factors under the internal strategic dimension. These
factors analyze a business internal strategic position. The financial strength factors
often come from company accounting. These SPACE matrix factors can include for
example return on investment, leverage, turnover, liquidity, working capital, cash
flow, and others. Competitive advantage factors include for example the speed of
20

innovation by the company, market niche position, customer loyalty, product


quality, market share, product life cycle, and others.
Other than that, SPACE matrix factors related to business external strategic
dimension are for example overall economic condition, GDP growth, inflation, price
elasticity, technology, barriers to entry, competitive pressures, industry growth
potential, and others. These factors can be well analyzed using the Michael Porter's
Five Forces model. The SPACE matrix calculates the importance of each of these
dimensions and places them on a Cartesian graph with X a coordinates.

Internal Strategic Dimensions


Financial Position (FP)
It includes everything that refers to the financials of the company. We can
consider the Return on Investment (ROI), which is how much money is recovered
from each unit of money invested, the liquidity of the company. It means that how
easy a company can make cash all his assets and the cash flow. Each one of these
variables is given a numeric value from 1 (worst) to 7 (best) according to our
perception of how good the company is doing regarding that variable.
Competitive Position (CP)
This is the next variable considered in the internal strategic dimension.
Market share, quality of the product, product life cycle, customer loyalty, the knowhow and the power of company over its suppliers and intermediaries are some of
the variables to be considered. As in the other internal strategic dimension, each
variable considered is given a numerical value, but in this case from -1 (being the
best) to -7 (being the worst).

External strategic dimensions


Industry Position (IP)
It considers external forces that belong to the industry where the company
develops its activities. Variables as growth potential, profit potential, financial
21

stability, resource utilization and productivity are considered. As well, in this


dimension each of these variables is given a score that goes from 1 (worse) to 7
(best).
Stability Position (ES)
Last, ES is considered. It refers to how stable is the market where the
company operates. Things like rate of technological change, inflation, demand
variability, price range of competing products, risks of the industry and the barriers
to enter or exit the market are considered. The more stable is the market; more
favorable is for the company to operate in it. A score from -1 (best) to -7 (worst) is
given to each of the variables considered.

The Space Matrix Analysis diagram:

22

SPACE MATRIX OF DUTCH LADY


IFE final score
3.01

III

I
3
2.95
EFE final score

II

V
IV

VI

VII

VII

IX

23

Based on the space matrix that is show in the diagram we can see that Dutch Lady
Company is on the I, II, IV build and growth strategy. In this case, the Dutch Lady Company
tactical strategies should focus on market penetration and product development. Base on the
SWOT we conclude that the Dutch Lady Malaysia as the market share leader in the growing up
milk segment. It can be proved with the Dutch Lady brand holding 40% of national market
share. Dutch Lady was the first Malaysian dairy company to use Ultra-High Temperature (UHT)
processing and packaging to produce and market milk in this country.
Then the Company continued to progressively manufacture and introduce new products
into the Malaysian market which is sterilized milk were locally produced and sold in plastic
bottles in 1983. They also provide production of chilled milk products started in 1986, and fruit
yoghurt and growing up milk were introduced into the market in 1988.

Dutch Lady Malaysia was the first company in the world to introduce growing up milk
products for children up to six years old. Dutch Lady Malaysia already develops their product
because they have different types of dairy products suitable for both children and adults. It
started with the production of a single product which is sweetened condensed milk and has
since expanded to a full range of dairy products locally manufactured in its factory. Its current
products include products for infants, growing up milk, UHT milk, pasteurized milk, sterilized
milk, family powdered milk, low fat and 0% fat drinking yoghurt, and low fat yoghurt.

24

SCALE:
-7 (WORSE), 7(BEST)
EXTERNAL POSITION
STABILITY POSITION (SP)
FEATURES

RATING

Technology changes

-1

Inflation

-3

Competitors Price

-6

Barriers to enter the market

-1

Barriers to exit the market

-3

Risk

-4

Total

-18

CALCULATION:
-18/6: -3
INDUSTRIAL POSITION (IP)
FEATURES

RATING

Growth potential

Profit potential

25

Financial Potential

Ease to enter market

Productivity

Capacity Utilization

Total

32

CALCULATION
32/6: 5.33

INTERNAL POSITION
CP (COMPETITIVE POSITION)
FEATURES

RATING

Market share

-2

Product quality

-1

Customer loyalty

-1

Control over supply and distributor

-2

Knows the later technology

-2

Product life cycle

-2

Total
CALCULATION

-10

-10/6: -1.667

FS ( FINANCIAL POSITION)
FEATURES

RATING

Return on Investment

Cash Flow

Inventory Turnover

Working Capital

6
26

Total

20

CALCULATION
20/4: 5

OVERALL
CP+IP = (-1.667 +5.33) = 3.663

SP+FS = (-3+5) =2

EXPLANATION
As we know, the aggressive quadrant lies in between the financial strength
axis with that of the industrial attractiveness. Here, all the four dimensions of the
axes are showing high scores. If readers are aware, high scores of both CA and IA
27

