Table of Contents

Executive Summary ......................................................................................................................... i

1.0 Introduction .......................................................................................................................... 1
1.1 Strategic Management ................................................................................................................ 1
1.2 Product Life Cycle ...................................................................................................................... 2
2.0 Corporate Strategic Plan ...................................................................................................... 4
2.1 Corporate Vision Statement ....................................................................................................... 4
2.2 Corporate Mission Statement .................................................................................................... 4
2.3 Corporate Objectives .................................................................................................................. 4
2.4 Mintzberg’s Modes ..................................................................................................................... 5
2.4.1 Entrepreneurial Mode ........................................................................................................ 6
2.4.2 Adaptive Mode .................................................................................................................... 6
2.4.3 Planning Mode .................................................................................................................... 7
2.4.4 Logical Incrementalism ...................................................................................................... 7
3.0 Internal Factor Analysis ....................................................................................................... 8
3.1 Corporate Value Chain Analysis ............................................................................................... 8
3.2.1 Primary Activities ............................................................................................................... 9
3.2.2 Support Activities.............................................................................................................. 11
3.2 Synthesis of Internal Factors – IFAS ...................................................................................... 12
4.0 External Factor Analysis .................................................................................................... 14
4.1 PESTEL Analysis ...................................................................................................................... 14
4.2 Synthesis of External Factors – EFAS .................................................................................... 17
5.0 Corporate Strategy Formulation ........................................................................................ 18
5.1 Directional Strategy .................................................................................................................. 18
5.1.1 Growth Strategies ............................................................................................................. 19
5.1.2 Stability Strategies ............................................................................................................ 19
5.1.3 Retrenchment Strategies .................................................................................................. 20
5.2 BCG Growth-Share Matrix ..................................................................................................... 21
6.0 Conclusions and Recommendations .................................................................................. 23
6.1 Strategy Implementation Issues ............................................................................................... 23
6.2 Stakeholder Measures and Value Analysis ................................................................................... 24
7.0 References .......................................................................................................................... 26
 Executive Summary

Strategic planning is the process of managing the organizational resources to meet its objectives,
with taking the changing market opportinuties into account. PHHP Manufacturing is one of the
leading Phyto Fibre manufacturers in Malaysia. Its vision is “To become the market leader with
innovation, added creativity and together with empowerment”, and its mission is “To offer the
customers with the best product in a more innovative way than the rivals”. The main objectives
are profitablility and productivity, employee relation and retention, growth, marketing and
customer relations. It uses few planning techniques, which would help organization to plan for
strategic decisions. Few methods used such as Mintzberg’s Modes, SWOT analysis, BCG
growth-share matrix, and value chain analysis. The environmental scanning is carried out to
identify certain important factors that are essential in future. PESTEL analysis is done to brief
on political, economic, social, technological, environmental, and legal factors. The important
role played by stakeholders is identified as the group of people who are interested or affected by
the decisions taken by the organization. PHHP Manufacturing Sdn Bhd is deciding to move into
new market and create new market segments. Each functions in organization must has certain
roles and responsibilies to face the challenging business environment. It might facing
implemention problems when trying to obtain the necessary resources but with careful and
effective planning, these strategy objectives could be achieved.

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1.0 Introduction

PHHP Manufacturing Sdn Bhd is one of the leading health food product - Phyto Fibre
manufacturer in Malaysia. The group of companies is currently holds the 6th position in Malaysia
in regard to the market share and the main aim of the company is to become the leading Phyto
Fibre manufacturer within the next 2 years. It is clearly understood that the main objective of any
organization would be to grow and expand after few years of operations. PHHP Manufacturing
Sdn Bhd has identified some core competencies which has helped them to stand out from its
competitors. This report explains the corporate vision, mission, objectives, policies, and the core
competencies of PHHP Manufacturing Sdn Bhd, the problems they might face while planning
strategic direction due to the changing economic condition. The report also shows the number of
different planning techniques that an organization could use and it shows how PHHP
Manufacturing Sdn Bhd have effectively use of Mintzberg’s Modes, SWOT analysis, BCG
growth-share matrix and value chain analysis. The importance of carrying out a PESTEL
analysis is given and also the value of stakeholders and the importance of stakeholder analysis
are given out effectively. This report also shows that PHHP Manufacturing Sdn Bhd could use a
number of methods as growth strategies and they have decided to move into a new market. It is
also understood that all the divisions have certain roles and responsibilities in helping PHHP
Manufacturing Sdn Bhd to achieve its objectives.

