FACULTY OF ECONOMICS AND MUAMALAT

SEMESTER II / ACADEMIC SESSION 2022/2023

MGB 4013

STRATEGIC MANAGEMENT

GROUP CASE STUDY

PPB GROUP BERHAD

LECTURER NAME:

SITI NURULHUDA BINTI NORDIN

LECTURE GROUP: KMB2

PREPARED BY:

NO NAME MATRIC NO

1 NURUL NAJIHAH BINTI REMLI 1200692

2 NURUL IZZAH BINTI YUZAMBRI 1200697

3 SITI NOR DINI BINTI MISSKAN 1200703

4 SITI ZHAFYRAH BINTI AZROL 1200684

5 MUAZ SYAIRAZI BIN MOHD SAFIAN 1202393

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 Table of Contents

Question A ................................................................................................................................. 3
Question 1: Should PPB strive to capitalize move effectively on rapidly developing
countries in Southeast Asia such as Vietnam? ....................................................................... 3
Question 2: Could PPB’s traditional cinema operations survive a renewed pandemic, or
should the company shift focus to its other businesses or even new business areas? ............ 3
Question 3: With regard to flour and animal-feed milling and bread production, the demand
for such products will increase as the population and tourism levels of various countries
increase. .................................................................................................................................. 4

Question B ................................................................................................................................. 5
Question 1: Factors to include are how PPB should allocate its resources among segments
and whether any segments should be sold off. ....................................................................... 5
Question 2: As there are few mills in the region that can crush soybean, resulting in most
soybean being imported as crushed products, should PPB enter the crushed soybean milling
business?................................................................................................................................. 7
Question 3: Should the firm move more operations to Vietnam since labour is cheaper?..... 8
Question 4: What is the solution for cheaper chicken from Vietnam under-pricing PPB’s
chicken in Malaysia? .............................................................................................................. 8

Question C ............................................................................................................................... 10
Question 1: A comprehensive strength-weakness-opportunity-threat (SWOT) analysis and
portfolio analysis is needed to facilitate PPB’s decision-making moving forward.............. 10
Question 2: Be sure to include in your analysis what you feel the firm should be doing, not
what they are currently doing or what you think they will be doing after studying the latest
news releases (unless, of course, you agree with these strategies). ..................................... 16
Question 3: PPB is in desperate need of a clear strategic plan as they serve a rapidly
growing regional market with multiple product lines that differ significantly..................... 17

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Case study – PPB Group Berhad—2022

Question A

A) When analysing cases, be sure that you fully answer questions and analyse the case in
parts, as shown in the following areas:

Question 1: Should PPB strive to capitalize move effectively on rapidly developing

countries in Southeast Asia such as Vietnam?
Answer: Yes, PPB should strive to capitalize move effectively on rapidly developing countries
in Southeast Asia since the case study shows the growth of populations and income levels in
Southeast Asia. This can give a benefit to PPB to increase profits in ASEAN market due to
increase in populations and income levels will increase the consumer spending. PPB should
capitalize effectively in Southeast Asia such as Vietnam but depends on business segments they
offered. According to the statement of “spurring a change in eating habits of consumers who
seek more western food in most Southeast Asia”, PPB should expand more flour mills in other
countries especially Vietnam. This is because Vietnamese staple food is based-flour foods such
as noodles, bread and pancakes. In addition, Vietnam permits foreign ownership of enterprises
in most industries. Vietnam is quickly developing highways and seaports, and it gives
corporations comparatively cheap tax rates and other incentives to start or expand businesses
throughout the nation. Due to a solid business climate and effective foreign investment policies,
Vietnam's GDP is expected to reach about 6.5 by 2024. This shows Vietnam is increasing in
the size of its economy.

