FACULTY OF ECONOMICS AND MUAMALAT

SEMESTER II, ACADEMIC SESSION 2022/2023

MGB4012

STRATEGIC MANAGEMENT

GROUP ASSIGNMENT: CASE STUDY

PREPARED FOR:

DR SITI NURULHUDA BINTI NORDIN

PREPARED BY
KMB2
GROUP 13
BIL. NAME NO MATRIC
1. MUHAMMAD IKHMAL BIN ROSLI 1200687
2. NOOR AMSYAR HILMAN BIN NOORAZAM 1200779
3. RAIHAN FARHANA BINTI MD JOHAN 1200712
4. NOOR HAWA HAFIZAH BINTI ZAINAN 1200728
5. DAYINI HASYA BINTI HUSNI BALIS 1200729

SUBMISSION DATE

10 JULY 2023

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Table of Contents

1. Strategic Profile and Case Analysis ..................................................................................................3

2. Situation Analysis – External ............................................................................................................4
3. Situation Analysis – Internal ............................................................................................................8
4. SWOT Analysis ................................................................................................................................14
5. Strategy Formulation .....................................................................................................................15
• Market expansion strategy ........................................................................................................15
• Sustainable development strategy ............................................................................................16
• Differentiation strategy ..............................................................................................................17
6. Strategy Alternatives Implementation ...........................................................................................18
7. Process Issues ................................................................................................................................19
8. Conclusion ......................................................................................................................................34
9. References......................................................................................................................................36

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 1. Strategic Profile and Case Analysis

PPB Group Berhad (PPB) is a Malaysian conglomerate business in Kuala Lumpur that
owns a variety of industries that include movie cinemas, food production, agriculture, and
waste management. PPB Group was founded in 1968 in the state of Perlis, in the north of
Malaysia. Its full name is an acronym for Perlis Plantations Berhad, which is owned by Robert
Kuok and his brother Philip, who began operating a business related to sugar plantations.
However, the PPB began to sell off its sugar business in 2009 and has since continued to
concentrate on a variety of businesses, particularly the supply of flour products to downstream
food processing. The primary objectives of PPB Group include achieving social and
environmental responsibility while also being a market leader in its key sectors by providing
high-quality products and services.

The PPB Group operates a range of products across numerous key business sectors,
including Grains and Agribusiness, Film exhibition and distribution, environmental
engineering and utilities, and property segments. The company offers a variety of products for
the agribusiness sector, which consist of flour milling, animal feed, livestock farming, and
organic fertilizer. The primary line of business for PPB Group is flour milling, where there is a
significant demand for these goods due to the fact that most foods are created to align with
consumer tastes. For the film exhibition and distribution segment (F&D), the activities are
divided into two categories. The first category is film exhibition, in which the business expands
Golden Screen Cinemas (GSC) to two nations, Malaysia and Vietnam with a significant number
of locations and screens in each.

The second category is film distribution, where GSC Movies Sdn Bhd sells movies and
television programs in several nations, including Malaysia, Brunei, Vietnam, Myanmar, and
Cambodia. In addition to industrial flour milling, which is the most well-known in the
agricultural industry, the environmental engineering and utilities sector of PPB is also a leading
company in water and sewage management in Malaysia. Furthermore, PPB Group’s property
division has decided to purchase more land to construct both commercial and residential
properties to expand online shopping alternatives. This is aligned with the property segment’s
goal to offer customers dependable property choices that will strengthen the local Malaysian
community’s focus.

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 2. Situation Analysis – External

• Trends in general Environment

Firms need to be aware of their general environment. It can influence how executives
will shape the company's operations and level of success. Therefore, firms need to perform a
comprehensive analysis to track trends and events to anticipate potential implications and
formulate immediate solutions. One of the well-known tools for observing business factors is
the PESTEL analysis. It is a well-known method to help executives identify how these factors
may affect the industry and the firms within it. The analysis provides a broad perspective that
reveals trends occurring in the general environment involving various segments such as
Politics, Economy, Social, Technology, Environment, and Law. These factors affect PPB's line
of operations, especially the global epidemic that led to the monetary crisis and economic
recession. Below is a table with a detailed explanation of the trends occurring around the firm
according to the PESTEL analysis.

Six factors of
Trends
PESTEL
Political • Malaysia declared a state of emergency in January 2021
during the COVID-19 pandemic.
• Thailand is a politically stable country
• Vietnam offers a low tax rate.
• The Philippines has a tariff quota on corn imports
• Indonesia has limited the amount of corn that can be
imported.
• Malaysia’s government-imposed price control on chicken
during the holiday season.
Economy • Malaysia’s GDP growth is estimated to reach 4.4 percent
annually by 2024.
• Feed mills globally decline by over 12 percent between
2015 and 2020.
• Indonesia’s GDP is forecast to reach 5.1 percent by 2024.
• GDP growth in the Philippines is estimated to be 6.2
percent up to 2024

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 • Thailand is an economically stable country with 20
percent of its, total GDP coming from tourism which is
estimated to be 3.2 percent up to 2024.
• Vietnam’s GDP is forecast to be about 6.5 percent up to
2024
• The Malaysian economy contracted by 5.6 percent in
2020 due to constrictions of movement of people.
• Feed demand declined by 6 percent in Malaysia, the
Philippines, and Thailand in 2020.
• Demand for flour-based products will continue to grow
about 5 percent annually throughout Southeast Asia.
• The growth of populations and income levels in Southeast
Asia presents large opportunities for firms to engage in all
types of business.
Social • Consumers in Indonesia, Malaysia, and Thailand tend to
prefer chicken over pork
• The growing macroeconomic climate in most of
Southeast Asia is spurring a change in eating habits as
there are more middle-income and upper-middle-income
consumers who seek Western food.
• The people of Singapore are highly educated and
excellent businesspersons.
• Filipino employees are known worldwide for their
proficiency in English and their professionalism.
• Malaysia offers a potentially well-educated and diverse
workforce.
• Malaysia, Indonesia, Thailand, Philippines, and Vietnam
import soybean faster than any region in the world.
• China and Vietnam prefer pork over chicken.
• The work culture that has already been developed in
Vietnam is specialized in food processing.
Technological • Advance technology used.

