FACULTY OF COMPUTER AND

MATHEMATICAL SCIENCE

BACHELOR OF SCIENCE (HONS.) MANAGEMENT

MATHEMATICS

MGT 400 – INTRODUCTION TO MANAGEMENT

ASSIGNMENT 3 – CHALLENGES FACING BY COMPANY

STUDENT NAME:
NUR FATNUN HIDAYAH BINTI JAMIRON
MATRIC NUMBER: 2018224056
GROUP: CS248 4A1
NAME OF LECTURER: MADAM MAZIAH M.ARIF
 ACKNOWLEDGEMENT

First and foremost, praises and thanks to Allah, Lord of the universe, who gives the
blessing and strength to me to complete this assignment. Peace and prayers be upon His Final
Prophet and messenger Muhammad.

Special appreciation and thanks to my Introduction to Management’s lecturer, Madam

Maziah M.Arif for all the support and guidance in helping me to finish this assignment in the
proper outcome. Without her, I cannot done this assignment properly. This assignment is to
study the challenges facing by the company. This enhance my study of understanding about
company problem and how to solve it.

Then, I would like thanks to my parents for supporting me mentally and physically not
just during finishing the assignment but also during my whole studies. Their love, prayers, caring
and sacrifices helped me preparing for the future.

In addition, grateful acknowledgement to all my friends who always there helping me in

direct or indirect ways in learning process and also in completing the assignment process. Thank
you very much my friends. I will never forget all of your kindness.
 TABLE OF CONTENT

Title Page
A. Introduction 1
B. Performance 2
C. Challenges 3-4
D. Recommendations 5-6
E. Conclusion 7
F. Appendix 8
G. References 9
INTRODUCTION

Munchy Food Industries Sdn Bhd or known as Munchy's started in 1991, by a bunch of
biscuit aficionados formulated their first successful crunch with a second-hand wafer stick
machine in a small peaceful town of southern Malaysia, Batu Pahat.

The Munchy's origins started with the two brothers Tan Soo Kuok (SK Tan) and Tan Lee
Kock (LK Tan) setting up Munchy Food Industries. With an initial investment of RM80,000 the
brothers developed the company to its current state, with the involvement of their siblings, CK
Tan and Net Tan. In 1993, they finally shared their wonderful creations to the world with the
birth of Munchy’s.

3 years later, a new wave of fun was unleashed with the launch of new products: MUZIC,
MUNCHINI and LEXUS. These yummy trailblazers were mixed and baked in Munchy’s iconic
factory in Batu Pahat. In 1997, Munchworld Marketing was set up as Munchy’s arm and sole
worldwide distributor. Then began munching into new shores, with more than 50 countries
making Munchy’s their go-to snack

Munchy’s is currently the number 1 homegrown biscuit brand in Malaysia. The new

additions to our crunch collection are OAT KRUNCH, MUNCHY’S CRACKERS, Munchy’s
assortment and Choc-O (Nielsen Retail Index Corporate Value Share, MAT March 2017). The
fun never stops with Munchy’s as they find new ways to excite their ever-growing family. In
2017, Munchy’s introduced 7DAYS Croissant to our already amazing line-up of yummy
goodness.

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PERFORMANCE

Munchy’s started with a second-hand single-line wafer stick machine, which the brothers
purchased for RM80,000 and spent a month fixing. Initially, the company only made wafer
products, but in 1998, the brothers decided to produce biscuits. Their other brothers, in the
meantime, also joined the business. Now, the company made wafer product which is MUZIC,
biscuits (MUNCHY’S CRACKERS, LEXUS, OAT KRUNCH, Munchy’s assortment, Choc-O
and CAPTAIN MUNCH) and also bread product (7DAYS Croissant).

Munchy’s started off in a small rented factory, but as business grew, the brothers sought
for land to build a new factory with more capacity. They eventually settled for a tract on the hill
located between Batu Pahat and Yong Peng. Munchy’s has grown by leaps and bounds in the
past two decades and boasts several well-known brands under its belt.

Munchy’s products are currently sold in more than 50 countries, and has the lion’s share
(22%) of the local market. “We consider ourselves the largest homegrown biscuit brand in
Malaysia. We are 100% Malaysian-owned,” says Soo Kuok.

In 2011, with strong demand for Munchy’s products in China, the company invested in a
factory that cost US$12 million. Soo Kuok says the acquisition of the factory was to cater for the
markets in China and other Asian countries. Earlier year 2016, Munchy’s invested in a
manufacturing plant in Jakarta, Indonesia, through a joint venture with two big companies which
are Indonesia’s Alpha Group and Japan’s Mitsubishi Corp.