Question 2: Could PPB’s traditional cinema operations survive a renewed pandemic, or

should the company shift focus to its other businesses or even new business areas?
Answer: PPB’s traditional cinema may survive in a renewed pandemic, but PPB’s cinema may
have to face challenges to gain back profits and reduce loss. Hence, its cinema needs to
diversify its business operations with increasing new facilities. Furthermore, the company
should also shift focus to a new business area which open for cinema online. For example, GSC
can introduce a new package of on-the-go movies plus food by booking at the online platform
GSC. The package must limit its access maybe 2 or 3 times only to avoid the misuse of this
online package. GSC can also open orders for food along with the sale of limited access codes
watching movies online. This makes it flexible for them to experience watching movies like in

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cinema no matter where they are. With this strategy, GSC can detect where they can open a
new cinema in which the state benefits them the most according to most users of this package.

Question 3: With regard to flour and animal-feed milling and bread production, the
demand for such products will increase as the population and tourism levels of various
countries increase.
Answer: An increase in population and an increase in tourism levels of various countries will
increase the flour and animal-feed milling and bread production. This is due to various
countries have different staple food. For example, Vietnam staple food is noodle. It is a huge
possibility that all houses in Vietnam have flours in their kitchen. Another example, even
though, Malaysian staple food is rice, but most of our traditional food, such as ‘kuih raya’ needs
a lot of flour especially festive season such ‘Hari Raya Aidilfitri’. Animal-feed milling may
increase because of a food is not complete without a protein source such as poultry. The
increase in the population increases the production and manufacture of feed, so, food
manufacturing increases, the consumption of protein sources such as poultry also increases.
Due to these factors, increase in population will increase the demand. Rise of tourism levels
also increase the demand, because the tourist may want to try local food in the country they
visit.

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Question B

B) Recall from the case that the firm’s mission and vision are likely too general, and
consideration should be taken on how both should be altered.

Question 1: Factors to include are how PPB should allocate its resources among
segments and whether any segments should be sold off.
Answer:
There are six segments that focused in PPB Berhad namely grains and agribusiness,
film exhibition and distribution, environmental engineering and utilities, consumer products
segment, property segment and investments and other operation. Since the investments and
other operations are the segments that included diverse operations, it related to the other
services and the decision’s investors by observing PPB performance.
The other segments are grains and agribusiness which allocated by FFM Berhad in four
principles as flour milling, animal feed milling, livestock farming and organic fertilizers.
Among the following, flour milling is a factory that operates and has great potential to become
the largest flour factory in Malaysia since there are 5 mills in Malaysia with has the capacity
production over 2,800 metric tons daily. Even this segment's overall sales decreased by less
than 1% in fiscal 2020, while profits increased by 28% because of lower raw material cost and
a higher share of profits from associates. Apart from having other flour mills factories in other
countries, two mills in Vietnam and one in Indonesia, PPB also controls 20 percent stake in 9
associates in China which resulting to have a combined capacity of 17,550 metric that is greater
than the company's production output in Malaysia, its native market.
The next principle is animal feed which the business that also produce many capacities
of over 2,200 metric tons per day across 5 mills in Malaysia. All the products available in three
forms, mash, crumble and pellet are produced to meet the different dietary requirements for
selected animals. The other factor that supports in reducing expenses by using less expensive
feed components in its products. PPB can produce 20 million eggs a month due to the closed-
housing facilities which limit the spread illness in raising poultry. In Malaysia, the business of
livestock farming faced a bit difficult compared to other business since the products had
overproduction, the price of imported chicken is cheaper and price control during holiday
seasons by the government. But now, the pressure on producing poultry is still increasing as a
result of tightening government rules and the participation of independent farmers in

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cooperatives. By products of raising and growing chickens include composted chicken manure,
which allows PPB to additionally make organic fertiliser.
The second segment that PPB can allocate its resources is consumer products segment
because this segment is the second largest revenue generated by PPB from sales of bakery
items, edible oils, and chilled and frozen foods which reach over 42,000 retail locations in
Malaysia, served through 13 warehouses. Based on Exhibit 4 in case study, looks on revenue
and profit shows RM628.3 million revenue and RM31.5 million in profit which show this
region being the fastest-growing country on this segment. Under PPB, there is a famous bakery
item brand called Massimo. In addition, in order to further increase the PPB industry and also
get a lot of demand for flour and frozen food, PPB has acquired BRF Foods GmbH, a
processed-food manufacturer. Because of this, PPB has changed the method from normal
packaging to more packaged and canned products so that processed food products are more
durable and still of high quality. Therefore, PPB needs to restructure the consumer product
segment regarding the packaging system.