1.1 Strategic Management

Strategic management is the ongoing process of PHHP Manufacturing Sdn Bhd uses to form a
vision, analyse its external environment and internal environment, and select one or more
strategies to use to create value for customers and other stakeholders (Thompson & Martin,
2010).

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1.2 Product Life Cycle

PHHP Manufacturing Sdn Bhd’s new products progress through a sequence of stages from
introduction to growth, maturity, and decline. This sequence is known as the product life cycle
and it is associated with changes in the marketing situation (Stark, 2015), thus impacting the
PHHP Manufacturing Sdn Bhd’s marketing strategy and the marketing mix.

The product revenue and profits is plotted as a function of the life-cycle stages as shown in the
graph below.

Sales

Introduction Growth Maturity Decline

Time

Figure 1: Product Life Cycle Stages

Introduction Stage

PHHP Manufacturing Sdn Bhd is seeking to build product awareness and develop their market
for the product. There are few impacts on the marketing mix as follows:

• Product branding and quality level is established, and intellectual property defence such
as patents and trademarks are obtained for Phyto Fibre which is the most sellable product.
• Pricing of product may be low to increase market share rapidly in short period.
• Distribution is monitored until consumers show acceptance of the product.
• Promotion is seeking to build product awareness and consumers product learning.

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Growth Stage

PHHP Manufacturing Sdn Bhd is seeking to build brand preference while increase market share.

• Product quality is maintained, value-add features and customer support services are
established.
• Pricing is maintained and enjoys increasing in product demand with minimal competition.
• Distribution channels are well established and customers accept the product.
• Promotion strategies are rapidly used to aim for large group of customers.

Maturity Stage

A strong growth in sales will be weaken at maturity stage. There is arising in competition with
similar product. The key objective at this stage is to protect market share while capitalize on
profits.

• Product features are enhanced to differentiate the product from its competitors.
• Pricing is low to compete in competitive market.
• Distribution becomes more intensive and encourage preference over competing products.
• Promotion is rapidly change for product diversity.

Decline Stage

PHHP Manufacturing Sdn Bhd is having few options in decline stage.

• Finding new customers, new design and features.

• Reduce costs and maintain the product for a loyal niche segment.
• Promotion and continue to offer product and maintain at certain level of market share.

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2.0 Corporate Strategic Plan

2.1 Corporate Vision Statement

The vision is intended to inspire PHHP Manufacturing Sdn Bhd’s employees to understand or
“picture” the future ambitions of what the organization can become and to help begin a
framework (Hoskisson, Hitt, & Ireland, 2009). The vision statement of PHHP Manufacturing
Sdn Bhd is given below:

“To become the market leader with innovation, added creativity and together with
empowerment”

2.2 Corporate Mission Statement

The mission statement defines the organization’s core intending to and the business or businesses
in which it intends to work. This will explain the reason of existence of the organization and
what it does, who it does for and how it does. The mission statement will help the stakeholders to
have an idea on what organization hopes to do and its overall intension (Hoskisson, Hitt, &
Ireland, 2009). The mission statement of PHHP Manufacturing Sdn Bhd is given below:

“To offer the customers with the best product in a more innovative way than the rivals”

2.3 Corporate Objectives

It is important that organization that exits is having its own objectives. It is essential to identify
its own objectives and the purpose of why they are going to carry out operations (Hoskisson, Hitt,
& Ireland, 2009). The objectives of PHHP Manufacturing Sdn Bhd are given below:

• Profitability and productivity – the ultimate objective of any business is to obtain profits
and to increase its productivity over time. Profit maximizing becomes one of the most
important objectives for PHHP Manufacturing Sdn Bhd and they aim to obtain 25%
increment of profits within the next 2 years. The management should take necessary

