IIUM Centre for Continuing Education (ICCE)

MID-TERM ASSESSMENT
SEMESTER 2, 2019/2020 SESSION

Department of Business Administration

KULLIYYAH OF ECONOMICS AND MANAGEMENT SCIENCES (KENMS)

Programme : Bachelor in Business Level of Study : Undergraduate

Management

Start WEDNESDAY 8am 24 June 2020 End TUESDAY 8pm, 30 June 2020

Course Code : MGT 4760 Section(s) : All

Course Title : Strategic Management Instructor : Dr Suhaimi Mhd. Sarif

QUESTION ALLOCATED OBTAINED

1 40
2 40
3 20
TOTAL 100

Answer ALL questions.

Type your answer. Submit your answer in Microsoft Document and save the filename as
BBMMGT4760MidtermYournameMatricNo (example:
BBMMGT4760MidtermSuhaimiDL19191919) to my email address: suhaimims@iium.edu.my

CHANGING TASTEBUDS OFFER SNACK FOOD MAKER OPPORTUNITIES FOR GROWTH

By Joy Lee

Everyone loves snacking. Snacking is one of Yuyi Low’s favourite pastimes. But when she and
her partner Nicholas Thang decided to start producing their own snacks, little did they know that
the business would grow that fast.

“It has definitely grown beyond our expectations, ” says Low.

Hofu Company joined the ranks of local small snack food producers slightly over two years ago.
But the brand has already established a sizeable presence in the market with a good portfolio of

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products. Last year, Hofu Company generated some RM3mil in sales and revenue is expected
to grow another 50% this year.

The brand hit the shelves in late-2017, not too long after Low tried out salted egg fish skin in
Singapore, where it was all the rage. In between jobs at the time, Low figured she could start a
business instead and capitalise on the trend.

Mr. Thang, a chef and F&B consultant, wasn’t so enthusiastic about the idea. He had been in
the food business for a number of years helping clients set up restaurants and develop recipes.
Manufacturing snack food was somewhat out of his league.

But Miss Low was insistent. She did some research and somehow convinced Mr. Thang that
they needed to get on the bandwagon before it fizzles out.

They got to working on recipes and developed the brand under Niche Flavours Marketing Sdn
Bhd. They also fundraise some RM100,000 from family and friends to secure a 1,300sq ft
manufacturing lot in Sungai Buloh to begin production.

Mr. Thang wasn’t particularly confident about their venture.

“We split the lot in three; one-third for our production, one-third for our office, and one-third for a
hotdog and bubble tea kiosk as a back-up plan in case this doesn’t work. We bought a coffee
machine and tables and chairs for the retail kiosk, but we ended up not using any of it because
we were busy with the snack food business,” he laughs.

Within four weeks, Hofu’s salted egg fish skin found its way into Ben’s Independent Grocer and
they made about RM20,000 in sales during the Chinese New Year festive season of 2018.

With things looking up, they increased production and started supplying to other retailers.

But not long after, complaints started coming in that their products were turning rancid. This,
they found out, was due to the way it was packaged.

“Our products were packed in plastic bottles at that time. We’ve always been in the F&B line but
we’ve always been dealing with fresh food so there was no problem with food going stale and
rancid. This was new to us,” admits Low.

They had to recall their products from the shelves, including those that had been supplied to
Singapore. And this turned out to be one expensive lesson they had to learn on product
packaging.

“But if other chips in the market can last a year, surely there must be a solution for this. So we
tried other packaging materials and finally settled on our current one. It’s got the right layers and
we also pump in nitrogen to keep the product crisp. We needed the right packaging to lengthen
the product shelf life,” she adds.

Hofu is currently present in about 200 high-end grocers and souvenir stores nationwide, which
have helped the brand, garner interest and generate new leads and enquiries for distribution.

Go with the flow

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As business picked up, Mr. Thang began developing new flavours with new products such as
truffle and japanese curry flavoured snacks. However, these new flavours failed to take off as
consumers were still hung up on salted egg.

Although puzzled by the long-standing salted egg fad, he was not about to fight the market. The
numbers indeed speak. About 60% to 70% of its sales are derived from salted egg snacks.

“So we shelved the other flavours. But now we have a whole bank of flavours that we can use in
the future and when the market is ready, we will launch them,” he says.