In the financial year ended Dec 31, 2015 (FY2015), Munchy’s posted a net profit of
RM41.34 million — almost 10 times more than the RM4.78 million it achieved in FY2011.
Revenue expanded to RM283.68 million from RM217.74 million four years back.

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CHALLENGES FACING BY THE COMPANY

COMPETITION

In business, there will be one or more company that are in the same industry or a similar
industry which offers a similar product like Munchy’s. For example, Nestle, Oreo and JACK ‘n’
JILL. Every company have their own strength and weakness which surely give effects to the
company. By make comparison between Cream-O (JACK ‘n’ JILL) and LEXUS (Munchy’s) –
comparison in APPENDIX, it show that Cream-O is cheaper than LEXUS. It is one of JACK ‘n’
JILL strength. In effect, Munchy’s price is looks like more expensive than other products.

Other than price, the type of products also give an effect to the company. As known
Muchy’s only have products of wafer, biscuits and a type of bread. Compare to Nestle, our
product is only a few. Nestle have variety of daily need from foods to drinks. Such as instant
noodles, breakfast crunch, chocolate snack and many more. It is not limited to only one type of
product. While Munchy’s focus on “floured food-food that only base of flour”.

SOCIETY

Malaysia has multiracial people. Every race has its own beliefs. And it is a sensitive
matter to play with. As a company that wants to grow, this matter also need to emphasize. It
should be given priority to avoid issues that could cause racial issues. For example, Muslims
emphasize halal in every food and drink produced in Malaysia and imported into Malaysia. As
Government of Malaysia focuses on turning the nation into an international Halal Hub,
Munchy’s has made it a priority to ensure every one of its products complies with Halal
standards. This means that all supply chain and manufacturing processes are meticulously
reviewed by a Halal Committee.

But due to the attitude of a few envious people, Munchy’s are getting a bad name. It
occurs when the person is spreading fake news about the halal issue. Based on Berita Harian on
15 September 2011, JAKIM through the Halal Hub Division received numerous inquiries and
complaints regarding SMS saying JAKIM raided Munchy's plant in Batu Pahat and discovered
liquor store allegedly used as one of the ingredients in the biscuits. Individuals who claim to be
JAKIM officers are said to have asked the public to disseminate the information for the benefit

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of Muslims. Because of this, it is likely that Muslims will begin to doubt the Munchy’s and
boycott it.

TECHNOLOGY
Nowadays, people use technology not only for entertainment, but also for business. No
matter the size of your enterprise, technology has both tangible and intangible benefits that will
help you make money and produce the results your customers demand. Behind all the
advantages, technology also hold disadvantages. One of them is expenses. In the beginning of
the business, Munch’s spend RM80, 000 by purchasing wafer stick machine and spent in for
monthly fixing. As business grow, Munchy’s increase the expenses on machines to increase the
production. Besides, Munchy’s added a new product such as 7Days Crossaint (bread) which
means Munchy’s need to purchase a new machines. Plus, the technology (machines) used in
manufacturing facilities such as the biscuit, wafer and wafer stick lines are imported from
Germany, Austria, Switzerland and Japan. The higher the technology, the higher the cost will be
taken.

Chief executive officer C. K. Tan said IT was one of the reasons that enabled the
company's business to grow fast and achieve double-digit growth for the past 10 years. Tan said
he found it tough to find the right partner to help set up the company's IT infrastructure and
networking at a reasonable price.  He had been talking to many local IT companies but the
packages offered were very costly with complicated solutions. 

ECONOMIC RISK
Munchy’s have sold in more than 50 countries. Plus, Munchy’s have manufacturing
factory in China and other Asian countries. This makes Munchy’s have include in
macroeconomic business. Economic risk centers on macroeconomic circumstances may result in
significant loss for a business. These conditions include inflation, exchange rates, new
government regulations and other decisions that may adversely affect profits. When it comes to
global supply chains risks, economic risk is particularly challenging to anticipate and predict.

Some of the risk that need to be focus is the minimum wage. Based on the different
country’s regulation, the minimum wage also could be different either higher or lower. If

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minimum wage is increased, the cost of production is increased. Often, labor costs can increase
but market price remains stable, leading to decreased profits.

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RECOMMENDATIONS TO OVERCOME CHALLENGES

COMPETITION

Munchy’s should start planning to expand the offer. It is means that Munchy’s should
produce other type of product such as snacks, drinks or instant food. This is because some
customer who are loyal to one brand would prefer to buy any product from only their favourite
product. Munchy’s need to keep up with developments in food sector. Concern and stay up-to-
date are very important keys to follow the customer trends in selecting their food.

Other than technique of lower the price, Munchy’s can maintain the price but increase the
quantity in pack. For example, in a pack of LEXUS with the same price, Munchy’s can add free
a few packs insides.

