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TUNKU ABDUL RAHMAN UNIVERSITY COLLEGE

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS


BACHELOR OF BUSINESS ADMINISTRATION
YEAR 3, SEMESTER 1
ACADEMIC YEAR: 2015/2016
BBDM3133 INTERNATIONAL BUSINESS MANAGEMENT
Coursework 1: Group Written Assignment
Topic

: Oldtown White Coffee

No
.

Name

Student Registration Number

DESMOND CHAN YEE WENG

14WBR09269

CHOO TZER YUAN

14WBR10080

CHOONG LIAN YU

14WBR09780

CHAN SOOK KUAN

14WBR10234

Signature

Programme: RBU 4
Total marks (60 marks): _______________

Name of Lecturer & Tutor: Mr. Chok Nyen Vui

Date of Submission: 21 July 2015 (Week 11, Tuesday)

Table of Contents
No.

Topics

Plagiarism Statement

Evaluation Score Sheet

Background description of the chosen company in Malaysia

Reason for entering foreign market for the products distribution

Discuss the Malaysia market analysis and description about the


products chosen

Analysis of foreign country environment and compare with


Malaysia environment in relate to the key issues affecting the mode
of entry of the products and services

Arguement for Standardization or adaption for the products and


services. Description of target groups, culture and promotion
activities

Relevant theory to discuss the analysis of the foreign country


environment

Conclusion on the company in Malaysia about to enter the foreign


market

10

References

Page number

KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN


FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS
PLAGIARISM STATEMENT
Read, complete and sign this statement to be submitted with your group report.
We confirm that the submitted work are all our own work and are in our own words.
No
.

Name

Student Registration Number (ID)

DESMOND CHAN YEE WENG

14WBR09269

CHOO TZER YUAN

14WBR10080

CHOONG LIAN YU

14WBR09780

CHAN SOOK KUAN

14WBR10234

Programme

: RBU

Tutorial Group

:4

Date

: 21 July 2015 (Tuesday)

Signature

1
1.0 Background Description of Oldtown White Coffee
___________________________________________________________________________
Oldtown White Coffee was established its business in 1958 in which the headquarter is
located at Ipoh. The vision of the company is to become the top market leader in Asia by
provide the highest quality of the products to the customers in different nations while the
mission is to delight the customers by supporting the company core products White Coffee.
In 1999, Oldtown White Coffee has been succeed in the product development by
established 3 in 1 coffee mix under the company name in the retail industry. Firstly,
Singapore will be their first platform to export their core products to the local customers. On
the other hand, the management think that it has potential to export their products to the
globalization. Therefore, Oldtown White Coffee decide to enter into Hong Kong market. The
management team believe that collaborate with some of the retail industry such as Tesco and
Aeon Big can gain advantages for them because it is able to placing their core products in the
hypermarket within Malaysia.
Besides that, the company has been successful to establish 3 in 1 milk tea in the
Malaysia retail market. In 2007, Oldtown announce that the company been listed the
company in the main market of Bursa Malaysia as it will give confidence to grow the
business in the worldwide. So, Oldtown decide to expand their business in Philippines and
Thailand market after the company has been listed.
Today, we can seen Oldtown White Coffee is one of the global company because of
possessing competitive advantages in term of branding awareness and its high visibility.
Oldtown also successful to established more than 200 restaurant around the world.
Meanwhile, Oldtown White Coffee encourage people to apply franchise their business in
different regions as it can provide job opportunity to the local peoples as well as increase the
branding awareness of the company.

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2.0 Explain the reason for entering foreign country or market for the products and
services distribution.
___________________________________________________________________________
A recent study (Domenic, 2009) indicates that every business owners are willing to seek
greater opportunities to expand the domestic businesses in different foreign markets in order
to meet international demand. As Bei Shan (2014) notes in her articles, the Managing
Director of Oldtown Berhad intend to open 27 cafes in four different countries which
includes Australia market in order to improve the productivity and profitability of the
business in the forthcoming year.
There are many reasons for Oldtown White Coffee choose to enter into Australia
market. From the management point of view, the Managing Directors are enable to reduce
the overall production cost in the foreign market. This is because different countries might
imposed different government policies in term of corporate taxes and tariff. After reviewing
the Federal Budget of Australia in 2015, the government tend to make a reduction in
corporate taxes from 30 percent to 28.5 percent which effective on 1 July 2015 (Tom, 2015 &
See Appendix 1). Therefore, the Managing Director will prefer to expand the Oldtown White
Coffee in Australia market in 2015. On the other hand, the Human Resource Managers are
enable to employ experience employees with lower paid compared to home country due to
fluctuation of foreign exchange rate.
The second reason for Oldtown to expand the signiture drink to Australia is that the
demand and consumption on drinking coffee for Australian peoples is relatively high. A
market reseach (Roy, 2014) has been carried out and found that the consumption of coffee for
Australian peoples especially teenagers has rising from 54 percents to 56 percents on 2009
and 2013 respectively. Due to high demand, the company will start to design new marketing
strategy in term of product packaging, promotional activities, price and etc. in order to grab
more customers attention. Meanwhile, the Managing Director can start to consider whether it

is possible to expand the white coffee into different regions within Australia after investigate
the market condition by offering franchise programme to potential local entrepreneurs.
Besides that, the government play an important role to encourage the business
owners enter into foreign market. The purpose of enter foreign market enable to enhance
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economic growth, improve brand reputation and build relationship with suppliers.