Low notes that most of the major food trends in Malaysia are generally influenced by what’s
happening in Singapore. It is not as easy to introduce new trends locally.

“There is still room for local creativity. We have seen some trends that were started locally like
when home-based producers started making fried crabsticks. But for something to grow and
boom, you still need to follow the trend and what’s happening outside.

“Like when all the hotpot restaurants started coming up, hotpot-flavoured snacks also came up.
So, we launched our mala-flavoured snacks as well,” shares Thang.

Notably, a lot of these trends have brought in more small players into the market, all vying for a
bite of the growing snack food market. But many of these are home-based snack makers who
are only active during the festive season, which means that there is still room to grow Hofu’s
presence on retail shelves.

Additionally, its wider range of products opens up a bigger market for the company.

“There is definitely competition in the market but it is about how we work around that to make
sure our products have turnover. Apart from fish skin, we have other products like mushroom
and okra crisps. So we can list our products in organic shops or pharmacies as healthy snack
options and we can target and cater to more consumers,” says Low.

Both of them note that there are still a lot of opportunities to explore in the artisanal products
space.

“There is a very big gap between homemade producers and mass manufacturers. There are not
that many other players in between.

“We can’t fight the big manufacturers. They have machines that can run 24-hours. So what we
can do is come out with good snacks at reasonable prices.

“Product development is our forte, so we prefer to offer our customers quality instead of fighting
the price war. Our products use real herbs and ingredients rather than powdered flavouring, and
that differentiates us from the market,” says Low.

Diversifying products

This year, the pair is looking to grow their product range further by venturing into the nuts and
Korean instant noodles segments.

This time, they are a lot more confident about what they are offering the market.

3
“We’ve informed our buyers about our Korean instant noodles and they are already quite
excited about it. That will be our focus this year. We will first introduce the salted egg, chili crab
and mala flavours.

“This is part of our diversification plan but it is also what is trending now, ” she says.

She notes that there is a market for high-end Korean instant noodles with unique flavours and
they are hoping to get the products into the hands of consumers by the second half of the year.

For those who can’t wait, they have also set up a Hofu pop-up store in USJ, Selangor to get
feedback on its new products.

“The diversification makes sense for us because we are already in the industry. We are not
starting something completely new. We have the technology to make the sauces and all for the
instant noodles and we will use good ingredients for that too, ” says Thang.

Hofu recently moved into a new space not far from the old lot, but at twice the size, they are
able to do a lot more with the business. This includes exploring the opportunity to relaunch
some of its shelved products.

“We are trying to relaunch the truffle-flavoured snack. I think there is demand for this. But if we
can’t sell it here, we will sell it in Singapore, ” says Low.

Currently, Hofu’s products are available locally and in Singapore. But there have been enquiries
coming in from China and the Philippines to bring their products there.

Hofu produces about 2,000 packets a day on a single shift and it can still cope with any new
demand.

“We can just add more people to increase production. Our products are still prepared manually.
The fish skin is still tossed in woks.

“It’s a bit hard to automate because we don’t have the space or the volume for it. And our
snacks are not standardised size and they could break if they are tossed in the machine, ” says
Thang.

Although the duo had some kinks to work out in the beginning, the venture has paid off pretty
well.

“Manufacturing wasn’t our forte. We had to figure out things like shelf life, packaging, optimising
production, timing of raw material supply and all that. But maybe it was the right timing and we
also somehow persevered through the ideas. Things turned out quite alright, ” Low concludes.

Source: Joy Lee. SMEBiz, https://www.thestar.com.my/business/smebiz/2020/02/15/changing-tastebuds-

offer-snack-food-maker-opportunities-for-growth, retrieved on 15 Feb 2020

*******************************END OF CASE******************

4
QUESTION 1
Perform Internal Factor Evaluation (IFE) Matrix for HoFu Company. Discuss two points from the
IFE results. Include Tawhidic paradigm in your discussion. (40 marks)

Internal factor evaluation done by searching the average value of each internal key factor which is then will be compiled in
matrix, as shown below for HoFu Company.