In addition, the PBB company should reallocate its resources to the film exhibition and
distribution segments. It is currently the third segment that generates the highest revenue for
this company, with revenue for this segment reaching 3% (114.3) and profit reaching 9%
(135.6). Previously, GSC had opened 33 theatres and 339 screens in Malaysia, making it the
country's largest movie distributor. Additionally, this company also expanded its market abroad
when it bought a 40 percent stake in Vietnam-based Galaxy Studio. Aside from introducing
the happy food company concept throughout all of its cinemas, this company is stepping up
attempts to make its own films in Malaysia without relying on Hollywood, knowing that this
market will expand. Next, in 2020, GSC bought the third-largest cinema in Malaysia, namely
MBO. Therefore, PBB needs to reallocate all resources to all divisions found in this segment,
including MBO's properties, to add 26 cinemas to the GSC line and further develop this
segment successfully.

Next, among the segments that provide little revenue are environmental engineering and
utilities, where the revenue is 189.5 (4%) and 14.4 (1%) of the company's profit, respectively.
Among the activities carried out in this segment are water engineering, solid waste
management, sewage treatment, and flood mitigation. PPB is a leading firm in water and
sewage management in Malaysia through its subsidiaries. This segment is led by Chemquest
Group, in which PPB has a 55-percent equity interest. To further strengthen this segment in the

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company, PBB should restructure management for this segment according to its long-term plan,
which is to cut costs in the utility segment. Among them, the company can ensure operational
efficiency through more efficient tactics, improvements in technologies, and working more
closely with project management teams. By restructuring this segment, PBB will be able to
improve the importance of this segment to the company with new management changes.

Unfortunately, there are some segments that need to be sold off. The first is property
segments which do not generate significant revenue from commercial and residential properties.
PPB only generates revenue amount only RM67 million and profit RM3.9 million. PPB
concept properties are on high-rise style buildings to save space such as the Cheras Leisure
Mall, The Whiteways Arcade, and the Megah Rise. Because this PPB has many types of
properties such as malls, arcades and condominiums, it may cause more losses than profits
because it does not focus on one type of property, whether malls or arcades or condominiums.

Question 2: As there are few mills in the region that can crush soybean, resulting in
most soybean being imported as crushed products, should PPB enter the crushed
soybean milling business?
Answer: Yes, PPB should enter the crushed soybean milling business because Malaysia does
not have its own soybean production. So that they need to import all soybeans for use rather
other nation they still can produce soybeans even a little. Due to soybean meal is a key
component in animal feed, PPB needs to has factory that can crush the soybean into animal
feed. There are several factors that PPB needs to have its own soybean factory. Firstly, the price
of soybean will decrease if less soybean is imported. Therefore, soybean in Malaysia will be
welcomed because of its cheap price. Furthermore, the less we import, the less ringgits flow
out of the country. The second is that the value of the country's currency will increase. When
the country has the ability to produce crushed soybeans, then we are able to reduce the outflow
of Malaysian currency and further increase the export of local goods. In addition, when you
have your own factory, it gives a lot of potential to PPB and other businesses. For example,
PPB can control the quality of the soybean itself, can produce other soybean-based products
other than animal feed such as soybean milk, soybean oil, soybean powder and others.
Therefore, PPB should have its own crushed soybean mill can provide more opportunities and
increase their revenue.

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Question 3: Should the firm move more operations to Vietnam since labour is cheaper?