4
 actions to increase the labour productivity by providing them with more and better
training, a better and happy environment to work and all the necessary resources to
achieve their targets (Spender, 2015).
• Employee relation and retention – one theory adopted at PHHP Manufacturing Sdn Bhd
is that more the employees are kept happy and motivated, the easier for the organization
to achieve its objectives. Both the vision and mission states about empowerment and the
organization have been empowering its employees (Strickland, Gamble, & Thompson,
2001). PHHP Manufacturing Sdn Bhd is needs to build up a good relationship between
the management and the employees and to retain them.
• Growth – the organization is planning to expand its operation in the coming two years.
Few plans have been laid down and the decision needs to be implemented properly. The
management is planning to set up new manufacturing plant and also planning to
introduce new products.
• Marketing and customer relations – one main objective of PHHP Manufacturing Sdn Bhd
is to market their products by giving an important message to its customers. Marketing is
about understanding consumer buying trends, being able to get ahead product distribution
needs and developing business partnerships that help organization to improve market
share (Williams, 2002).

2.4 Mintzberg’s Modes

According to Henry Mintzberg, the organization's structure begins from the interaction of the
organization's strategy, the environmental forces it experiences, and the organizational structure
itself. When these come together, the organizations can perform well. In reverse, then the
organization is likely to experience severe problems (Thompson & Martin, 2010).

Different structures arise from the different characteristics of these organizations, and from the
different forces that shape them. By understanding the organizational types that Mintzberg
defines, PHHP Manufacturing Sdn Bhd can think about whether its structure is well suited to its
conditions. If it isn't, it must think about what is needed to change things.

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 Mintzberg’s Modes of Strategic Decision Making

Entrepreneurial Logical
Adaptive Mode Planning Mode
Mode Incrementalism

Figure 2: Mintzberg’s Modes of Strategic Decision Making

2.4.1 Entrepreneurial Mode

In entrepreneurial mode, PHHP Manufacturing Sdn Bhd’s strategic planning is done by its Chief
Executive Officer (CEO) or Top Management. He takes the full responsibility of business
planning, focus and creates business opportunities. He has entrepreneurial skills. That is, he is
good in planning, organizing, motivating people by having strong vision of direction for the
growth of organization. He is a strong and bold leader.

2.4.2 Adaptive Mode

In adaptive mode, the CEO is changing his plans according to the changes in the business
environment. He first makes a big plan, then he breaks it into smaller plans. This is done to
adjust with the dynamic business environment. Then, he is combining all these plans to make a
strategic business plan. In this method, the CEO works in a disorganized business environment
with the objective to get the best business plan for PHHP Manufacturing Sdn Bhd.

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2.4.3 Planning Mode

In planning mode, the Top Management makes the plan after analyzing the objectives and
resources of PHHP Manufacturing Sdn Bhd. It is carefully considering all the factors before
making the plan. In this method, its approach is very rational and gives prime importance to
management processes in order to get logical business plan.

2.4.4 Logical Incrementalism

In this mode, Top Management has a rationally ideas of the business’s mission and objectives. In
its business strategies, it selects to use an collaborative process in which the organization probes
the future and learns from a some commitments rather than over comprehensive constructions of
total strategies in PHHP Manufacturing Sdn Bhd. Thus, although the mission and objectives are
set, the strategy can emerge out of argument, debate, and experimentation by business operations.
This approach appears to be useful when the business environment is moving fast and when it is
important to compromise and develop needed resources before obligating an entire corporation
to a specific strategy (Thompson & Martin, 2010).

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3.0 Internal Factor Analysis

This internal factor must be first understood before one goes about understanding the external
factor in PHHP Manufacturing Sdn Bhd. When internal factor is understood, the points that
emerge include its strengths, weaknesses, resources needed and competencies that must be built.
An understanding of a firm’s resources is a prerequisite to formulation of business strategy.

Internal factor analysis is usually done around traditional functions: production, marketing,
finance, human resources, technology and so on. Each of these functions is further broken down
to identify critical sub-functions, and their strength is also determined in terms of their
contribution to organizational goals (Pahl & Richter, 2007).

3.1 Corporate Value Chain Analysis

It is a common fact that the businesses add value to their products at each stage of production.
The production or the manufacturing process is divided into various segments and at each stage a
certain value should be added to the products. For example, when the raw materials are
transported for manufacturing, a value is added during packaging process and when the final
product is transported, another value is added (Ensign, 2001). This is where the value chain
developed by Michael Porter comes into picture.