will push the average to the right of the x axis while high scores on both FS and ES
will push the average of the y axis toward the top. With all the scores being positive
then the company is supposed to be in a comfortable position and therefore, an
aggressive strategy is appropriate. An aggressive strategy would treat growth and
expansion of high priority. This will also the require the drive to get more market
share and new markets. We can approve that Dutch Lady Company is suitable to be
in the aggressive quadrant because they already have the highest market share and
they have high opportunity to get more market share and new markets in the
market. At the same time they are also in a comfortable position in the market. It is
because, they already be the market leader and have many customer that are very
loyal to them. Besides, customer also aware about their product because Dutch
Lady Company is good in implement their advertising. For example, they have many
type of advertising such as through the internet, television and also the newspaper.

9. STRATEGIC PLANNING PROCESS


(THE EXTERNAL ENVIRONMENTAL ANALYSIS)
Dutch Lady Milk Industries Berhad engages in the branded manufacturer
and distribution of dairy industry milk product in Malaysia. Previously, Dutch Lady
Berhad is a subsidiary company under Royal Friesland Foods that first production in
Nertherlands, there are one of the worlds largest dairy companies.Dutch Lady
Malaysia started as Pacific Milk Industries (Malaya) Sdn Bhd in 1963 where it was in
Petaling Jaya factory.
Five years later, Pacific Milk Industries (Malaya) became the first milk
company in Malaysia that listed on the Stock Exchanges of Kuala Lumpur and
Singapore. The company changed its name to Dutch Baby Milk Industries (Malaya)
Berhad in 1975, and again in year 2000 now as Dutch Lady Milk Industries Berhad.
The company have strong consumer following and well known for its dairy
products and beverage brands such as Dutch Lady, Frisolac, Friso, Completa, Omela
and Joy. The product line of the company include product for infants, growing-up

28

milk formula, powdered milk, condensed milk, UHT milk, sterilised milk, Pasteurized
Milk, Cultured Milk, Yogurt and also fruit juice drinks.
The Five Forces Model of Michael Porter comprises and analysis or
understanding the nature of the competitive environment. They can ensure that
management considers a wide range of potential impacts when devising strategy. In
addition, Porters five forces also help to develop effective strategies to raise
profitability, power and competitive position in industry.
Porters five forces is divided into threats posed by new entrants, bargaining
power of suppliers, bargaining power of buyers, substitute products and intensity of
rivalry among competitors. These are also one most widely used and best known
conceptual framework to assess the nature of the industry environment. The
strength of the five forces determines of profit potential of an industry by
influencing the price, cost and required investments of business.

THREAT OF NEW ENTRANTS


Threat of new entrant into market will bring extra adventure and intensify
competition. The strength from new entrants will depends on barriers to entry and
likely raise response of existing competition and substantially erode the existing
firms to a new entrant. Moreover, some market for the industry is relatively
untapped and considerable marketing opportunities. It is easy for new firms to enter
into the industry because it has low- entry barriers.
The main competitors of Dutch Lady Berhad are Nestle (M) Berhad and
Marigold Brands (M) Sendirian Berhad. They were produce similar products and
getting their customer support on higher demand from the buyer. Nestle (M) Berhad
also became a threat when it tried to extend its production capacity by investing
more money, and thus has a possibility of affecting Dutch Lady Berhads revenue.

29

Apart from this, Marigold Sdn Bhd focused on the produce nutritious products.
The company was trying to provide consumers with healthy products to enhance
quality of life. Company threat is more difficult to control, because Dutch Lady
Management need to concentrate on changing buyers preference and also
maximize the shareholders wealth.