  Strengths

Key internal Weight Rating Weighted score

Good Portfolio of
0.10 3 0.30
Products
Extensive distribution
0.07 3 0.21
Channels
Variety of Snack
0.15 4 0.60
flavours
Healthy products 0.16 4 0.64
Technology to
produce diversity 0.10 4 0.40
products
TOTAL     2.15 
  Weakness

Key internal Weight Rating Weighted score

Product packing
0.14 1 0.14
defects

Limited production
0.10 2 0.20
force

Product vulnerability 0.18 1 0.18

TOTAL 0.52
TOTAL IFE 1   2.67

Based on the IFE Matrix, we can conclude that HoFu Company has a strong internal position where is the Total (IFE) is 2.67
which is > 2.5.
As per the IFE, the HoFu Company strongly holds with the strengths where the total weighted score is 2.15 rather than the
weaknesses.
Strength
Healthy products will be the major strength for HoFu Company as the Weight value 0.16 is > 0, 1 indicates a very important role,
while Extensive distribution Channels being as a Weight value <0, 1 indicates the less important role. HoFu Company can sustain
to produce healthy products as its being as a demand for healthy food grows and certainly healthy food content will grow with it.

On other hand, HoFu Company is to improve in their marketing function where they can look into in improving the ability of
employees by attending product marketing training that usually held by the Ministry of Industry, Trade, and Cooperatives. So
that HoFu Company will get new ideas about the ways of marketing the product and from this they can overhead their least
strength factor.

5
Weakness
Limited production force is being the considerable weakness factor in their operation where the weight value 0.10 is < 0, 1
indicates the less important role. HoFu Company can focus on the improvement of the equipment strategy by investing in
appropriate processing technology instead of hiring new employees. By this they can increase the production with shorter time.
They can also re-inventory what tools are by the conditions of HoFu Company specially to avoid manual cooking and packaging.

QUESTION 2
Perform External Factor Evaluation (EFE) Matrix for HoFu Company. Discuss two points from
the EFE results. Include Tawhidic paradigm in your discussion. (40 marks)

External factor evaluation done by searching the average value of each external key factor which is then will be compiled in
matrix, as shown below for HoFu Company.
  Opportunities

Key External Weight Rating Weighted score

Local homemade
0.12 2 0.24
trends
Hotpots trends 0.11 3 0.33
Marketing to health
0.09 3 0.27
shop

Korean instant noodles 0.15 4 0.60

Singapore market
influence Malaysia
market which create 0.15 3 0.45
local demand with less
marketing cost.

TOTAL     1.89 
  Threats

Key External Weight Rating Weighted score

Long lifespan for other

0.19 4 0.76
products
Small homemade
1.4 2 0.28
entries
Consumer prefer salted
0.05 2 0.10
egg fish skin only

TOTAL     1.14
TOTAL EFE 1   3.03

A standard total weighted score indicator should be equal to 4.0 and this will show that the company’s current strategies are
effective. But for HoFu Company, the total EFE is 3.03 which we can say that this company is still scored above average where
an average score equal to 2.5. From this, we can say that HoFu Company’s strategies are still little effective.
Opportunities
Korean instant noodles and Singapore market influence Malaysia market which create local demand with less marketing cost is
being the best opportunity for HoFu Company as the weight value carries > 0, 1 shows a very important role. Korean instant
noodles eads per capita consumption by far as their ease of storage meant that they could be stocked easily by a variety of
establishments. Instant noodles can now be bought in supermarket, convenient stores, gas stations, and vending machine. Quite
often, hot water facilities are available on-site so that the customer can cook the product immediately after purchase.

6
Threats
Long lifespan for other products will be the threat for HoFu Company and the developments in the food producing technology
will have influence on the life span of the products.

QUESTION 3
Propose vision and mission statements for HoFu Company. (20 marks)

Vision

We, Hofu Company envision a community where everyone has access to good quality, nutritious food, understands the
consequences of hunger and poor nutrition and is committed to creating a stronger, healthier.

Mission

HoFu Company
Our mission is to provide the locals
1) Open own outlets with own brand world.
Become an active member of local small snack food producers’ associations, so the company can get product insights from other
snack food entrepreneurs, as well as their experience that already has a healthy snack food shop.
2) HoFu Company dedicated to recognizing our customers’ needs by producing healthy, superior-quality, all-natural food for the
local consumer. Our high standards and commitment to cleanliness, and environmental stewardship allows for a relaxed, stress
free environment for consumers.