A value chain is a set of activities that an organization carries out to create value for its
customers. Porter proposed a general-purpose value chain that companies can use to examine all
their organization activities and examine how they have connected each other (Ensign, 2001). It
helps PHHP Manufacturing Sdn Bhd to understand the sources of value in an organization.

The following diagram clearly explains how a value chain would look like.

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 Firm Infrastructure
Support Activities (general management, accounting, finance, strategic planning)

Human Resource Management

(recruiting, training, development)
Technology Development

Profit Margin
(R&D, product and process improvement)

Procurement
(purchasing of raw materials, machines, supplies)
Inbound Operations Outbound Marketing Service
Logistics Logistics and Sales (installation,
(raw (machining, (warehousing (advertising, repair, parts)
materials assembling, and promotion,
handling and testing) distribution of pricing,
warehousing) finished channel
products) relations)

Primary Activities

SOURCE: Competitive Advantage: Creating and Sustaining Superior Performance by Michael Porter.
Copyright © 1985, 1988 by Michael E. Porter. All rights reserved.

Figure 3: Michael Porter’s Value Chain Model

3.2.1 Primary Activities

Primary activities are directly involved in the conversion process of basic raw materials into final
products including the receipt of raw materials from suppliers and marketing of products to
customers. They are grouped into two types of activities related to product and market. Product
related activities are the inbound logistics and operations, performed by the organization to add
value to the product and services itself. Market related activities are outbound logistics,
marketing and sales and services, performed by the organization to transfer the finished product
or services to the customers (Porter, 1998).

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Inbound Logistics

These include receiving the raw materials required for the PHHP Manufacturing Sdn Bhd’s
health food products making process, stacking and reclaiming the materials, and distribution of
materials to production departments. Warehousing activities and supports are vital to product
quality, balancing supply and demand, and create value-add to products and customers. Inbound
Logistics activities can be included to primary activities (Dawar, 2013).

Operations Management

These include raw material handling and processing which involving receiving and handling of
major raw materials like plant fibre including oat, roselle, psyllium husk and hawthorn berries.
Raw materials are carefully examined to ensure its high-quality supplies. Manufacturing of
products must meet the plant requirements, carrying out the major repairs of equipment in plant
units, maintenance of equipment; repair of machineries and electronics equipment etc. Planning
and monitoring of production also a vital activity (Dawar, 2013). Operation Management
activities can be included to primary activities of PHHP Manufacturing Sdn Bhd.

Outbound Logistics

These include planning and despatch of products, distribution management intra and inter plants,
transportation monitoring and control, warehousing and space availability, and customer order
fulfilment by PHHP Manufacturing Sdn Bhd. Outbound Logistics activities can be included to
primary activities.

Marketing and Sales

These include product management, price management, order placement management, product
promotion management, product sales planning and control, planning and despatch, pricing and
policy, customer contracts and relations management etc. Marketing and Sales activities can be
included to primary activities of PHHP Manufacturing Sdn Bhd.

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Service After Sales

PHHP Manufacturing Sdn Bhd provides services such as product warranty, commercial terms,
quality aspects, delivery aspects, post sales contact handling, and customer complaint settlement
procedure. Service after sales activities can be included to primary activities.

3.2.2 Support Activities

Material Management

These include identifying sources for various materials, selection of suppliers, taking requests
from plant units, procurement of raw materials, components and parts, machinery and spares,
consumables, stationery, servicing, transport contract management, discrepancy receipt,
inventory control, and ensure the continuity supply of materials for production in PHHP
Manufacturing Sdn Bhd.

Technology Development

PHHP Manufacturing Sdn Bhd is investing in bringing in modern technology to support and
improve its operation which include quality assurance, engineering, production processes, and
logistics operations. Key focus is toward processes automation to increase output and improve
efficiency. The activities involved in improving the technology and the process used in the
manufacture of products and their improvement, and the service procedures constitute
Technology Development. Redesigning of processes, basic research, new product development
process, use of information technology in service and distribution and the like are the different
forms of technology development. Technology, a source of value, affords the competitive edge; a
constant and successful pursuit of acquiring or developing technology differentiates a star
performer from its rivals (Williams, 2002).