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 • The growing technological expertise of local players in
the export market.
• Malaysia has excellent digital infrastructure and major
regional hub for financial, information, and
communication technology.
• Malaysia is the most technologically advanced country in
Southeast Asia.
Environment • According to the Food and Agriculture Organisation
(FAO), livestock farming methods account for 14.5% of
human-induced greenhouse gas emissions.
• 6 percent of global greenhouse gas emissions come from
crops for animal feeds.
• Animals' disease reduced the number of smaller mills.

Legal/Law • Rise of government regulations and independent farmers

joining cooperatives.
• Vietnam allows 100 percent of foreign ownership of
business in most sectors.

• Porter’s Five Forces

The Porter’s Five Forces model to review the analysis of PPB business’ product lines, which
are Cinema, Animal feeding, milling flour, and food production.

Forces Explanation
Threat of new entrants • Food production is easy for new entrants to start as
people and food cannot be apart. PPB produces food
such as sausages, chicken nuggets, burgers and other
convenient food products that can easily attract a new
entrant. Recently, there is sausages that produce by
Muslim Owner that capture the attention from the
society since Malaysia is a Muslims majority and the
tendency for the increasing demand for Muslims
product is higher.

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Bargaining power of buyers • The demand for cinema movie tickets could be
seasoning because people usually watch at cinema
based on rating by others, favorite movie or actors and
some film or movie might not get as much demand
from people.
• The demand for flour is always increasing because
people are using flour in their daily use especially for
food business such as bakery or even baked for
themselves and family.
Bargaining power of • PPB’s subsidiary, FMSB controls the supply of their
suppliers well-known products, such as Massimo breads, Blue
Key Flour, Marina canned Sardines and frozen food,
Seri Murni cooking oil, and eggs. All these foods are
very common brands that people use or consume. It
proves that PPB’s products are in good quality that
consumers are willing to buy with their price offered.
Threat of substitute products • Cheras Leisure Mall and Cheras Plaza have quite
or services many substitutes since there are many malls in Kuala
Lumpur.
• Frozen food in supermarkets or hypermarkets or even
in the convenience store has much more choices of
brands. In fact, even if PPB did produce the vegetable
processed food, however nowadays there are more
plant-based food in frozen section that can be
substitute and attract not just the vegans but other
people also.
Rivalry among existing • For the competitors of PPB Group bhd, each of their
competitors product lines has so much competitor, however if we
looked in the film distribution industries, it still has a
few closest competitors for PPB. Since PPB has so
many product lines, the competitor might vary
according to each product segment.
• In the production of foods, we always heard the
closest competitor of their bread is Gardenia which is

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 the most famous brand for breads consume by
Malaysians

• Key competitors analysis

Key competitor analysis is a method to identify competitors in the industry. It helps PPB
to understand how well the market position of the competitors is, how it can influence the firm’s
performance, and what the competitors changed strategies. By analysing the factors
surrounding the competitors, PPB can gain a competitive advantage and maintain a good spot
of market position. By observing the critical functions of competitors, PPB can use the gathered
information to plan for the next strategies.

Key
TGV Cinema Godrej Agrovat Gardenia Foods
competitors
Market share Regarded as the largest Huge animal feed and Provide bread-type
movie theatre in agribusiness in products in Singapore,
Malaysia, consisting of Southeast Asia region. Malaysia, and the
35 multiplexes and 282 Philippines
screens.
Business Has the capacity to add Acquire a strong Expanded the flour
expansion 4 more cinemas balance sheet that could mills in Jakarta,
easily expand the Indonesia to meet the
business from India to rising demand for
Malaysia. flour-based products.
Services or Offer plush seating and Involvement in palm oil Offers bread, snacks,
product large sitting for production, poultry, and cake, toast, and pocket
variety families. animal feed processing. sandwiches through
each production
facility.

3. Situation Analysis – Internal

• Value Chain Analysis (VCA)

a. Primary Activities
− Inbound Logistics

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 Inbound logistics is the process of managing and controlling the flow of materials,
supplies, and other inputs into an organization. It involves activities such as
procurement, transportation, storage, and inventory management. As for PPB Group
Berhad, we acknowledge that their organization focuses on food production,
agriculture, waste management, film distribution, property investment, and
development. The example of inbound logistics of food production, PPB involves
animal feeds, livestock farming, frozen food, bakery products, and flour milling. Its
subsidiary, the FMSB, controls the process of managing the flow of materials in their
13 warehouses which are located in Prai, Ipoh, Sungai Buloh, Melaka, Kuantan, Johor
Bahru, Kota Bharu, Alor Setar, Kuching, Miri Sibu, Kota Kinabalu and Sandakan. All
the raw materials are stored and processed in their factory.
− Operations
Next, the operations involve in the activities of transforming inputs to production.
Take a look at one of the product lines of PPB, which is food production. This company
can conduct operations smoothly across Malaysia with 13 warehouses. As an example
of their frozen food, Marina Brand, the FFM Marketing Sdn. Bhd (FMSB) have make
sure that their frozen food is uncompromised quality since all the operations regarding
process of making the frozen food is complied with Food Safety Management Systems
and also follow the standards of food safety such as GMP and HACCP including
HALAL Certification from JAKIM.
− Outbound Logistics
After that, we go to the outbound logistics. Outbound logistics refers to the process
of managing and controlling the flow of finished products or services which is from
organization to customer. Using the above example of PPB food production line, after
completing the operations, the product then is packed and ready to distribute to their
channels. Their food production line uses a distribution channel from
producer/manufacturer to retailer and from retailers, they distribute the product to
customers. As an example, FMSB will distribute the Marina frozen food to retailers
such as Lotus’s, Aeon Mall, or any grocery shop. The retailers will buy in bulk and sell
to their customers directly.
− Marketing and Sales
Next, Marketing and sales involve activities such as promoting and selling the
product or services to customers. The company uses marketing tools to promote its
frozen food and established its brand to get more demand from customers. As Marina
brand produces quality frozen food, they market their products through advertisements

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on television, radio and even promoting at the Shopee e-commerce platform under
Shopee Mall. They use these platforms to engage their brand to the customers. Since
2003, Marina brand succeeded in blishing a well-known brand that people or consumers
trust with their products.
− Service
The last part in primary activities which is service. Service will provide after-sales
support and customer service to customers. Usually, FFM or FMSB will response to
the feedbacks or dissatisfaction from customer through email. Since the company
distribute their products to customers by retailers, usually any of review, products
damage will directly receive from their retailers and FFM is committed to provide a
good customer service.

b. Support Activities
− Human Resources

Training and development: To improve the abilities and expertise of its staff,
PBB Group funds training initiatives. PBB Group ensures that all of its employees
undergo ongoing training to stay abreast of market developments, statutory
requirements, and professional norms. Among the training activities are workshops,
seminars, e-learning courses, and mentorship programs. By investing in training and
development, PBB Group hopes to provide its employees the abilities they need to
deliver superior services, adapt to changing client demands, and contribute to the bank's
success.