Answer: Yes. The firm should move more operations to Vietnam since there are two mills that
operating there and focused on the production of flour. There are some factors that support the
expansion of PPB Berhad to move more operations, especially due to wages of labour is
cheaper. Referring to the external issues for PPB, Vietnam is one of the countries account for
most of the vitality and growth. The growing numbers of middle-class and upper-middle-class
consumers are turning to more Western cuisine because of Southeast Asia’s expanding
macroeconomic environment. PPB’s products seem to be well received in Vietnam since
western foods also need the products from grains and agribusiness segment. Other products
that produce by grains and agribusiness segments which is animal feed also will expand more
capacities since Vietnam also one of the countries that import more soybean meal and other
grains like corn.
Other than that, Vietnam permits 100 percent foreign ownership of enterprises in the
majority of industries and offering comparatively low tax rates and other incentives for
business to start or expand operations in the nation. In terms of facilities to welcome foreign
business, Vietnam is building highways and seaports. The comparison in percentage of PPB’s
by region revenues and profits in 2019 and 2020 shows revenues in the Vietnam region
increased by 12 percent, which is also consistent with Vietnam being the region's fastest-
growing country. It also gives opportunities for both Vietnam and foreign business which is
PPB Berhad since it will help in rise Vietnam’s GDP and good performances for PPB.

Question 4: What is the solution for cheaper chicken from Vietnam under-pricing PPB’s
chicken in Malaysia?
Answer: The solution that can be done to overcome the issue of cheaper chicken from Vietnam
underpricing PPB's chicken in Malaysia is that PPB's company needs to intensify its chicken
farming activities in Malaysia and sell it at a lower price. This is because, historically, Malaysia
is one of the countries with the highest chicken consumption populations. Therefore, the
amount of chicken production in Malaysia should be increased to be able to meet the demand
for chicken without depending on chicken from abroad. However, to ensure that the chicken
can be sold at a low price, PBB should implement a strategy to reduce the cost of raising
chicken so that, with the sale price, it can still provide profit to PBB's company. Among the
strategies that can be done is to reduce the cost of livestock farming and the animal feed given
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to the chickens. In addition, the government can also reduce the amount of chicken that can be
imported from Vietnam by imposing restrictions or raising quota tariffs on chicken imports. In
this way, the sale price of chicken imported from Vietnam will be more expensive than the
price of chicken sold by PBB's company.

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Question C

C) As the Strategic Planning team, develop for Lim Soon Huat, Managing Director of PPB
Group, a strategic plan that you believe will lead the company to prosperity. Recall from
the case that consumption patterns in Southeast Asia in general are moving further away
from rice to more flour-based products and this bodes well for PPB if the company can
capitalize on such external opportunities.

Question 1: A comprehensive strength-weakness-opportunity-threat (SWOT) analysis

and portfolio analysis is needed to facilitate PPB’s decision-making moving forward.

Answer:

IFE Analysis

Strength Weight Score Weighted

score

Leading in business Grain & Agriculture 0.12 4 0.48

business and cinemas in Southeast Asia

Large animal-feed supplier in Malaysia 0.11 4 0.44

Saving costs by including lower-cost feed 0.08 3 0.24

ingredients in its products.

Farms are both closed-housing facilities 0.07 3 0.21

Strong brand recognition 0.12 4 0.48

Weakness Weight Score Weighted

score

Surplus of production during holidays season 0.12 2 0.24

Firm’s Environmental Engineering & Utilities 0.09 3 0.27

and Property segments do not generate
significant revenue

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 Centralized organization 0.12 3 0.36

Does not provide online watching options 0.11 2 0.22

Lack of variety of packaging (packaged and 0.06 3 0.18

canned products)

1.00 3.12

The company has a great strength to ensure the company grow well in the country but there
are some issues to address for its weaknesses.

