ECO415

ECONOMICS

INDIVIDUAL ASSIGNMENT 1
THEORY OF PRODUCTION AND COST

AS2011B1

NAME STUDENT ID

DAYANG NOR SHAFIQAH BINTI AWANG SHUKERAN 2020994777

PREPARED FOR : SIR HAFIS HAFIZAN BIN ALIAS

PART A

TITLE

Muslim's Purchase Intention towards Non-Muslim's Halal Packaged Food Manufacturer

INTRODUCTION

This research focus on the study of the determinant factors that Muslim's consumers might
consider in buying Halal packaged food produced by Non-Muslim manufacturers. In this
research, the objective is divided into two categories. Firstly, it is the main research objective
and secondly is the specific research objectives. For the research question also divided into
two categories which are main research question and specific research question. The main
research question is related to the dependent variable that is important or basic research in
this study. Therefore, the specific research question is the supportive of the main research
question. There are two ttpes of variables involved which are dependent variable and
independent variables. The dependent variable in this study is purchase intention while the
independent variables are Halal awareness, Islamic brand and product ingredients.

WRITERS

Nor Sara Nadia Muhamad Yunus

Faculty of Business Management, Universiti Teknologi MARA, Bandar Puncak Alam

Wan Edura Wan Rashid

Institute of Business Excellence, Universiti Teknologi MARA, Shah Alam

Norafifa Mohd Ariffin

Faculty of Business Management, Universiti Teknologi MARA, Bandar Puncak Alam

Norhidayah Mohd Rashid

Faculty of Business Management, Universiti Teknologi MARA, Bandar Puncak Alam

DATE OF PUBLISHED

March 2013

RESEARCH OBJECTIVE

This study was done to investigate the key factor that consumers might consider in
purchasing Halal packaged food produced by Non-Muslim manufacturers.
RESEARCH DESIGN

This study was using quantitative method to determine the key factors that consumers might
consider in purchasing Halal packaged food from the Non-Muslim manufacturers. After that,
the data collected was used for quantitative studies.

SAMPLES

This study was using a convenient sampling, where 150 Muslim respondents were involved
from different locations in Klang Valley area. The authors received 115 responses, which
were then proceed with only 100 samples.

METHODOLOGY

The authors began their study by collecting data through survey questionnaires to create
samples. Then, an empirical study of the relationships between variables was performed as
suggested by the research model in the study. Package for Social Science (SPSS) version
20.0 was used to create analysis of demographic profile of respondents whereas Alpha
coefficients was used to check the reliability of the data. It was also used to measure
validation and to test the structural model. Besides that, correlational analysis was used to
evaluate correlation between the variables. In this section, all of the details of the instrument
development and survey administrations were presented.

MEASUREMENT TOOLS

To increase the validity and reliability of the results of this study, all the items have been
adapted from previously validated studies and any changes required to fit the instruments to
the current sample context were appropriately performed. The variables for this study were
measured using descriptive analysis which both of the dependent and independent variables
were shown and adapted from most of discussions in literature review. The instruments
involved were closed-ended multiple choice questions and Likert-scale questions. The
develop measurement tested allowed respondents to convey their level of agreement to
choose the best response that was suitable for them. All items were measured by responses
on a five (5) point Likert-scale of agreement with statement ranging from 1 (strongly
disagree) to 5 (strongly agree). The first section of the questionnaire was the independent
analysis while the second section is dependent analysis. The other section, which was to
gain demographic information about the samples, where they simply filled in the information
asked in the answer space given.
RESULT & FINDING

This study provides further understanding upon the Muslim's acceptance towards Non-
Muslim's products. Besides that, it also provides a good determinant factors especially to
Non-Muslim's Halal packaged food manufacturer in convincing Muslims to buy Halal
packaged food. The three variables have significant effect amd predict a good proportion of
the variance in Muslim's purchase intention. The research results indicate that Halal
awareness and product ingredients can positively and significantly affect the Muslim's
purchase intention while the brand orientation have not significantly affecting Muslim's
purchase intention on Non-Muslim's Halal packaged food manufacturers. The results of this
study have revealed that awareness and product ingredients are the most influental on
purchase intention. It also shows that people in Klang Valley area have a positive intention to
buy Non-Muslim's Halal packaged food.

IMPLICATION

The relationships investigated in this study deserve more effort on understanding Muslim's
buying behaviour. This is because the data analysed were collected and focused on one
area only in this country. More studies are required before general conclusion can be drawn.
Besides that, it would be interesting if future researchers were to examine consumers'
purchase intention towards specific Halal products within specific product categories.