Human Resource Management

These include corporate coordination in manpower planning, recruitment, executive

establishment, rules and policies, and welfare. The activities in human resources such as human

11
resource development, management services such as quality circles, suggestion schemes, awards,
and incentive schemes. Other activities such as corporate social responsibility, medical support,
general administration, training and development (T&D), and HR information systems (Kotter,
2014).

Finance Management

These include treasury management, budgeting, costing, corporate accounts, raw material
accounts, sales finance, operations & general accounts and works accounts, insurance, pay
sections, stores accounts, purchase bills, project accounts, internal audit and stock verification.

3.2 Synthesis of Internal Factors – IFAS

Internal Factor Analysis Summary (IFAS) is to evaluate the worth of each identified strength to
determine which strength is more critical than others. This tool furnishes both an enumeration of
strengths and weaknesses in the functional areas of PHHP Manufacturing Sdn Bhd, and the value
of each of them, thus the weighted score of strengths and weaknesses is calculated. This can be
compared with those of the rival firms or industry standard. This tool also facilitates the
understanding of the relationship among functional areas, and the degree of such relationship
(Wheelen & Hunger, 2015). More specifically, a thorough understanding of the factors included
in the IFAS is highly important to identified correct resources for PHHP Manufacturing Sdn Bhd.

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 Table 1: Internal Factor Analysis Summary (IFAS Table)

Weighted
Internal Factors Weight Rating Comments
Score

Strengths
Competent and 0.25 4.2 1.05 Strong in strategic planning
experienced staff
Innovative ideas 0.20 3.6 0.72 Competitive advantage
High products quality 0.15 3.0 0.45 Recognized and stand out
High capacity production 0.10 2.5 0.25 Capable of reducing
facility production cost

Weaknesses
Marketing expertise 0.15 3.8 0.57 Weak marketing and business
development function
Raw materials from 0.05 1.8 0.09 Dependence and subject to
oversea exchange rate fluctuations
Lack of an effective 0.10 4.1 0.41 New recruitment and training
middle management policy
Total Scores 1.00 3.54
Notes:
1. Each factor is weighted from 1.0 (most important) to 0.0 (not important). The total weights are sum to 1.00.
2. Each factor is rated from 5.0 (outstanding) to 1.0 (poor), based on the company’s response to that factor.
3. Multiply each factor’s weight and its rating to obtain each factor’s weighted score.
4. Add up all the weighted scores usually works out between 1 (at its low) and 4 (at its highest). A score of
less than 3.0 indicates a weak internal organization whereas that above 3.0 represents a stronger one.

The sum of the IFAS weighted scores of PHHP Manufacturing Sdn Bhd works out to 3.54 which
is above the average of 3.0. It can be inferred that its internal factors are strong enough.

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4.0 External Factor Analysis

External factor analysis is a strategic management tool which allows the management of
organization to examine the cultural, social, economic, demographic, political, legal, and
competitive information. It indicates whether the organization can effectively take advantage of
existing opportunities along with minimizing the external threats (Wheelen & Hunger, 2015).
Similarly, it will help PHHP Manufacturing Sdn Bhd to formulate new strategies and policies on
the basis of existing position of the organization.

4.1 PESTEL Analysis

It is a common fact that the organization carry out external environmental audit to identify their
strengths and capabilities within the organization and to have an understanding about what is
happening in the outside world. External environmental audit or scanning a PESTEL analysis
could be carried out by detecting early signs of opportunities and threats that may influence its
current and plans. There are six factors in PESTEL analysis which stand for Political, Economic,
Social, Technological, Environmental and Legal (Porter, 1998).

Political Economic

The
Legal Organization Social

Environmental Technological

Figure 4: PESTEL Analysis Factors

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4.1.1 Political

Political factors play a huge role for an organization and it influence on its decisions. It might
place obligations and duties on an organization. Some factors are tax policies, safety regulations
issued by government and international regulations. PHHP Manufacturing Sdn Bhd must
produce products per given standards and adhere to trade agreements, tariffs or restrictions.

