Professor Kikunae Ikeda
Introduction
• Incorporated in 1961• HQ - Jalan Kuchai Lama, Petaling, Kuala Lumpur• Type of business - flavor enhancer, and seasoning
manufacturer• Type of products – AJI-NO-MOTO, VONO, TUMIX,
SERI-AJI and etc.• Main competitors – Maggi, VEDAN, and
CAMPBELL
A. General External Environment
• The target customers of Ajinomoto: Housewife, Chefs & RestaurantsDemographic
• Holding almost 80% market share in MalaysiaEconomic• SALAM (System Ajinomoto Lindungi Alam Msia)• ASQUA (Ajinomoto System of Quality Assurance)Political/Legal• Produce product that are suitable for every culture races in
MalaysiaSociocultural• Ajinomoto (M) conducted thorough studies and finally
selected FlexProcessTechnology• Follow the Eco-Guidelines of the Eco-Index for Container
and Packaging to conserve the environment Physical Environment
B. Industry Analysis (Porter’s 5 forces)
• Low, due to high entry barriers and involve large capitalThreat of New
Entrants
• Low, as Ajinomoto itself owns plantation that can produce itself
Bargaining Power of Suppliers
• Low, as seasoning price are standardized• Only few brands to choose on
Bargaining Power of Buyers
• High, seasoning product are not necessary • Can be replaced by salt or sugar
Threat of Substitute Products
• Average, as Ajinomoto already a market leader • Well established brand and strong reputation
Rivalry Among Competing Firms
C. Internal Environment Analysis
Resources • Tangible resources – Organizational and
technological
• Intangible resources – Human resources and Reputational resources
Technological
• NEC’s FlexProcess is an ERP solution designed specifically for the process industries and helps to
build an information system that streamlines business processes, reduce TCO (Total Cost of Ownership), and adapts to changing business
environments.
Chairman, Independent Non-Executive DirectorGeneral Tan Sri (Dr.) Dato’ Paduka Mohamed Hashim Bin Mohd. Ali (Rtd) – 75 years of age - Malaysian
Chief Executive Officer, Managing DirectorHiroshi Amano - 49 years of age - Japanese
Non-Independent Non-Executive DirectorAdinan Bin Husin - 64 years of age - Malaysian
Human Resources
ISO 14001
awareness briefing
Team Building Program
Reputational Resources
"HALAL" Certification
Quality Management System
Food Safety Programme
C. The Firm’s Capabilities
Human Resources Have enough potential employees to achieve the company
mission and vision
Foster world-class human resources have been implemented
Fair Employment for All
Initiatives for Labor-Management and Human Rights
-create rewarding work environment
-labor-management council meetings to assess labor
conditions
C. The Firm’s Capabilities (Cont’d)
Research and development Strong ERP solution- Flex Process
- Help to solve difficult to manually plan production. (because more than 100 products)
- More accurate information on inventory level and the actual production situation and status
- Efficiency management Using new bio-science and fine-chemical healthcare
technologies and improve development in low fat, low sugar production.
VRIO AnalysisIs the resource or capability Valuable?
Is the resource or capability Rare?
Is the resource or capability costly to imitate?
Is the resource of capability Non-substitutable?