EFE Analysis

Opportunity Weight Score Weighted

score

Demand for flour-based product increased 0.1 4 0.4

5% in Southeast Asia

The growth of populations and income 0.08 2 0.16

levels in Southeast Asia

Spurring a change in eating habits of 0.12 4 0.48

consumers who seek more western food in
most Southeast Asia
Vietnam GDP is growing at a faster rate of 0.09 2 0.18
around 4.5 percent

Indonesia, Malaysia, the Philippines, 0.11 3 0.33

Thailand, and Vietnam are currently
importing soybean meal faster than any
region in the world.

Threats Weight Score Weighted

score

Vietnam and China prefer pork over chicken 0.11 3 0.33

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 Thailand grow livestock cheaper allowed 0.12 4 0.48
consumer to purchase at lower price than the
domestic chicken

COVID-19 movement constriction order 0.12 3 0.36

(MC0)

Godrej Agrovet is a market leader in poultry 0.1 3 0.3

processing, animal feed, and palm-oil
production.
TGV offers more facilities than GSC 0.5 2 0.10
(playground,family seats)

1.00 3.12

The company has a competent external environment to expand better despite the competition
and other external issues. But with the corrective action, the company will sustain in the future.

SWOT Analysis

Strength Weakness

1. Leading in business 1. Surplus of

Grain & Agriculture production during
business and cinemas holidays season in
in Southeast Asia Malaysia
2. Large animal-feed 2. Does not provide
supplier in Malaysia online watching
3. Saving costs by options
including lower-cost 3. Lack of variety of
feed ingredients in packaging (packaged
its products. and canned products)
4. Farms are both 4. Firm’s
closed-housing Environmental
facilities Engineering &
5. Strong brand Utilities and Property
recognition segments do not
generate significant
revenue
5. Centralized
organization

Opportunities SO STRATEGIES WO STRATEGIES

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1. Demand for flour- 1. Produce own 1. Provide new
based product western product packaging and
increased 5% in like pasta, bakery canned products
Southeast Asia (S1, S5, O2, O3) especially for flour
2. The growth of and frozen food
populations and 2. Growing an own (W1, W5,O1,O2)
income levels in soybean farm (S2,
Southeast Asia S3, O5) 2. Create new food
3. Spurring a change in products based on
eating habits of poultry and market
consumers who seek it to all subsidiaries.
more western food in (W1,02)
most Southeast Asia
4. Vietnam GDP is
growing at a faster
rate of around 4.5
percent
5. Indonesia, Malaysia,
the Philippines,
Thailand, and
Vietnam are
currently importing
soybean meal faster
than any region in
the world.

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Threats ST STRATEGIES WT STRATEGIES

1. Vietnam And China 1. Export lower-cost 1. Introduce package

nation pork over feed ingredients in on-the-go movies
chicken its product to plus food by
2. Thailand is ASEAN booking at the
significant player in (S3,S5,T2,T4) online platform
poultry export GSC (W4,T4,T5)
business since their 2. Enhance pest
grow livestock control in animal- 2. Create online
cheaper allowed feed production festival food (W1,
consumer to (S4,T2,T4) T5)
purchase at lower
price than the
domestic chicken 3. Cut cost in farming
3. Godrej Agrovet is a production (W1,
market leader in T2)
poultry processing,
animal feed, and
palm-oil production.
4. TGV offers more
facilities than GSC
(playground, family
seats)
5. COVID-19
movement
constriction order
(MC0)

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QSPM
Strategic Alternatives
Growing an own Cut cost in farming
soybean farm production
Total Total
Attractive Attractive Attractive Attractive
Weight Score Score Score Score
Opportunities
Demand for flour-based product
increased 5% in Southeast Asia 0.12 5 0.6 5 0.6
The growth of populations and
income levels in Southeast Asia 0.08 5 0.4 4 0.32
Spurring a change in eating habits
of consumers who seek more
western food in most Southeast
Asia 0.12 - - - -
Vietnam GDP is growing at a faster
rate of around 4.5 percent 0.09 5 0.45 3 0.27
Indonesia, Malaysia, the
Philippines, Thailand, and Vietnam
are currently importing soybean
meal faster than any region in the
world. 0.1 5 0.5 4 0.4