Performance management: To evaluate employee performance, give feedback, and

match personal goals with corporate objectives, PBB Group employs performance
evaluation tools. Every employee's performance is continually assessed by managers
and supervisors, who also provide constructive criticism and point out areas for
development. PBB Group encourages a culture of performance throughout the business
by recognizing and rewarding top performers. Another component of performance
management is identifying training and development opportunities to close skill gaps
and foster employee growth. By using effective performance management tools, PBB
Group hopes to motivate employees, boost output, and ensure that individual goals are
in line with the bank's long-term objectives.

− Procurement

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Infrastructure and technology: PBB Group invests in and purchases infrastructure and
technology to support its banking activities. The bank invests in robust financial
systems that serve as the backbone of its operations and enable efficient data storage,
account management, and transaction processing. PBB Group also buys web platforms
and mobile banking software to provide customers with straightforward and secure
digital banking services. The bank also invests in network infrastructure to deliver
consistent connection throughout its branch network, online channels, and other
systems. PBB Group places a high priority on cybersecurity solutions such firewalls,
encryption techniques, and intrusion detection systems in order to safeguard client data
and create a secure banking environment. PBB Group consistently invests in
infrastructure and technology in order to improve operational efficiency, foster fantastic
customer experiences, and uphold the security and integrity of its financial services.

Talent acquisition is a key emphasis for PBB Group, which aims to hire and
keep talented employees in a variety of fields like finance, risk management, marketing,
technology, and customer support. PBB Group uses recruiting tactics, such as job
postings, college recruitment, and talent acquisition agencies, to entice top industry
talent. The bank also places a high priority on talent development programs, which
include training initiatives and career advancement opportunities, in order to promote
and enhance the abilities of its employees. To entice and retain outstanding personnel,
PBB Group offers perks, alluring salary packages, and a supportive work environment.
By placing a significant emphasis on talent acquisition, PBB Group hopes to build a
solid team of professionals who will support the bank's development, encourage
innovation, and offer consumers high-quality banking services.

− Technology Development

Digital banking solutions: To develop and improve its digital banking products, PBB
Group invests in technological development. PBB Group contributes to the
development of mobile banking applications that provide consumers with secure and
feature-rich banking experiences on their smartphones or tablets. Through these digital
channels, customers may access a variety of banking services, check balances, send
money to others, pay bills, apply for loans, and more, at any time and from any location.
PBB Group continuously enhances its digital banking products based on customer
feedback, industry trends, and technological advancements to deliver a seamless and
straightforward digital banking experience.

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 PBB Group places a strong emphasis on innovation and research to spot new
market possibilities, product potential, and technology developments in the financial
sector. The bank regularly searches for new product opportunities, developing trends,
and technological advancements using a range of techniques. This includes
collaborations with IT firms, attendance at trade events and conferences, and research
linkages with academic institutions. By being abreast of industry developments and
taking part in research initiatives, PBB Group can come up with innovative solutions,
anticipate customer wants, and respond to market changes. For instance, to improve
operational efficiency and increase the scope of its product offerings, the bank may look
at cutting-edge technologies like data analytics, blockchain, and artificial intelligence.
PBB Group supports a culture of innovation and research in order to preserve a
competitive advantage, accelerate ongoing development, and offer cutting-edge
banking solutions to its clients.

• Financial Analysis
According to the financial statements reports of PBB, PBB business segments were
divided into 5 segments which are Grains & Agriculture, Consumer Products, Film Distribution
and Exhibitions, Environmental Engineering & Utilities, and Property. All these business
segments' financial records were reported in the financial statements of PBB to evaluate to see
the total profits and revenues gains in the year 2020. The company faced a large decrease in
the revenue for financial year 2020 due to the economic global crisis that had affected the
business operations to close. The net income stated in the balance sheet for the financial year
2020 increased by 14% though the revenues had a downfall in the same year. The PBB’s
subsidiaries in China which operated more on Grains & Agribusiness segments contributed to
raising the net income under the item of non-recurring events. However, the events can be
expected to recur under the same business segments since the subsidiaries of the PBB remained
the same.

The first segment of PBB of Grains & Agribusiness showed a reduction in the revenues
at 1% but achieved to increase the profits up to 28% due to the lower the cost of raw materials
and higher share of profits from associates of the company. PBB Grains & Agribusiness
segments include a few activities that supported to increase the profits such as flour milling,
animal feed, livestock farming, and organic fertilizers. The activity that contributed the most
to the rise of profits is flour milling. The flour milling business has many flour mills operated
in Southeast countries and China with higher capacity of metric tons daily. Moreover, apart

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from operating the flour mills as a business activity, PBB also generates other activity that is
derived from the business segment itself. Flour milling activity produced wheat flour that is
used as an ingredient in cooking and baking activities. The products such as bread, cakes,
biscuits, noodles, and other flour products marketed in the food industry will give rise to a
higher demand from customers because these foods are part of daily necessities foods. For
example, during the pandemic crisis Covid-19, there was an unexpectedly high demand of
breads since people are restricted from going out and to stay at home. Hence, people more
focused on buying food necessities compared to other food products.