SOCIETY

As we knows, Munchy’s have gone viral with the non-halal issue and having liquor store.
The issue was solved as JAKIM said that the Munchy’s halal certification are available on that
time. Until now Munchy’s R&D Department are doing their best to ensure that all products are
halal. To eliminate the stigma of people who still thinking bad about Munchy’s, Munchy’s
should run a campaign to raise awareness of Munchy’s is already halal and is appropriate for
people of all ages. Besides, in the same campaign, Munchy;s can make a promotion and
introduce new product to society.

Munchy’s can do some charity programmes to strengthen bonds with society. For
example, ‘gotong-royong’ with village people. Munchy’s also can provide the scholarships to the
school and university students as the company charity. With this scholarships, Munchy’s can
help many students do better in studies. For return, students may work for Munchy’s after their
graduation.

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TECHNOLOGY

Munchy’s should using the right tools that can improve the efficiency and productivity of
maintenance processes. Computerized maintenance management system (CMMS) which is
maintenance software helps to track, manage, and control everything in one place. Today,
CMMS programs integrate with existing systems to help meet different needs and requirements.
Leverage this technology to streamline the database and procedures. With this, Munchy’s can
add different requirement in one time to produce more. In result, with lower cost of maintenance,
the production can be increase.

Plus, not all breakdowns or repairs can be predicted, but preventive maintenance keeps
them minimized. Munchy’s should set up a regular maintenance schedule that covers all essential
equipment and accessories. This gives a buffer, cutting down the cost and time required for
handling repairs, especially in emergencies. But for critical repair and maintenance Munchy’s
should call the experts.

ECONOMIC RISK

Companies cannot do anything about government law except just following it. As
minimum wage increase, Munchy’s cannot against so Munchy’s should re-evaluate the budget of
company for business. Munchy’s may need to cut back their workforce, firing employees as they
can no longer afford to keep on. Since Munchy’s have a great machines technology, it would not
very difficult to fire some employees. Munchy’s can consider automating certain parts of
business operation to cut down workload and costs, and keep workload manageable.

Another option is to set overtime limits for the employees. As the employees work

overtime, the more that Munchy’s need to pay for their wage. Non-exempt employees who work
overtime must be paid one-and-a-half times their regular hourly wages. That can add up really
quickly if overtime hours are unlimited. Or may ask some full-time employees to become part-
time employees so that the total working time will decrease, next reduce their wages.

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CONCLUSION

Whenever there is progress or growth, it will be met with criticism and resistance. This is
where we have a choice, we could either shrink-move to our comfort zone to avoid temporary
pain however in the long term we will face disappointment (long term pain) or grow-face
temporary pain (acknowledge it’s a phase) and beyond it lies the pleasure of seeking our goals.
In business is certainly a challenge. Therefore, company like Munchy’s must be wise in adopting
solutions to grow their business until become the most internationally renowned company.

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APPENDIX

Based on the figure, we make the comparison:

Product Quantity & gram Price

Cream-O (JACK ‘n’ JILL) 3 * 65g = 195g 3 * RM 1.10 = RM 3.30
LEXUS (Munchy’s ) 1 * 190g = 190g 1 * RM 4.69 = RM 4.69
It show that Cream-O is cheaper than LEXUS.

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REFERENCES
1) Adlina Zainuri (Feb 11, 2016). MKT345 Assignment (Oreo). Retrieved from
https://www.slideshare.net/adlinazainuri/mkt345-assignment-oreo
2) Admin Munchy’s (2020). Retrieved from http://www.munchys.com/about-us/

3) Berita Harian (September 15, 2011). Berita Harian: JAKIM sah produk Munchy’s
HALAL. Retrieved from http://www.munchys.com/press-room/berita-harian-jakim-sah-
produk-munchys-halal/
4) Lindsey Walker (September 2016). 7 Strategies to Help You Reduce Maintenance
Management Costs. Retrieved from https://mcsmag.com/7-strategies-help-reduce-
maintenance-management-costs/
5) Rachael Kam (January 7, 2008). IT helps Munchy improve efficiency. Retrieved from
https://www.thestar.com.my/business/business-news/2008/01/07/it-helps-munchy-
improve-efficiency
6) Sabasun HyperRuncit. Retrieved from https://www.eruncit.my/index.php?
route=product/product&product_id=118
7) Wong Ee Lin / The Edge Malaysia (December 28, 2016). EY Entrepreneur Of The Year:
Munchy’s expansion during tough times yields returns. Retrieved from
https://www.theedgemarkets.com/article/ey-entrepreneur-year-munchy%E2%80%99s-
expansion-during-tough-times-yields-returns

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