Competitive consequences
Performance implications
Yes Yes Yes Yes/NoSustainable competitive advantage
Above-average return
Valuable - because Ajinomoto (M) ensure strict quality assurance from raw material procurement.- all products are qualified under Ajinomoto System of Quality Assurance (ASQUA)
Rare- because It is the only company that provided seasoning products.- less rivalry business that can be competed in this industry
Costly to imitate- has strong capabilities on its human resources and also research and development.- foster world-class human resources - high technologies skills and strong experiences (large capital enquire)
Non substitutable- yes - because it is the only company that provide seasoning in Malaysia.- no - because people might look for natural species such as salt, sugar. - people might have a mind set that seasoning can cause unhealthy effect
Firm infrastructure- NEC’s Flex Process as an ERP solution- Reduce total cost of ownership- Improve production planning and inventory management
Human Resource Management
- Recruit qualified people- Provide intensive training program to employees- Trust on employee and a fair employment for all
Technology Development - Adopting Flex Process to strengthen production- More precise information pertaining to inventories- Improving nutrition by making food more delicious
Procurement- Procurement raw material from local and also foreign country- Take advantage of buying in advance and in bulk- Procures the equipment from domestic manufacturers
Inbound logistics Operations Outbound Logistic
Marketing and Sales
After Sales Service
*Raw material from Cameron Highland and Indonesia*Secure a stable supply of high- quality raw materials
*Process the raw material and packaging*Quality control* Uses flex process to control its inventory level of production
*Distribute finished goods locally and also export *Endeavor to reduce environmental impacts during transportation
*Deliver products in easy to understand packaging.*Advertising through television* invited celebrity chef conduct cooking demonstration
*Customer helpline*Promptly reply to inquiries and feedback*Online cooking class with recipe
D. Business Level Strategy Analysis
Cost leadership
High-earnings structure
Reducing the cost
Nucleotides and amino
acids
Increase efficiency and flexibility
NEC’s FlexProcess
(logistics and production)
E. Competitive Environment Analysis(i) Competitor Analysis
Market commonality
• MAGGI and VEDAN, • Flavor enhancers
market and seasoning market
• CAMPBELL
Resources similarity
• MAGGI• strong parents
company• resources similarity
such as technological knowledge, experience, and expertise
E. Competitive Environment Analysis(ii) Interfirm Rivalry
• Likelihood of Attack
(i) Organizational Size
•Ajinomoto (M)•Market position, capability, and volume of business to achieve economic of scale•Offer attractive pricing to gain enhanced market shares•Maintain profitability of the firm
(ii) Quality•Quality of product is of prime importance to the firm•Quality audits•ISO 9001: 2000 •“Hazard Analysis and Critical Control Point” (HACCP)
• Likelihood of Response
(i) Reputation
• Responsive• Key players in the
market• Predict the
competitor’s likelihood of attack
• Evaluate the responses
(ii) Dependence on the Market
• Monosodium glutamate products
• Strongly dependent on the market
• Strong response
E. Competitive Environment Analysis (iii) Competitive Dynamics
• standard-cycle market
Intense competition
• Ajinomoto (M) has kept prices constant selling downsized packages
• Packages design and ease of availability are dimensions the competitive
Innovation
• Had launched two new variants in their VONO® instant soup line
• New Potato and Potato Mushroom variants
F. Corporate-Level Strategic Analysis
Moderate to high levels diversification
• retail and industry• flavor enhancers and
generates not more than 70% of its sales revenue
Related constrained diversification strategy
• Sharing primary activity or support activity in order to create value
• AJI-MIX and SERI-AJI
G. Strategy Formulation I – Matching StageStrength• S
trong quality control• S
afe and Halal
• Offer excellent service• C
ustomer Satisfaction Code of Conduct
Weakness• H
eavily rely on advertising
• Too focus on a specific market• S
easoning market
Opportunities• H
ealth concern• S
easoning products’ nutrition issues
Threats• U
npredictable Economy
• Intense competition• M
aggi
SWOT
H. Strategy Formulation II – Current and Propose Strategies
• Business level
Current
• Distribution channel is inefficient
• Take advantage of the technology
Propose• A mobile
computer and printer, paired with GPRS connectivity
• Wireless data processing and printing
• Increase field sales productivity
• Bringing down the cost indirectly
Competitive Strategy
• Advertising are costly, while campaign are relevantly cheaper.
• Example: blood donation, recycle, free body check up campaign
• More campaign to be organized to create awareness and increase reputation of Ajinomoto(M)
• Reputation are important as positive reputation resulted average return or otherwise
• This strategy may help Ajinomoto(M) to save more cost and generate profit.
Corporate Level
Current• Concentrated resources in selected core market• Deploying its technological strength to differentiate its
well-known brand• Promote products with emphasis on the “Eat Well, Live
Well” concept
Propose• Utilize existing plants and equipments with little
hassle• Develop new product line• Expand its current product line
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