Next. the second business segment that contributed to the rise of profits which also the
largest revenue generating segment is Consumer Products. In this area of business, PBB used
a strategy to sell products that has value recognition from consumers and that is branded
products. Consumers tends to buy branded products compared to non-branded products due to
the quality and the price of the products. The segment generated 15% of fiscal revenue and 2%
of profits in 2020. Besides this, another business segment that contributed to earning a high
change in profit of the business segment is Environmental Engineering & Utilities with a 28%
rise but a fall of 3% in revenues. Film Distributions and Exhibitions suffered the most during
the year 2020 with a 100% decrease in the profit of the film segment. The implementation of
the Movement Control Order (MCO) by the government affected the film industry to face a
major loss of 80% of the revenue from the business operation. Thus, the loss of the restriction
of business from operating during the pandemic impacted the loss of both profit and revenue
in PBB financial statements. Lastly, the Property segment was also impacted by the MCO
which resulted in a reduction of 72% of profits. This was due to the household economy during
the pandemic in which savings is the priority to avoid having financial difficulties, and people
wanted to reduce their borrowing interest from banks. So, there was a lesser investment in
property from buying a house during the period.

Finally, the financial statements of profits and revenues of the PBB operations in
various Southeast countries exhibited that Vietnam and Other Asian countries are the only two
PBB’s regions that increased in profits and revenues from 2019 to 2020 with up to 11.6% and
45% changes. The other PBB subsidiaries in the regions of Malaysia, Indonesia Other ASEAN
countries, and other regions showed a more downfall in profits and revenues in the fiscal year
2020. Thus, the financial operation of profits and loss of PBB in total is higher in the fiscal
year 2020 compared to 2019. PBB should formulate and implement new strategies to improve
the financial profits and revenues not only in the area of the business segments, but also focuses
on each developing country that is under the PBB’s operation business. nevertheless, excellent

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strategies implementation will help PBB’s to boost its business planning and activities in more
successful company that remarkably benefits its shareholders and subsidiaries.

4. SWOT Analysis

SWOT Analysis of PPB Group Berhad

Strengths Weaknesses
1. Market leadership 1. Lack of
position environmental
2. Leading Cinema impact.
Screen Exhibitor 2. Short stock of
with supplies to products which
other content such as cannot cater the
anime, sports demand from
3. Strong brand consumers.
recognition such as 3. The imported frozen
Anchor cheese, chicken from
Marina Frozen Food, Singapore and China
Canned food, Sei facing surplus.
Murni cooking oil,
4. Success of new
product
Opportunities SO, strategies WO strategies
1. Advance technology 1. Open new factory 1. Increase quality of
used. with new technology frozen foods. (W3,
2. Engaging in all types robot that reduce O2)
of business, includes human resources. 2. Improve the use of
agricultural sector. (S1, O4) technologies in each
3. Import soybean to 2. Provide excellent business. (W3, O1)
Southeast Asia quality cinemas in
Countries. terms of sound
4. Leading company as system, comfortable
a producer of pork to seats, and improve
export in China. apps. (S2, O5)

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 5. Expand market to
other country.
Threats TS strategies TW strategies
1. Growing 1. Improve quality 1. Hire more workforce
Technological production of their and robot to cover
expertise of local product lines. (T2, the shortage of
players in the export S3) stocks. (T1, W2)
market 2. Increase in supply of 2. Implement SDG and
2. Competitors catching new products. (T4, CSR in the business.
up with the product S4) (T3, W1)
development.
3. Competitive pressure
4. Diversifying
activities in
Southeast Asia

5. Strategy Formulation

A comprehensive strategic plan is essential for the PPB Group to provide service and compete
in a fast-expanding regional market given its vast variety of fundamentally varied product lines.
So, there are a few strategies that a company must consider in assist their business to derive a
competitive advantage in the future. There are some explanations of these strategies’ benefits
and drawbacks for each, and we also choose the most effective strategy that will be
advantageous to the company, along with the reasons for choosing it.

• Market expansion strategy

PPB Group has the most skilled management group in all of Southeast Asia when it
comes to establishing objectives, developing standards, offering encouragement and
support, controlling output, and raising the level of the company’s productivity. PPB Group
focuses a strong emphasis on the quality and consistency of all its products, employing
high-quality ingredients while minimizing production costs. Besides being a well-known
business with numerous subsidiaries, this company needs to capitalise on the chance to
boost product innovation and diversify into other nations with the potential for future rapid
development. This strategy can benefit the company by increasing brand recognition and

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 retaining its established market share, which is widely recognised across the world. By
having strong brand recognition, the company can obtain higher customer retention among
existing and new customers.

Next, PPB Group is striving to create new flour-based product offerings that are in line
with local consumer preferences and tastes to improve its market competitiveness. This
effort will create an opportunity for market expansion into other nations by influencing
customer preferences towards flour-based products. However, there might be challenges
for the company in understanding the market strategy since there are cultural differences in
each nation. PPB Group must initially study the cultures of the new markets in order to
cater to their preferences with its products. Following that, the company needs to strengthen
its partnerships with both domestic and international players while also looking into
collaborative arrangements for large projects. It can be accomplished through promoting
brands on social media, launching a podcast, engaging with influencers, and participating
in networking events. The PPB Group can further enhance their supply chain management
with this effort, including having the best supplier criteria.

Subsequently, PPB Group experiences a supply-chain interruption, such as a lack of

raw materials and a problem with logistics that endangers both manufacturing and
distribution. This occurred because of the COVID-19 outbreak that hit the entire nation,
including Malaysia, and devastated every sector of the economy. The movement of goods
from abroad was not possible because all nations at the time restricted people and
commodities from crossing the border to ensure the welfare and safety of their citizens.
Regardless, PPB Group can use this as an opportunity to present innovative ideas and boost
confidence in the global market, for instance by focusing on essential goods like organic
products in line with the current trend that prioritises health first.

• Sustainable development strategy

Sustainable development is important for a single business because it considers the

organising principle for achieving human development goals while continuously protecting the
capacity of natural systems to supply natural resources and ecosystem services. PPB Group has
an agriculture business activity that needs a huge amount of land to cultivate to meet a lot of
demand from its consumers. Trees often become the main target to be eliminated to provide
enough space for large agricultural activities. This issue has the potential to have an impact on
society and the environment since it concerns the environment, which is the primary source of
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clean air for people and plants. PPB Group must therefore adopt Sustainable Development
Goals (SDG) and Corporate Social Responsibility (CSR) into its operations to prevent this
problem from occurring repeatedly. The company can boost customer retention through these
efforts due to the customers’ confidence in the safety and hygiene of PPB’s products and
services.