4.1.2 Economic

The market condition or the economy of the country is bound to change from time to time. The
economy might be in a boom, in a recession or in a growing inflation problem. These can
influence an organization and it will change the plans set up by PHHP Manufacturing Sdn Bhd.
They must cope up anything because depending on the economic condition, they might not get to
market their products well and sales may not increase. It is clearly understood that if an economy
is in a recession, then it will have high unemployment levels, low spending power and lower
stakeholder confidence.

4.1.3 Social

This mainly considers people’s lifestyles and behaviour. Different people have different choices
and their taste and preferences differ. PHHP Manufacturing Sdn Bhd should always try to
produce a product and market it effectively which can capture a wider customer range. Factors
such as mood and demographics should be considered. The company should always consider the
population changes in the country. Changes in the structure of a population will affect the
demand and supply of goods and services. PHHP Manufacturing Sdn Bhd must produce products
that will suit to different segments in the market.

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4.1.4 Technological

An organization use modern technology to manufacture products and market their products. By
moving on technology, it exchange of information faster and help the business to react quickly to
changes. To be more competitive in the market, PHHP Manufacturing Sdn Bhd use machineries
in modern technology to produce its products and use modern techniques in production of
products. With modern technology in production, PHHP Manufacturing Sdn Bhd is able to
increase its output and produce high quality products which able to compete in the competitive
market.

4.1.5 Environmental

Organization should always pay high concern to the environment impact. Products should be
produced, that will minimize the environment pollution. To keep the environment clean, it
should comply with government’s policies and legislations. Other factors such as floods, should
be considered as it will disrupt production and supply operations.

4.1.6 Legal

Organization should always adhere to certain rules and regulations which are set up by
government. Labour laws is important and must consider to ensure the effectiveness of human
resource management. It is also important to produce products per certain standards, and
implemented legally.

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4.2 Synthesis of External Factors – EFAS

Table 2: External Factor Analysis Summary (EFAS Table)

Weighted
External Factors Weight Rating Comments
Score

Opportunities
Expansion into regional 0.25 4.0 1.00 Increase sales volume and
markets improve market share
Technological 0.20 3.0 0.60 High output and efficient
advancements production
Strategic partnership 0.10 2.5 0.25 A reduction in raw materials
with vendors price and lead time

Threats
High competition 0.25 4.0 1.00 Increasing in new competitors
Changes in customer 0.10 3.2 0.32 Service comparative and high
demands and preferences customization
Government policies and 0.10 3.0 0.30 Impact on foreign workers’
legislations costs and GST
Total Scores 1.00 3.47
Notes:
1. Each factor is weighted from 1.0 (most important) to 0.0 (not important). The total weights are sum to 1.00.
2. Each factor is rated from 5.0 (outstanding) to 1.0 (poor), based on the company’s response to that factor.
3. Multiply each factor’s weight and its rating to obtain each factor’s weighted score.
4. Add up all the weighted scores usually works out between 1 (at its low) and 4 (at its highest). A score of
less than 3.0 indicates a weak internal organization whereas that above 3.0 represents a stronger one.

The sum of the EFAS weighted scores of PHHP Manufacturing Sdn Bhd works out to 3.47
which is above the average of 3.0. It can be inferred that the organization is taking advantage of
existing opportunities along with minimizing the potential adverse effects of external threats.

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5.0 Corporate Strategy Formulation

Strategy formulation is a continuing process to develop and review forthcoming strategies that
allow PHHP Manufacturing Sdn Bhd to achieve its objectives, seeing its competences,
limitations, and the environment in its operation. In the strategy formulation process, produces a
clear set of recommendations, with supportive reasoning, that review as essential the mission and
objectives of the organization, and supply the strategies for realising them (Lehmann, 2012).
Thus, PHHP Manufacturing Sdn Bhd is trying to adjust the current objectives and strategies in
the ways to make the organization more effective.

5.1 Directional Strategy

PHHP Manufacturing Sdn Bhd’s vision and mission are the most fundamental forms of
directional strategy. A mission statement defines its business purpose and sets the overall tone
for business strategic direction. A vision statement outlines what they hope to achieve as work
toward its mission and helps to focus on strategy toward reaching specific business goals
(Hoskisson, Hitt, & Ireland, 2009).