BARGAINING POWER OF SUPPLIERS


Bargaining power of suppliers is define with stronger power of suppliers in an
industry were more difficult to firms make high profit. As we know important source
supplier such as labor, parts and raw materials before produce goods and services.
The suppliers will supply and sell directly to the firms by passing beyond their
demand and need of production process.
The most important material and ingredients that are contented in Dutch Lady
Milk is the fresh and pure milk, because milk is essential for the production process
making Dutch Lady Dairy milk. In addition, labor in factory, box of packaging, bottle
of yogurt, plastic bags and packaging of paper are other things that Dutch Lady
Company need. After all the raw material is ready, so the process were begin as
soon as possible.
So, raw material supply product is very important in industry because they
need to help each other. Furthermore, Dutch Lady Malaysia supports local industries
by putting substantial amount of local ingredients in its products. Because, Dutch
Lady company Berhad is the largest buyer of local fresh milk from the Veterinary
Services Department which is done under the Companys Dairy Development
Program.
Unfortunately most of our competitors also search for new supplier and it may
not easy to reduce cost as low as before.

BARGAINING POWER OF BUYERS OR CUSTOMER

30

The bargaining power of buyer means of potential buyers or powerful buyer


that can force price cuts, high demand on product and gain more consumers
attention towards the main product of the company. Dutch Lady positions the
product as though it was meant not only for babies but for another consumer as
well. For example, Dutch Lady 123, Dutch Lady 456, and Dutch Lady 6 - plus.
Buyers also have search full information about the dairy product in market.
Because they need to evaluate and choose on healthy product, that are provide
best quality product or if they can affordable to buy. Dutch Lady retains their
customer by improving product quality and introduce new product such as dairy
drinks, yogurts, desserts, cream, coffee creamers, baby milk and infant food and
also cheese.
Dutch Lady Berhad gets benefits from obtaining global procurement services
and innovation activities. For example, Dutch Lady was the first Malaysian dairy
company that used Ultra-High Temperature (UHT) processing and packaging to
produce and market milk in the country. Moreover, Dutch Lady Malaysia produces,
and also offers various flavors and size of product. Such as chocolate, strawberry,
coffee and full cream and also low fat milk product. It will give more choice to
customer make evaluation before make a decision to buy.
Moreover, Dutch Lady Milk powder provided satisfy for customer needs that
who want mix it with other flavor and it has a rich and creamy taste. Furthermore,
Dutch Lady also has provided different formulations to cater to children of different
ages that suitable to brain development and healthy growth. Therefore, most of the
mother would choose Dutch Lady Milk products for their children rather than choose
other products because they want the best for their children growth.

From bargaining power of buyers, products represent large expense for


customers and improve in sales revenues. Customer could not switch to another
product because they are actually loyal and satisfy on product when make
purchase. As the company they would define of customer loyalty based on
consumer database. In another ways is from average of the profit that always

31

increases even though the price of product changes at the certain time or place. But
it will not cause loyal customer to change mind and buy another product.

SUBSTITUTE PRODUCTS
Porters five forces have include the threat of substitute product which is other
firms has offers similar product with similar benefits for the customer. This threat
may effects the competitive environment of the company and influence ability to
achieve profitability.
Buyers always have different choice for their beverage and dairy product. So,
there is risk on switching cost for buyers. Potential buyer comes with different based
on taste, customer behavior and preference. They would be change every day
because they will purchase the product that they prefer to buy.
In general substitute products come from one business then replaced with
another product but still produce in product line market. Besides that, Dutch Lady
Berhad was the first in the world company recommend a growing up milk formula
powder specifically for children from ages one to three years old. These products
are available now in Malaysia as Dutch Lady 123 and Dutch Lady 456 and Dutch
Lady 6- plus.
Dutch Lady Milk Industry Berhad always had an innovative approach towards
their product portfolio. So, the company comes up with a new type product every
four or five years. Whenever an opportunity is seen in the market, Dutch Lady
Company were grab it and the management creates a product diversification.
The Dutch Lady company continue progressively manufacture and introduce
new product into Malaysian market for those who did not drink milk directly or
allergic with fresh milk. So company tries to produce calcium snack for customer. It
may help customer to take their nutrition and protein from milk. It were come with
various type of flavor and size and also available for certain age. This is the fact that
comparison usage with previous milk powder formulation.