As

Government and Business are inter-related (David, 2013). Therefore, Malaysia government
will design an attractive package such as lower down the interest rate of borrowing capital,
provide tax incentives and reduce the trade policy in order to influence the Oldtown White
Coffee core products placed it in the foreign market.
Lastly, the customers in Australia market will be given additional choices to
choose on foods and beverages. Nowadays, students who are study abroad may feel
uncomfortable with the foreign culture in term of foods and beverages as the food industries
in Australia are more depends on fast food based. Besides, students are not afford with the
consumption on local foods as the price of the foods are relatively high compared with home
country. Therefore, it is the good opportunity for Oldtown enter into Australia market which
enable to give variety choices of asian foods to the students and giving the chance for local
customers who like to try new foods without traveling a long distance.

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3.0 Discuss the Malaysia market analysis and description about the products and
services chosen.
___________________________________________________________________________
It is undeniable to state that Oldtown White Coffee possess the strong market position
because it has been recognized as the largest retail chain restaurant with established more
than 200 branches in Malaysia. Recently, Oldtown White Coffee has stand at the maturity
stage in the product life cycle as the restaurant able to create customer value by introducing
the signature drinks such as White Coffee and its subsidiary foods and beverages to the
customers. On the other hand, Starbucks Coffee will be the major competitors for Oldtown
White Coffee However, different coffee shops will using their own unique resources to
produce signature beverages. Therefore, the price for Oldtown White Coffees will be slightly
different with Starbucks Coffees.
A recent study shows that the consumption of coffee for Malaysian peoples is increasing
significantly. Therefore, the marketing team start to develop new and effective product
development by diversify their beverages into different categories such as chocolate
beverages, instant milk tea mixes, roasted coffee powder and etc in order to meet customers
demand. It is true that customers can purchase such foods and beverages at any small
kopitiam, but there are two benefits that customer could not buy from somewhere else which
are the restaurant environment itself and it is affordable for different income level of peoples.
Recently, a students from UTM has been carry out the research to examine how was
the social pattern for Malaysian peoples regarding to the coffee consumption (Siti, 2010).
From the statistics, we can identify the majority respondents who are patronize coffee shop
actively are between 21 years old and 29 years old respectively with the income range
between RM1,600 until RM2,500 per months (Refers to Appendix 2). In another word, the
respondents are income-secured and belongs to middle income level of peoples.

Next, the market structure that practice by Oldtown White Coffee is monopolistic
competition in which the firms are produce and selling similar products but it is not identical
such as foods, movies, beverages, and other manufacturing products (Geoff, 2014).
Meanwhile, it means that the consumers are able to find substitude products easily in the
market. However,
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Oldtown White Coffee is not allowed to set their price for foods and beverages which is
exceed the market price as the restaurant must practice price taker. The most significant
characteristics is that Oldtown White Coffee easy to enter and exit the market due to have
low barrier of entry.
Besides that, the management of Oldtown White Coffee also focus on product
differentiation in which defined as the process of distinguishing the product is different from
the competitors (Susan, 2009). For example, it is true that Oldtown White Coffee is using
similar unique resources used by Starbucks Coffees to produce their beverage but Oldtown
has mix with their secret recipe. Therefore, the taste for Oldtown White Coffee will be
slightly different amongst the competitors.
Lastly, Oldtown White Coffee in Malaysia will only compete with their competitors in
term of price and quality of the coffees. Therefore, the management of Oldtown White Coffee
has developed effective marketing strategy by establishing the new packaging in order to
attract consumers purchase their coffees (See Appendix 3). Therefore, consumers are able to
purchase the 3 in 1 white coffees from the restaurant directly and the hypermarkets within
Malaysia.

References:
Ng, BS (Reporter of Star Online Newspaper) 2014, Oldtown Plans Expansion, Aims To Open
27 Cafes In Four Countries, media release, 21 August, Viewed on 29 May 2015,
<http://www.thestar.com.my/Business/Business-News/2014/08/21/Oldtown-plans-expansionIt-targets-to-open-up-to-27-cafes-in-four-countries/?style=biz>
Dominic, R 2009 Growth Strategy: Shoud I Expand My Business, Viewed 30 May 2015,
< http://www.entrepreneur.com/article/203666>
Noor, SN 2014 Old Town White Coffee: International Strategy, Viewed 30 May 2015,
< http://docslide.us/documents/old-town-white-coffee-16112011-intrnational-strategies.html>
Tom, S. 2015 Company tax rate cut to offset Paid Parental Leave Levy, Viewed 6 Jun 2015,
<http://www.pwc.com.au/tax/federal-budget/2014/corporate-tax.htm>
Roy, M. 2014 The brew crew: Australias heaviest coffee drinkers, Viewed 6 Jun 2015,
<

http://www.roymorgan.com/findings/5470-brew-crew-australias-heaviest-coffee-drinkers-

201403060304>
David, I. 2013 In What Ways Can the Government Encourage Business Activity?, Viewed 11
Jun

2015

<http://smallbusiness.chron.com/ways-can-government-encourage-business-

activity-2282.html>
Geoff, R. 2014 Definition of Monopolistic Competition, Viewed 5 July 2015
<http://beta.tutor2u.net/economics/reference/monopolistic-competition>

Siti, N 2010 Malaysian Coffee Culture: A research of social impact, branding and design,
Viewed

July

2015,

UTM

Dissertation

<https://www.academia.edu/1088257/Malaysian_Coffee_Culture_a_Research_of_Social_As
Aspe_Branding_and_Design>
Susan, F 2009 Differentiated Products: Definition & Examples, Viewed 6 July 2015
<http://study.com/academy/lesson/differentiated-products-definition-examples.html>

Appendix:

Appendix 1: Reduction in Corporate Tax

Appendix 2: The chart of correspondent average income for coffee-lover in Malaysia

Appendix 3: The features of Old Town White Coffee