BKAM3073 – ENTERPRISE STRATEGY

ASSIGNMENT 2 (INDIVIDUAL) – 10%) (FIRST PART)

SECOND SEMESTER 2022/2023 SESSION (A222)
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INSTRUCTION:
ANSWER ALL THE QUESTIONS.

You must write the answer handwritten and upload it through UUM OL. You need to
SCAN and save in a pdf file and name your file according to your matric number.
Please write your name, matric number, and lecture group clearly on the front page
(use the cover page suggested in the coursework guideline). Use a clear ink pen to write
your answer.

QUESTION 1
Fast Company Berhad (FCB) specialise in manufacturing and packing all types of instant
beverage premixes including coffee, tea, and chocolate. FCB now produced 50 products
under “SEDAP” brand, with the capacity of 200,000 sachets of daily outputs. The company
was established in 1980 and become a listed company in 2010. Besides the domestic market,
the company products are also exported to more than 20 countries, for example, China, Japan,
Singapore, Indonesia, Thailand, Philippines, Russia, etc. FCB relies on one major supplier
from Brazil for raw materials. The company used cane sugar as one of the ingredients for its
instant beverages. Even though there is enormous pressure from consumer associations
regarding the use of sugar in instant beverages, FCB is unable to find the right alternative for
sugar that will not change the taste of its products. However, FCB’s research and
development department continues to do research to reduce the level of sugar in its product.
Due to this scenario, the Marketing department faces difficulties to sell FCB products to the
customers who prioritise healthy drinks. Amid this, the FCB brand received good responses
from other types of customers and currently, the market share of FCB in the domestic market
is around 30% and ranked at the 4 th place in the industry. For the international market, FCB
recorded approximately RM20 million in sales per year. Since its public listing in 2010, FCB
has won several awards such as “Most Valuable Malaysian Brands” by Reader Digest
Magazine and “Best Small Capital Companies” by the Malaysian Beverage Association. FCB
products currently had Halal and Good Manufacturing (GMP) certificates.

In 2021, FCB’s Managing Director has identified two (2) major challenges, which are the
Covid-19 pandemic and the weakening Malaysian Ringgit currency. Covid-19-related
disruptions and lockdown have affected FCB production and marketing activities. FCB had
80 employees and 40% of them are foreign workers. During the Movement Control Order
(MCO), these foreign workers are not allowed to come to work, and the company has
operated below its normal capacity and is unable to meet customers’ demands. During MCO,
many supermarkets had limited business operations, and this interrupted marketing activities
for product testing. FCB’s marketing staff are lacking digital marketing skills and depended
on traditional marketing approaches. Thus, sales in the domestic markets decreased due to
MCO as lower consumers recorded in supermarkets, hypermarkets, convenience stores, food
outlets, and petrol kiosks.

The weakening Malaysian Ringgit currency against US Dollar also affected FCB’s profit.
Overall, in 2021 the profits dropped by 15% due to lower revenue generation from the
international markets. Additionally, the sales revenues for global markets are also affected by

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Covid-19, and the hike in the value-added tax and the sugar tax imposed in some countries.
FCB has a strong cash flow and low gearing ratio, and this gives a positive outlook to the
shareholders.
Recently, the Managing Director announced that there is a possibility that FCB’s supplier
will increase the prices of raw materials. Following this, FCB will increase their products’
price by 10%. The Marketing department needs to be more aggressive and adopt digital
technology to penetrate the market so that the price increase will not lead to sales reduction.
The Marketing department sees the Vietnam market as a potential for FCB for future
investments. For the domestic market, there is a fast-growing market for instant drinks and
FCB can take this opportunity to open cafes for example for market penetration strategy.
However, the challenges from the customers who prefer healthy drinks remain for FCB to
tackle in the future. Market analysts predict a slowdown in the national economy but forecast
that consumer spending will continue to increase, particularly among the 25-to 40-year-olds
consumers. The competition in the beverages industry is tight as there are nearly 30
companies in the industry, however, FCB is optimistic about its future growth and believed
that its strong branding is the cornerstone for the company’s success which enabled FCB to
remain competitive and relevant in the industry.
FCB is in the process of preparing its strategic planning for 2023. The Managing Director
asked you as a Management Accountant to do a relevant analysis for this planning.
REQUIRED:
(a) Prepare strengths, weaknesses, opportunities, and threats (SWOT) analysis for FCB.
Briefly explain your answer.
(6 Marks)

(b) Analyse FOUR (4) factors that should be considered if FCB decides to do an
investment in Vietnam, using the Porter’s Diamond model.

(6 Marks)

(c) Describe THREE (3) risks to compete in global markets.

(3 Marks)