SUGGESTION

Governments should focus on creating social expectations regarding food labelling and
improving consumers' sense of awareness and their ability to buy food with some
information regarding ingredients and nutrients and with a halal logo on the product. It is
appropriate to suggest that the Muslim community has adopted halal food from non-Islamic
brands as part of their lifestyle choice. Clearly, this sends a clear message to non-Muslim
halal food producers and makes it critical for food manufacturers to increase their level of
awareness towards halal products and provide sufficient information, especially about halal
certification. Hence, manufacturers must take the opportunity to perform intensive promotion
in order to encourage more consumers to purchase their products.
 PART B

Malaysia has the edge in the development of the halal industry, as it is a modern Islamic
country with an open economy and well developed physical and institutional infrastructure,
Malaysia also having a capability to support initiatives and programs to develop and promote
the industry. The growing interest in the potential of the halal market has facilitated the move
towards the development of global standards, as well as expanded the coverage of
standards to included activities, such as logistics and packaging.

a) Describe the halal industry production/productivity in today's market where it becomes a part
of vital component in contributing towards country economic development.

In recent years, the halal industry has attracted a growing number of global interets.
The competitiveness of the Halal industry productivity in today's market has become a vital
component in contributing to the country's economic growth. In this context, one of the most
relevant sectors is the halal food/product market, which is no longer merely an industry that
meets the religious requirements of feeding some 60 per cent of the Muslim population of
Malaysia, but is becoming an economic force in itself, both domestically and globally.This
phenomenon is caused by raising awareness among Muslim about what can be consumed
and not. In fact, this expansion is very beneficial to the Muslims. The other aspect that
makes the halal industry a major business is the expected growth of the Muslim population.

Malaysia also plays a crucial role in trade, exports and imports. In particular, exports
continue to grow and have contributed a great deal to textiles, electrical goods , electronic
goods, rubber products and a few other sectors (Noguer & Siscart, 2005). Besides that, an
example that can be taken for the production is halal meats. Nowadays, halal meat
production has a high demand majority for Muslims due to the high standards of hygiene and
sanitation. The high demand for meat contributes to higher production. It will, therefore,
contribute to expansion towards country economic growth (Farouk et al., 2016). As a
beneficial, the halal meats produced not only fulfill the demands of Muslim consumers but
also non-Muslim consumers.

Besides that, the rapid growth of Malaysian palm oil industry also played an
important role in the Malaysian economy. The rise in palm oil consumption is mainly due to
food demand driven by the world population and wealth growth. On the other hand, the palm
oil industry has also played a major role in biofuels. The rush to demand palm oil is due to
two factors, which are production cost and the versatility of palm oil. Being the highest
yielding vegetable oil, palm oil is the most cost-effective option for consumers. In fact, palm
oil can be used in numerous capacities such as oleochemicals and bio-fuels to satisfy
consumers’ evolving needs (Seng et al., 2012).

As the halal industry in Malaysia is more concentrated in the food and beverage
market, for example, Nestle and Ajinomoto use Malaysia as a halal hub and export to other
parts of the world, including the Middle East (Noordin, 2019). The Halal industry in Malaysia
is well developed and not only limited to industrial products based on food and drink alone,
but also covers a larger sector including pharmaceuticals, cosmetics, healthcare, packaging,
logistics, banking and finance, food processing and packaging machinery, tourism and other
sectors in the Halal ecosystem (Wordfolio, 2016).
b) Explain certain cost associated in conducting a halal based business in the industry.

In conducting a halal based business in the industry, there should be certain costs
involved in order to run a business. One of the most important cost is to get a halal certificate
and halal verification product from JAKIM. The biggest challenge for companies to ongoing
compliance with halal will be with the sourcing of materials from the supplier, and ensuring
the traceability of their goods including ingredients, manufacturing aid and packaging
material. All the materials used in the production of a product, whether directly or indirectly,
need to be compliant (Latif, 2016). Halal certification is not something necessary if the rules
of halal are followed, but it makes muslims feel safer. The cost required varies significantly
and it depends on what type of business one to run (Hassan, 2017).

Besides that, halal testing which is DNA testing, commonly laboratory test for
verification of the product quality is also needed. Basically, there is no laboratory test on the
market that can determine the way in which an animal is slaughtered. Therefore, the
scientific testing within the Halal industry is strictly concentrated on contamination. This is
easily explained using the example of meat, and the presence of pork (Asia Pacific Food
Industry, 2017). Next, the cost of raw products, supplies and equipment needed to start up a
business. This is important because it might be one of the larger corporate expenses (Bragg,
2020).

Other than that, the cost needed in conducting a halal based business is the cost on
attending programme, courses or sessions in conducting the procedures of preparing the
products. As for food, it is not just the type of food but also the ingredients used, how it is
manufactured, packaged, stored, transported and sold to consumers. All of this should be
considered before starting up a halal business. Halal products must be safeguarded from
contamination across the entire product cycle and strict sanitary regulations must be upheld
so that the "halal thoyyiban" concecpt can be ensured (Farina, 2017).
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