Additionally, this strategy offers the opportunity to expand into new large markets and meet
the increasing need for sustainable goods and services which can enhance sales, market share,
and customer satisfaction. The company can also better manage risks linked to climate change,
human rights, labour sources, and image by implementing sustainability into their business.
However, the process of implementing the SDGs can be a difficult task because it involves a
wide variety of interrelated concerns such as social, environmental, and economic elements.
The PPB group thus must come up with effective solutions to overcome such problems to build
a brighter future for society and the environment while ensuring the long-term health and
resilience of our earth.

• Differentiation strategy

The preferences and demographics of consumers are a priority to ensure they are satisfied
with the products the company produces. Companies must first perform market research to
discover what consumers want and customise their product lines accordingly because each
person’s taste is unique and important to take into consideration. Based on PPB Group’s
business, especially in the flour manufacturing sector, the company can take action by
providing gluten-free products and healthier alternatives. Since, recently, a lot of people are
more concerned with their health and actively seek out food sources rich in nutrients, it will
give the company the opportunity to produce new products that aligns with consumer
preferences. This aims to minimise the chance of developing certain diseases, lower cholesterol
and blood pressure levels, and encourage healthy growth. Along with the fact that most
consumers now demand nutritious food, it can encourage more target markets, including the
elderly, to get the products.

Additionally, the company also needs to raise the quality of their movie cinemas’ snacks
and exhibitions. For instance, the PPB company may introduce a new menu of food depending
on the preferences of its customers while also offering vegetarian options, as not every
customer has the same taste. In terms of uniqueness, the business can design a few customised

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miniature room theaters for anyone who wants to spend time privately with friends and family,
as well as provide décor services in the rooms for celebrating extraordinary events. This
strategy is a way for businesses to differentiate themselves from other businesses by developing
a product and service that is unique and appealing to consumers. But, the company may spend
more on research and development (R&D) activities to identify the high-quality materials,
skilled labor, and specialised equipment that led to difficulties in competing on price.

6. Strategy Alternatives Implementation

• Product development

PPB Group strives to develop a strategy to capitalise on the demand for flour-based
products by investing in research and development procedures to identify consumer
preferences. Currently, the company generates many products from wheat, including bread,
noodles, biscuits, and cakes. These flour-based products are becoming increasingly well-liked
and in high demand because the quality ingredients themselves satisfy consumers’ needs PPB
Group can use this as an opportunity to present new ideas and boost confidence in the global
market, for instance by focusing on essential goods like organic meat in line with the current
trend that prioritises health first. Besides, the company’s animal feed division is working to
increase production capacity and enhance product options in order to take advantage of higher
demand for animal feed. Based on the case study, there is a greater demand for chicken than
pork in Malaysia, which causes the livestock sector to increase its investment in expanding
chicken farming and production. The company can also look into ways to improve feed
formulations for healthier animals and greater output in order to satisfy customers with good-
quality products.

• Market penetration

The PPB Group must review the performance of each division in terms of revenue,
market share, and growth potential in order to determine whether strategic adjustments are
necessary for the existing product line. Plus, it can help figure out potential relationships
within product lines to sustain and improve productivity. Research and development

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 procedures are also essential for businesses to generate valuable knowledge and insights
that can be used to upgrade present methods and increase efficiency while saving costs.
The statistics show that PPB Group has difficulty whereby its environmental engineering
& utilities and property divisions are unable to make a sizable amount of revenue compared
to other product lines. Thus, the companies can then aim to find emerging markets with
attractive locations for a new property development as part of their property and
development division. A suitable location for manufacturing is a large area far away from
people’s houses because the manufacturing process typically generates surplus waste
materials, energy, and water utilised in the production.

• Digital transformation

PPB Group Berhad could decide to engage in digital technology to increase operational
effectiveness, improve customer experiences, and take advantage of the chances provided by
the internet of things (IoT). The company can develop new digital technologies for the
application process that will reduce human error, increase cost effectiveness, and promote
innovation and creativity. It is possible to apply sustainable and environmentally friendly
practices in the property industry due to the fact that this digital technology consumes less
resources of machinery and generates lower-cost products. Moreover, the company can also
enhance each business’s utilisation of technology by hiring workers and robots to cover the
shortage of stocks. For the film exhibition and distribution industry, PPB Group can provide
more self-service conveniences like machine tickets and include a range of payment options to
make it simpler for users to save time and minimise the potential for human error.

7. Process Issues

• Should PBB strive to capitalize more effectively on rapidly developing countries

in Southeast Asia such as Vietnam?

Yes, PBB should strive its business to capitalize more effectively on rapidly developing
countries because the company has gained an increase in revenue and profits from the business
operations in Asia countries. PBB is a highly diversified company based in Malaysia and have
many operations throughout Southeast Asia that provides many business segments such as
movie cinemas, agriculture, food production, and waste management. PBB’s largest
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contribution in profits of its business are from grains and agribusiness, and consumer product.
PBB also has showed the increased in the revenues and profit from Vietnam country at 12
percent and 45 percent for the other Asian countries. Based on financial statements of flour
milling operation in grains and agribusiness segment, the Southeast Asia generated higher
profits and revenues due to its operation in Vietnam, Thailand, and Indonesia. Hence, this prove
that PBB should strive its business in expanding its capacity in the production of flour in
Vietnam in 2021.

Besides that, the majority of PBB operations of the film exhibitions and distribution
segments is utilized in Southeast Asia countries such as Vietnam, Myanmar, and Cambodia.
PBB shall continue to expand its operation in these countries by opening a new branch or
headquarters of PBB operations. This is due to in the long term, this segment will optimistically
grow in the industry and be profitable. In addition, another segment of PBB is popular in
Southeast Asia since many consumers have been using the brands owned by PBB. The segment
named Consumer Product has received many recognitions from the brands it produced and
collaborated with which has reached over 42,000 retail locations in Malaysia. Most of the
Southeast Asia countries forecast to have stable GDP growth planning for 2024. Singapore is
ranked to be the best country of doing business and Indonesia has an excellent business
environment of consumers that will benefit business operations. Thailand also indulges in a
stable economic and political system which encourage investment from various sectors that
attracts investors to invest in a business which is profitable to them.

Lastly, Vietnam is one of the countries that shows the fastest growth in Southeast Asia
so the company should grab the opportunity to increase brand awareness and improve its
operation in providing new packaged and canned products to consumers in this country. PBB
may also offer for collaboration with other branded companies in the food industry to gain a
more competitive market segment. This country encourages ownership from foreign countries
in doing business there. It also provides low rates for companies to expand their business
operations in the country. Nonetheless, it is agreeable for PBB to strive its operations more
effectively in the Southeast countries since these countries have provided more revenues and
profits in PBB business segments.