32

In addition, to make the product aware and known by consumer, some product
were distributed surrounding in market or do advertisement awareness and make as
a sponsorship for event or games. But, there are some opportunities that company
take over which is they are distribute the milk product among the primary school,
and the product are given to student every week. So people might know about the
product and continue loyal with Dutch Lady Brand.
The another way to make customer aware and realize about the Dutch Lady
product is together bringing Malaysians to participate in the annual World Milk Day
celebrations initiated by Food and Agriculture Organization of the United Nations.
The objective of the celebration is to contribution the important to take care of
healthy in the first step by citizens.
Threat of substitute products is the existing problem in business, and the
company solves with good solution make or produces some other product that can
give same functions or same benefits. The product must be totally different and
unique from the competitor product.
A multinational produces with nutritious and high-quality dairy products, new
taste flavor, health fresh milk, and convenience on Halal certificates and also
hygiene milk and reliability are key of characteristic best product to customer. It will
fulfill customer desire, needs, satisfaction and repeat purchase.
The product range consists of consumer for example, milk in powder and
concentrated form, dairy drinks, yogurts, desserts powder, cream, coffee creamers,
baby milk and infant food, cheese and butter. However, Dutch Lady HL Milk is lowfat milk that has perfect balance of nutrients for everyone in family members and it
consistent high calcium and protein. Dutch Lady is first choice for the customers
who caring for their health conscious.
The company trusts in product innovation and its holding company, Royal
Friesland Campina supported this act. The company continuously improves its
processes to provide high quality and nutritious products to its customers.

33

RIVALRY AMONG COMPETITORS


There many competitors in industry that produce similar or almost similar
goods and services. Because our competitor will produce same product with same
function and focus on same customer. Rivalry among competitors is strongest of the
five competitive forces and can vary widely among industry. If the rivalry among
competitors is weak, companies able to rise price and earn more profit.
Intensity of competitive rivalry among competitors in industry strives
companies to gain competitive advantages. The company gains the competitive
advantage by several ways such as pricing policy, improving the products
differentiation with other competitor and exploiting relationships with suppliers. If
can gain more competitive advantages over competitors, it can increase company
profitability.
Apart from that, some competitors will display their product nearby company
because they want to take customer aware about the product. For example, they
are placing same type of product together and allowed buyers to search easily.
Beside, degree of product differentiation is low, because customer may feel
confused and think all brands are similar. It will make buyer difficult to define
product or choose another product based on their preference and need.
For example, main competitor of Dutch Lady is Nestle and Marigold Brands.
They are rivalry because they produce the similar product in market. Such as milk in
powder and concentrated form, dairy drinks, yogurts, coffee creamers, baby milk
and infant food, cheese, butter.
Same based on various type of flavor, target level age of consumption,
promotional tools, and same supplier. Because of this situation, may occurs
customer change or switch their like easily. Although there are many competitors in

34

market but the Dutch Lady Company has done a lot of promotion and activities to
gain more than half of the market share.

10.

QUANTITATIVE STRATEGIC PLANNING MATRIX

(QSPM)
Key Factor

Weig
ht

OpportunitIies

a) Make a new
flavors of the milk

the old folks

0.1

Total
Attractivene
ss score
0.3

market.
2. High demand

0.09

0.27

0.27

in the market.
3. Expert in an

0.07

0.14

0.14

innovation.
4. High customer

0.08

0.24

0.24

0.1

0.3

0.3

0.1

0.4

0.4

1. Easy

Attractivene
ss score

b) Produce milk for

to

Attractivene
ss score
3

Total
Attractivene
ss score
0.3

maintain in the

loyalty
5. Get

the

highest
awareness
from
customers
6. Healthy
campaign

by

the
government
35

Threats

Attractivene
ss score

Total
Attractivene
ss score

Attractivene
ss score

Total
Attractivene
ss score

0.1

0.3

0.4

competitors.
2. Many product

0.09

0.27

0.36

substitutions
3. Rapidly

0.08

0.24

0.1

0.4

0.4

0.09

0.27

0.27

Attractivene
ss score

Total
Attractivene
ss score

Attractivene
ss score

Total
Attractivene
ss score

1. Many
existence

change
tastes

in
and

preferences of
customer.
4. Competitors
price
5. Probability of
cows attack by
virus
Strengths

1. Market leader

0.09

0.1

share
3. Good profit

0.08

0.08

0.08

stability.
4. Export widely.
5. Get
the

0.08
0.08

1
3

0.08
0.24

1
2

0.08
0.16

in the high
quality
branded dairy
business in
Malaysia.
2. Have

the

highest market

highest
awareness
from
36

customers
6. All have halal

0.1

0.4

0.4

certificate.
7. High quality of

0.08

0.24

0.24

the milk.
8. Variety

0.07

Attractivene
ss score
3

Total
Attractivene
ss score
0.27

of

flavors
Weaknesses

1. Dutch Lady

Attractivene
ss score

Total
Attractivene
ss score
0.27

0.09

0.09

0.08

0.06

just produces
the milk from
cow milk.
2. Not
produce
milk for the old
folks.
3. Have high
contain of
sugar.
4. Rarely change
their
packaging
TOTAL

4.44

4.31

Based on the quantitative strategy planning matrix (QSPM) that is show in the diagram,
we can see that make new flavors of the milk get the highest for total
attractiveness score which is 4.44

37

11.

