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Professor Kikunae Ikeda

Ajinomoto (Half)

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Page 1: Ajinomoto (Half)

Professor Kikunae Ikeda

Page 2: Ajinomoto (Half)

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

Page 3: Ajinomoto (Half)

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

Page 4: Ajinomoto (Half)

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

Page 5: Ajinomoto (Half)

C. Internal Environment Analysis

Resources • Tangible resources – Organizational and

technological

• Intangible resources – Human resources and Reputational resources

Page 6: Ajinomoto (Half)

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.

Page 7: Ajinomoto (Half)
Page 8: Ajinomoto (Half)

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

Page 9: Ajinomoto (Half)

Human Resources

ISO 14001

awareness briefing

Team Building Program

Page 10: Ajinomoto (Half)

Reputational Resources

"HALAL" Certification

Quality Management System

Food Safety Programme

Page 11: Ajinomoto (Half)

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

Page 12: Ajinomoto (Half)

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.

Page 13: Ajinomoto (Half)

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

Page 14: Ajinomoto (Half)

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

Page 15: Ajinomoto (Half)

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)

Page 16: Ajinomoto (Half)

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

Page 17: Ajinomoto (Half)

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)

Page 18: Ajinomoto (Half)

• 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

Page 19: Ajinomoto (Half)

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

Page 20: Ajinomoto (Half)

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

Page 21: Ajinomoto (Half)

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

Page 22: Ajinomoto (Half)

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

Page 23: Ajinomoto (Half)

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.

Page 24: Ajinomoto (Half)

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

Page 25: Ajinomoto (Half)

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