• Could PBB’s traditional cinema operations survive a renewed pandemic, or

should the company shift focus to other businesses or even new business areas?

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 PBB film exhibition and distribution segment is categorized into two activities which
are film exhibitions that provide retail branches of the film industry in many areas and film
distributions which is the process of making or screening a film for audiences. Based on the
PBB’s annual report in 2020, film exhibition and distribution have significantly dropped in
revenue and profit by 80 percent and 100 percent due to the COVID-19 pandemic which caused
every cinema operation to close their activities followed by the Movement Control Order
(MCO) and Standard Operating Procedure (SOP) implemented by the government. The
pandemic had affected the film segment as everyone was restricted from going out and it was
the most tough time for film exhibition and distribution segment to survive. This has also
affected the PBB box office to fall notably in Malaysia and in the global film industry.

However, the current film trends are rapidly growing back in the industry and PBB’s
traditional cinema operations may be able to survive the post-pandemic. This is particularly to
be mentioned in Malaysia because after two years of the pandemic, Malaysians film industry
and entertainment sectors are positively shown a sign of recovery and is revived from the crisis.
Many investments and collaborations from Malaysian’s companies in film industry especially
are seeking their ways to bring back the hyped of Malaysia’s films and to improve the changes
of filmmaking to be more innovative. Since the pandemic has impacted the industry on various
levels in every industry, a new joint-ventures agreement has been confirmed from a local
production company and entertainment company. These joint ventures played a vital role in
reviving and boosting the growth of film industry in Malaysia.

For example, Mat Kilau movie is released in 2022 right after every industry is
recovering from the crisis. The movie has received a tremendous success from Malaysia and
Indonesia and collected RM90 Million in a month from screening nationwide in Singapore and
Brunei. The movie has created an extraordinary phenomenon that revive back the film industry
from the crisis that has crushed over the world business activities. There are more movies that
were shown in cinema which had surprisingly brings back the phenomenal experiences such
as AirForce the Movie: Selagi Bernyawa, Avatar; The Way of Water, Top Gun: Maverick, Polis
Evo 3, and Marvel Phase 4 movies. PBB also may use this opportunity to collaborate with other
branded or famous companies to gain more profit in this business segment.

For example, GSC had produced merchandises for some local and international movies
such as Transformers merchandise tumbler collection of Optimus Prime and Bumblebee,
Airforce the Movie keychain, and Boboiboy and Mechamato figure. There are more initiatives
in which PBB can pursue in producing more merchandises with the right target audience. As

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for the latest marketing, the company may make a collaboration with Barbie since the movie
will be out in the second quarter of 2023. A few shops such as Typo, Cotton On, and Forever
21 have already sold their Barbie collections in Malaysia’s market recently. Therefore, PBB
should take the chance in selling Barbie merchandise when the show is about to release soon.
As a result, it will benefit PBB to gain profit from their business activity. PBB should also
improve its services to provide more kids-friendly cinemas with playgrounds in it so that
parents may be able to watch movies at cinema with their kids.

GSC under PBB may also implement a new hall with new features in it such as a putting
heater under the seat, making the two-floor cinema wider IMAX and louder Dolby Atmos, and
improving eye screening to 5D since GSC now only has 3D and 4D. Thus, the company should
implement and improve its features and services in providing. In this context of suggestion,
PBB can increase its profit in the future by producing and implementing a more effective
marketing strategy to attract more customers of various ages. Hence, PBB should continue its
operation of film exhibition and distribution as the cinema operations have passed the critical
crisis and more new upcoming epic films will be released in the cinema for a few years in the
future.

• With regard to flour and animal-feed milling and bread production, the demand
for such products will increase as the population and tourism levels of various
countries increase.

PBB’s business activities in grains and agribusiness sectors regarding flour and animal
feed milling and bread production have resulted in the increase of revenues and profits of the
company in 2020. The main factors that contribute to the increase in revenues and profits are
the population in a country and the tourism levels of various countries. Malaysia has over 2,800
capacities of metric tons in the flour milling business, making the Malaysia as the biggest flour
miller. Bread production is one of the high demands from various customers around the world.
For example, during covid-19 pandemic, the demand for bakery products and bread products
in many sectors especially household sectors had increased the demand in the bread production
that automatically relates to the increased in flour milling. This is because people were isolated
and were ordered to stay at home or quarantine and was not allowed to go out at all for days
under the Movement Control Order (MCO) that was implemented by the government. Hence,
more people started to develop their interest in doing baking activity to fill their free time. As
the population of people was under the implementation of MCO, there was a high demand for
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bread production to increase until to the point it was sold out because of people kept buying
the bread products and other wheat flour products.

Besides that, the demand for bread production will increase due to the increase in the
tourism levels of various countries. The tourism industry will bring in more visitors and
travelers from different countries around the world and during their travel, they may buy
essential food products such as bread just like when they are in their countries. It is because
food products made from wheat flour such as cakes, breads noodles, and biscuits are the
essential foods everyone has eaten in their daily lives. Everyone from every country has all
these types of foods and it is one of the ways for PBB to generate profits and increase its
business selling. More products using flour ingredients as the main ingredient will increase the
demand for flour milling from PBB to increase their business activities and expand their flour
mills business in more countries. Thus, with the current flour mills production of PBB from
Malaysia, Thailand, Indonesia, China, and Vietnam, PBB had expected to increase its capacity
of flour production in Vietnam to fulfill marketable demand in Vietnam as to the reasons stated.

In the sector of animal-feed milling agribusiness, PBB is the major provider of this
business in Malaysia, and the company has large capacities with a total of 5 mills in the country.
Animal feed is marketed under brand names as a strategy to increase the demand for animal
feed production. It is also available in a variety of distinct forms which are crumble, mash, and
pellet according to the company’s customer preferences. The industry levels play a significant
role to increase the demand for the products. The demand for animal-feed milling or animal-
feed products will increase as the tourism levels increase because indirectly, the tourism
industry will include the investors who are also part of the travelers or visitors that may
participate in doing business in the country. Nevertheless, this may attract investors or other
companies to collaborate with PBB in expanding animal-feed milling sectors. Finally, these
animal feed products are also adapted, shaped, and maintained at high care levels to meet the
individual needs and diets of the intended animals. For instance, the products of animal feed
include duck, rabbit, broilers, ruminants, poultry, and quail. PBB strives to maintain the quality
of animal feed production in a way that the company can also the reduce cost of the ingredients
in the production of animal feed.