GROWTH STABILITY RETRENCHMENT

Concentration Pause/Proceed with Caution Turnaround

- Vertical Growth No Change Captive Company
- Horizontal Growth Profit Sell-Out/Divestment
Diversification Bankruptcy/Liquidation
- Concentric
- Conglomerate

Figure 5: Corporate Directional Strategies

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5.1.1 Growth Strategies

PHHP Manufacturing Sdn Bhd’s growth strategies can be classified into two categories:

• Concentration within existing industry: vertical and horizontal growth

• Diversification into other lines of business or industries: concentric and conglomerate

Vertical Growth

The strategy taken by PHHP Manufacturing Sdn Bhd is taking over functions earlier in the value
chain that were previously provided by suppliers. Some outsourced processes are returned to
internal production that have advantages like in cost, stability and quality of products, that
making operations more difficult for competitors.

Horizontal Growth

PHHP Manufacturing Sdn Bhd is involving in expanding existing products into East Malaysia to
extend its market segments. The product range is increase to support new market segments with
different demand and needs.

Concentric Diversification

PHHP Manufacturing Sdn Bhd is venture into packaging production which is having synergy
with the organization’s existing lines of business. It is creating a situation to gain special
advantages from commonalities such as technology, customers, distribution, and location.

Conglomerate Diversification

There are no strategy alternatives for PHHP Manufacturing Sdn Bhd for growth involves
diversifying into a line of business unrelated to the current ones.

5.1.2 Stability Strategies

There are several circumstances in which the most appropriate growth stance for a company is
stability, rather than growth. Three alternatives as below, in which the actual strategy actions are
19
similar, but differing primarily in the circumstances motivating the choice of a stability strategy
and in the intentions for future strategic actions (Strickland, Gamble, & Thompson, 2001).

Pause and Then Proceed

PHHP Manufacturing Sdn Bhd is wait and look at the market conditions before launching the
full-fledged grand strategy. Also, the organization that has intensely followed the expansion
strategy would wait till the time the new strategies seeps down the organizational levels and look
at the changes in the organizational structure before taking the next step.

No Change

There are certain market segments in low sales that may require to remain as to compete with
few competitors. This is happening in few small towns in West Malaysia.

Grab Profits

PHHP Manufacturing Sdn Bhd is aim to maintain the business profit by whatever means possible.
When the profitability is low, it may cut costs, reduce investments, raise prices, increase
productivity or adopt any methods to overcome the temporary difficulties. The profit strategy can
be followed when the problems are temporary or short-lived and will go away with time.

5.1.3 Retrenchment Strategies

The retrenchment strategy is adopted when PHHP Manufacturing Sdn Bhd is aim at reducing its
business operations with the view to cut expenses and reach to a more stable financial position.

Turnaround

The need for a turnaround strategy arises because of the changes in the external environment,
change in the government policies, saturated demand for the product, a threat from the substitute
products, changes in the tastes and preferences of the customers, etc (Kaplan & Norton, 2001). In

20
2006, PHHP Manufacturing Sdn Bhd announced the cost-cutting measures by downsizing its
production facility and capacity, but unfortunately, it suffered huge losses in market share. Then
in 2007, PHHP Manufacturing Sdn Bhd come back with centralized production and warehousing
strategy. Today, it is one of the largest Phyto Fibre manufacturers in Malaysia.

Liquidation

The liquidation strategy is the most unpleasant strategy adopted by the organization that includes
selling off its assets and the final closure or winding up of the business operations. It is the most
crucial and the last resort to retrenchment since it involves serious consequences such as a sense
of failure, loss of future opportunities, spoiled market image, loss of employment for employees,
etc (Kaplan & Norton, 2001). PHHP Manufacturing Sdn Bhd is doing their very best to avoid
such strategy become reality in its organization.