Threats
Other nations listed above prefer
pork over chicken, especially
Vietnam (and China) 0.1 -- - - -
Thailand is significant player in
poultry export business since their
grow livestock cheaper allowed
consumer to purchase at lower price
than the domestic chicken 0.11 - - - -
Godrej Agrovet is a market leader
in poultry processing, animal feed,
and palm-oil production. 0.12 - - - -
TGV offers more facilities than
GSC (playground, family seats) 0.09 - - - -
COVID-19 movement constriction
order (MC0) 0.07 4 0.28 3 0.21
Total 1

Strength
Leading in business Grain &
Agriculture business and cinemas in
Southeast Asia 0.1 4 0.4 5 0.5
Large animal-feed supplier in
Malaysia 0.08 5 0.4 5 0.4

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 Saving costs by including lower-
cost feed ingredients in its products. 0.12 5 0.6 5 0.6
Farms are both closed-housing
facilities 0.09 4 0.36 4 0.36
Strong brand recognition 0.11 3 0.33 4 0.44
Weakness
Surplus of production during
holidays season 0.1 2 0.2 4 0.4
Does not provide online watching
options 0.1 - - - -
Lack of variety of packaging
(packaged and canned products) 0.12 3 0.36 3 0.36
Firm’s Environmental Engineering
& Utilities and Property segments
do not generate significant revenue 0.11 5 0.55 5 0.55
Centralized organization 0.07 - - - -
Total 1 5.43 5.41

PPB’s company should choose to grow an own soybean farm to moving forward.

Portfolio
Segment Revenues (RM Percent Profits (RM Percent Profits
millions) Revenues (%) millions) (%)
Grains & 3,300.0 76 271.7 19
Agribusiness
Consumer 628 15 31.5 2
Products
Film 114.3 3 -135.6 0
Exhibition &
Distribution
Environmental 189.5 4 14.4 1
Engineering &
Utilities
Properties 67.0 1 3.9 0.3

Question 2: Be sure to include in your analysis what you feel the firm should be doing,
not what they are currently doing or what you think they will be doing after studying
the latest news releases (unless, of course, you agree with these strategies).
Answer: The firm should be focusing on grains & agribusiness since this segment contributes
the highest income and profit into the company with 76% of total revenues and 19% from total
profits. Based on the QSPM and SWOT strategies above, it would be a brilliant move from
PPB if they start to grow their soybean farm. Aside soybean as component that essential for

16
animal feed, soybean also become common ingredients in Southeast Asia cuisines like tempeh
and soy sauce. Based on Soy: The King of Beans, research made by Khazanah Research
Institute in 2019, Malaysia currently importing soybeans from American countries like USA,
Argentina and Brazil. As Ringgit Malaysia keep falling, the price for imported soybean will
become more expensive. This could lead towards shortage of livestock products and other
soybean-based foods in Malaysia. PPB can expand their segment of agribusiness into soybean
industry to solve the dependence on imported soybean and at the same time, generate more
profit to the company.

Question 3: PPB is in desperate need of a clear strategic plan as they serve a rapidly
growing regional market with multiple product lines that differ significantly.
Answer: PPB will be able to gain a competitive advantage in the future by using a strategy
known as regional diversity at the corporate level. Diversification, in its most basic form,
comprises the production or provision of a greater number of products or services. As a result,
a corporation that wishes to diversify its operations will look for ways to broaden the range of
activities that are already part of those operations. A geographic diversification strategy is used
when a corporation establishes a presence in a new nation with the objective of increasing its
present activities. Furthermore, global diversity may result in an increase in a company's
revenue since high-growth nations can counteract the effects of low-growth regions. For
example, PPB can diversify their operation by promoting halal product in Muslim-majority
countries like Brunei, Malaysia and Indonesia. While in Thailand, Vietnam and the Philippines,
they can create new food based on trends and market research on this country.

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