• Factors to include are how PPB should allocate its resources among segments and
whether any segments should be sold off.

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 − Factors to include are how PPB should allocate its resources.
One of the methods used to plan resource allocation is to use the Boston Consulting
Group (BCG) Matrix. The BCG matrix is a graphical representation of division or segment
differences in terms of growth in industry and market share. This method helps a business
identify the growth potential of its product portfolio and helps in making decisions about which
segments the company should invest in, discontinue and develop products. Decisions can be
made by examining the growth rate of each segment and its place in market share compared to
other segments. The BCG matrix displays the company's position among the four quadrants
which are Question Marks, Stars, Bulls, and Dogs. Based on the diagram below, we can
determine how PPB should allocate its resources by labelling each segment according to its
respective quadrants.

Figure 1 BCG Matrix Model

Growth rate and market share position are considered factors in allocating resources
efficiently. Flour and livestock manufacturing is the largest PPB revenue-generating segment
and consumer-type products such as bread are by-products of flour manufacturing. Overall,
PPB revenue in 2020 plunged by 11% compared to the previous year. The global pandemic
during that period had a major impact on the company as most of its segments such as
agribusiness, film exhibition, and environmental engineering faced a downward trend in its
earnings, especially under PPB investment Golden Screen Cinemas (GSC) whose earnings
were rejected noticeable at 80% in Malaysia. While most parts are facing negative changes due

24
to COVID-19, we cannot say the same about its profits. Three of PPB's five segments
experienced growth in profits involving grains and agribusiness, consumer products, and
engineering and environmental utilities. As earnings continue to plummet from 2019 to 2020,
costs will also begin to decline as PPB may try to lay off some workers or reduce production
to deal with the global pandemic. In the 2020 income statement, the cost of goods sold
decreased by 7%, and operating expenses also decreased by 9%. Less production and operating
activity also reduce the PPB's balance sheet liabilities.

As mentioned, PPB's grain and agribusiness division decreased in revenue by 1% but

on the other hand, profit increased to 28%. This is due to the lower cost of raw materials and
the profit of the division obtained from the associate company. According to PPB's survey on
grain and agribusiness operations, the market size is growing as the flour milling business is
not only considered the largest flour producer in Malaysia with 2,800 metric tons of flour
produced daily but also expanded its business by developing 2 flour mills in Vietnam and 1
flour factory in Thailand. Not to forget, PPB also acquired a 20% percent share in 9 associated
companies in China which leveraged the company to acquire a capacity of 17,550 tons per day
which exceeded the production output by a large margin in the local market in Malaysia. PBB
also developed a strategic plan to increase flour production by acquiring more facilities and
developing more flour mill production centres.

In terms of sales growth rate, it is safe to assume that the segment is declining while
holding the top position in market share. A 1% drop in yield has no impact given that it was the
time of the outbreak. With an average population growth rate of 0.88% for ASEAN
(Association of Southeast Asian Nations) countries and 0.83% for other countries in the Asian
region, the segment's sales growth will also increase gradually according to the population
growth rate. Population trends lead to similar effects on sales volume because a growing
population means greater demand. If we put the statistics under the BCG Matrix tool, the sales
growth rate category will be scored from negative zero to one point where the market share
position will be set to 0.5 points and above, therefore, placing the segment in the Cash Cow
quadrant for the assessment year 2020. This division has already generated cash with a huge
increase in profits beyond their requirements and PPB can allocate the available resources to
develop markets in the further horizon or use them to upgrade flour and food processing plants
to maintain their strong position as long as possible. This matter has already been replicated
based on the view of the managing director in PPB's financial report for 2020 which states that
flour mills in Vietnam are undergoing capacity development to increase from producing wheat

25
flour at 500 m/t to 1000 m/t by adding a mill with a production of 500 m/ t wheat flour for USD
19.7 million. The new plant is expected to be operational in 2021.

Animal feed manufacturing is also considered to be the largest revenue-generating part

of the PPB's grain and agribusiness division. But it does not mean greater profits because one
of the animal feed components such as soybeans is usually imported from the United States
and Brazil since Malaysia does not have a soybean production plant which has increased
operating costs and expenses. Nevertheless, it stands as the main supplier of animal feed in
Malaysia by producing more than 2,200 metric tons per day in all factories operating in the
country. Additionally, the Friendship and Five Rings brands help in the marketing of feeds in
various forms. According to PPB's financial report for 2020, animal feed producers experienced
lower demand for poultry resulting in lower animal feed sales. The pandemic hit the segment
quite hard as it prevented broiler producers from carrying out expansion plans either choosing
to postpone or reduce production. Therefore, stop the planned growth for the segment.

By applying the BCG Matrix to these facts, we can conclude that the segment's sales
growth rate is between 3 and 5 because the business does not hold any shares in associated
companies and only provides local products. As PPB builds its base in Malaysia and is a major
food supplier and does not develop products elsewhere outside Malaysia, it is fair to score a
relative market share position of between 0.1 to 0.2 as the segment is not in a high market share
position. Therefore, place the product in the Question Mark quadrant. The best suggestion on
how PPB should allocate its resources to segments is to devise strategies that can help maintain
segment profitability in a pandemic environment. For example, PPB has spent RM 52 million
to build a new flour milling plant and improve food processing facilities. It is one of the market
development strategies that PPB has developed to curb external threats in the segment. It is
impractical to sell the division as the segment still looks profitable as it starts switching to
alternative food items at lower prices to reduce total costs. The company remains positive on
the business outlook with hopes for a better economic environment in 2021 and the following
years. Population growth and tourism recovery may be factors in the company's optimistic
prospectus.