5.2 BCG Growth-Share Matrix

An organization is most likely to engage in the production of large number of products and it is
the duty and the responsibility of PHHP Manufacturing Sdn Bhd to identify and decide which
products should focus more on investment. Simply this means that the business needs to allocate
its investment on each product to make things easier for the organization a BCG growth-share
matrix could be prepared (Marren, 2007).
High

STARS QUESTION MARKS

Market Growth Rate

Rapid growth & New ventures, few

expansion become stars

CASH COWS DOGS

Ability to fund the Low market share &

Question Marks & Stars growth
High Market Share Low

Figure 6: BCG Growth-Share Matrix

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As shown in Figure 6, two key terms used in BCG growth-share matrix is ‘Market Growth’ and
‘Market Share’. Products in PHHP Manufacturing Sdn Bhd can be categorized as Stars, Question
Marks, Cash Cows and Dogs. The number of products could be categorized into these four
segments are:

• Stars – Phyto Fibre

• Question Marks – Phyto Aloe Vera, IG-Rich Colostrum
• Cash Cows – Phyto Greens, Ophira Collagen
• Dogs – Alijaga Coffee, Green Tea

The following diagram clearly shows the characteristics of BCG growth-share matrix in PHHP
Manufacturing Sdn Bhd.

STARS QUESTION MARKS

High market growth High market growth
High market share Low market share
Cash neutral Cash absorbing

CASH COWS DOGS

Low market growth Low market growth
High market share Low market share
Cash generating Cash neutral

Figure 7: Characteristics of the Segments of BCG Growth-Share Matrix

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6.0 Conclusions and Recommendations

It is important that the main motive of any organization is to achieve the goals and objectives
which are set up before operations and to grow over time, but the question is whether this is
always possible. Will PHHP Manufacturing Sdn Bhd end up in its desired place? Some strategy
might work out but some might decline.

6.1 Strategy Implementation Issues

Some strategies must be avoided or use with caution in organization. There are few concerns
described as follows.

Follow the Leader

The Top Management decision making may be a good idea, but it must careful consider PHHP
Manufacturing Sdn Bhd’s strengths and weaknesses. Example the Indonesia market penetration
within 3 months.

Hit Another Home Run

It is very expensive and massive cost should spend to develop another star product like Phyto
Fibre. It might not successful in market and create losses to organization.

Arms Race

Certain market segments or products may have to aggressively compete with competitors to
maintain or increase market share. Example Alijaga Coffee for Malay market. With the increase
in advertising, promotion, R&D costs may reduce its revenue.

Do Everything

It is more competitive advantage to have more products in the market and increase market
segments, but as time goes by, more and more resources are needed and exhausted. The focus
shall on few strong ones.

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6.2 Stakeholder Measures and Value Analysis

Stakeholders could be recognised as the group of people who are interested or affected by the
decisions taken by PHHP Manufacturing Sdn Bhd. Stakeholder analysis is the review and
consideration of the impact of stakeholders in businesses. This is becoming increasingly
important as non-shareholder entities, including customers, employees, communities and
business partners, have become more key to business success (Westland, 2017). PHHP
Manufacturing Sdn Bhd need to understand the interest of each stakeholder and strategize on
how to address them in business practices.

Organization should understand that it is not all about generating sales and obtaining higher
profits, they should also operate or take actions in the way that could or should satisfy many
people, which keeping all the stakeholders satisfied at once and their needs (Marren, 2007).
PHHP Manufacturing Sdn Bhd have identified many stakeholders who are interested or affected
by their decisions. The following table shows possible stakeholders and their concerns.

Table 3: Stakeholder and Stakeholder Concerns

Stakeholder Stakeholder Concerns

Shareholders Return on investments, income and profits, strategic plans

Employees Wages and salaries, job security, compensation, respect

Customers Value-add, quality, customer care, ethical products

Suppliers Business opportunities, fair and equitable treatment

Community Jobs, environmental protection, truthful communication

Government Taxation, GST, legislation, employment, truthful reporting, diversity,

legalities, externalities

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PHHP Manufacturing Sdn Bhd is prioritize the stakeholders into four parts as high influence low
interest, high influence high interest, low influence low interest, and low influence high interest.
The following diagram clearly shows the method of prioritize its stakeholders.

Keep Satisfied Manage Closely

Power

Apathetics Defenders

Interest

Figure 8: Prioritization of Stakeholders

The four groups of stakeholders identified by management of PHHP Manufacturing Sdn Bhd as
follows:

• Keep satisfied – High influence and low interest

▪ Government, major customers, and media
• Manage closely – High influence and high interest
▪ Shareholders, existing and potential investors
• Apathetics – Monitor
▪ Small customers, small shareholders
• Defenders – Keep informed
▪ Employees, local community, suppliers

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