BLUE OCEAN STRATEGY

Definition
The Blue Ocean Strategy is one of the most powerful innovation processes,
aiming at creating profitable high-growth for companies. The objective is to create
and capture new demand by focusing on unaddressed groups of customers (noncustomers), with a strategic offering that creates a leap in value for both the buyers
and the company. Its describes the opportunities of vast, untapped market spaces,
or "Blue Oceans," that can be developed by expanding market boundaries or
launching new industries. The strategy is the simultaneous pursuit of differentiation
and low cost, with the theory behind it not to out-perform the competition in the
existing industry, but to create new market space or a "blue ocean," thereby making
the competition irrelevant.
In term of blue oceans, demand is created rather than fought over. There is
ample opportunity for growth that is both profitable and rapid. Other than that, in
blue oceans, competition is irrelevant because the rules of the game are waiting to
be set. Blue ocean is an analogy to describe the wider, deeper potential of market
38

space that is not yet explored. Blue ocean strategy model highlights the principles
and framework and tools that every company can use successfully to formulate and
execute blue ocean strategy. The six principles are reconstruct market boundaries,
focus on the big picture, reach beyond existing demand, get the strategic sequence
right, overcome organizational hurdles and build execution into strategy.

BLUE OCEAN STRATEGY OF DUTCH LADY


1. ELIMINATE
-

3. RAISE
-

2. Reduce
- Sugar content in drinks

Raise the size of yoghurt bottle

4. CREATE
Capsule as the supplement or
vitamin for those who are not
interested to milk.
- Produce chocolate bar

Reduce

39

Dutch Lady should reduce the quantity of sugar found in milk content. As
we know Dutch Lady Products for children. First of all, we need to understand that
children growing need of energy resources to help them grow. The main source of
energy is carbohydrates and fats. Carbohydrates are very important, because it is a
major source of energy needed for healthy growth and development of the body
and the brain, especially for growing children. Sugar is a type of carbohydrate.
Milk is a natural product itself contains sugar called lactose. Sugar (lactose)
that contain in milk is helping the child to grow up. Therefore, all of Growing up Milk
will contain some form of sugar. Dutch Lady Growing up Milk is nutritionally
designed using a combination of natural sugar in milk called lactose and also added
so that the ratio of natural plant sugars naturally lactose in milk can be maintained.
Based on years of research, we found that it is important for our Growing up
Milk optimally formulated. Research conducted revealed that products that are not
optimally formulated, for example with high lactose cannot be accepted by
Malaysian

children.

Some

children

who take

high

lactose

milk

can

have

complications such as diarrhea, bloating (due to too much wind / gas) the impact of
their body's inability to excessive metabolic lactose. Therefore, we suggest reducing
sugar found in milk.

Raise
Dutch Lady Products that available on the market only have in small sizes. It
make troublesome to users who tend to eat much because they have to buy in a
large quantities to enjoy the meal that much.

Create
Nutritious milk means the liquid produced by the mammary glands of female
mammals. It provides the primary source of nutrition for newborns before they are
able to digest other foods. It is also can processed into dairy products such as
cream, butter, yogurt, ice cream, gelato, cheese, casein, wheat protein, lactose,
condensed milk, powdered milk, and many other types of extra-food and
40

manufactured products. So we are planning to create a chocolate bar which can be


produced from cow's milk.
Next company can plan to create cow's milk-based foods in capsule form.
This is because it will help people who do not like to drink milk directly. This can help
customer to get their vitamin or supplement easily. These capsules are creating
suitable for all consumer.
Dutch Lady Company just produces drink milk and powdered milk. Thus,
company can create another product innovation such as produce chocolate bar.

12.

CONCLUSION

41

13.

REFERENCES

Book Reference
Zainal Abidin Mohammad, Ho Jo Ann, Wong Foong Yee (2014), Strategic
Management Second Edition, Oxford University Press.
Reference for website:
1.
2.
3.
4.
5.

http://www.halalexporter.com
http://www.dutchlady.com.my
http://www.studymode.com
http://www.mida.gov.my
https://www.scribd.com

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