Bread is one of the commodity products in high demand with a large market around the
world. Bread is a byproduct of flour manufacturing including noodles, biscuits, and cakes. It
has been marketed under one of PPB's well-known brands, Massimo owned by Flour and Feed
Milling (FFM). The bread will be used in the bakery business under the consumer products
segment to make cakes, bread, rolls, and buns. Although it is a by-product of the grain and
agribusiness segment, the growth rate of bread sales is reflected by changes in the revenue of

26
the consumer products segment. The segment experienced a 1% increase in 2020 compared to
previous years and a 4,900% increase in profits. Therefore, it is logical to score the growth rate
range from 0 to 2 because the growth rate is not extremely attractive. In terms of market share
position, PPB built a solid foundation for bread production in Malaysia by opening a new
bakery industry facility for RM 120 million located in Pulau Indah, Klang. To interpret the
position in market share, Massimo is not the only business involved in bread supply considering
other leading bread brands such as Gardenia, Keto Low Carb Sandwich Bread Loaf, Maretti
Bruschette Oven Baked Bread Bites, and Kawan Lotus Leaf Bun. But the low brand awareness
may be supported by the development of large branches throughout Malaysia.

Therefore, it is reasonable to assign a score between 0.0 to 0.5 that places bread
production or the entire consumer product segment in the Question Mark quadrant. This
segment achieved growth in small fractions while off-brand bread and other bread brands. PPB
must initiate a strong strategy to increase its product development to gain more customers and
meet more demands. To translate this strategy into practice, PPB has introduced two new
products named Massimo Primo Sandwich Bun and cheap Massimo Favorito Lemon Krunch
Cream Roll in 2020. The newly launched products act as a countermeasure to face the high
competition in 2021 and the market trends that are increasing. During the pandemic, the
Malaysian government has imposed strict regulations on the enforcement of physical
confinement known as the Movement Control Order (MCO). As a result, bakeries cannot
operate at full capacity and must spend money to comply with health and safety guidelines. So,
businesses are turning to e-commerce to expand their brand awareness and manage their sales
operations through digital mediums. This conversion can also be considered as a strategy to
increase market development which requires some physical and financial resources.

− Factors to be included whether any segments should be sold off

One of the factors that should be included in whether any segment should be sold is to
analyse the segment's performance. Performance can be evaluated by measuring segment
revenue growth, contribution margin, and profitability. This assessment helps in identifying
which segments have good sustainability prospects and generate high returns. PPB's grain and
agribusiness declined by 1% in revenue in 2020. The negative growth may indicate that the
segment's revenue did not perform well compared to the previous year but if we look at
profitability instead, the segment generated a 28% increase in profit compared to the financial

27
year ago It marked a significant level of profitability as PPB began to reduce raw material costs
and build new factory facilities creating better segment profit prospects.

PPB may want to consider winding down its real estate segment as it is not generating
significant revenue and is facing a downward trend in its profitability. Selling properties in
2020 only increased revenue by 4% which is not unusual as the segment saw a 72% drop in
profits in 2020 and may follow the trend line if the pandemic continues to affect its sales.
According to PPB's financial report, the company has planned to expand its project by
acquiring 87 acres of land for property development and investing RM 6.95 million to upgrade
and restore investment properties. It poses the potential risk of spending a large amount of
capital expenditure which may cause the segment to incur high expenses which leads to losses
and may force PPB to wind up the segment. The segment does not show good profit prospects
as it requires high expenses to maintain the business with low returns in exchange. The
pandemic issue at that time could not be resolved for several years leaving the segment with
the risk of losses and economic uncertainty.

Another factor that leads to the decision of whether the segment should be sold is to
assess the risks associated with the segment. The purpose is to determine which segments
involve the main risks and whether the possible advantages outweigh the accompanying
dangers. PPB's film exhibition and distribution segment has been affected by the regulations
imposed by the government during the outbreak. The Movement Control Order (MCO)
enforces social distancing rules by prohibiting people from leaving their homes. Thus,
disrupting the segment's sales and preventing the business from operating physically. In this
situation, there are several factors to consider such as operational challenges and market
fluctuations. Operational challenges can be defined as any issue that makes a segment less
profitable while market volatility refers to unpredictable price movements in the market.
Regarding the given factors, movement restrictions caused operations to reduce capacity by
50% and delay the film's release, dampening Malaysia's box office collection by 85% at RM
138 million.

Furthermore, the global film industry is already at an unpleasant level of uncertainty as

revenues declined by 71% in aggregate due to the pandemic which caused GSC to fall by
approximately 80% in revenue in 2020 and with profits down by 100%. Investors may see it
as a tough time to invest in the company as the stock price hits an all-time low to generate
profitable returns. Usually, small capital businesses will choose to end their business in this
kind of situation as the income starts to decline along with high-cost maintenance expenses in
exchange for a low contribution margin. For large capital companies like PPB, several

28
initiatives can be done to influence the challenge to segment advantage. Although the segment
faces significant risks in maintaining sustainability, PPB began its turnaround program by
acquiring MBO cinema assets, releasing more local films, and establishing new cafe brands in
selected GSCs. PPB has anticipated risks and made appropriate adjustments to facilitate
segment operations. We can see that the expenses incurred will outweigh the dangers involved.

We also need to analyse the market potential of each segment by assessing the market
size, growth rate, and competitive landscape. This helps companies compare segments that
have scalability in the market with dynamic operations with segments that experience better
consistent losses. From there, the company can analyse according to the index that shows
whether it is relevant to reduce segments with low profits or inject more capital to drive its
growth over time. The company needs to evaluate the results of each decision to determine the
most beneficial decision. Some situations encourage the decision to sell a segment with inferior
performance prospects, but this does not mean that the company will be out of the market
because a discontinued segment may affect other segments in other ways. Some businesses
may have interdependent segments where they share resources, technology, labour, and capital.
Therefore, reducing one of them may interfere with the operation of other segments. There are
also certain situations where the company may still carry unprofitable segments due to tax
benefits and high winding-up costs.

In the case of PPB, the grain and agribusiness segment achieved the highest growth rate
among segments with market share positions outside the domestic market such as Vietnam,
Indonesia, and other ASEAN countries. The size of the market is also large reflecting the
growth rate of the segment with thousands of tons of flour produced daily. Its market size makes
it superior to other flour milling businesses across the country along with animal feed by-
products with 5 factories across the country producing more than two thousand feeds making
them a major supplier in Malaysia. It makes the feature of the segment far from launch. It
happens the same with consumer products with growth rates and a thousandfold increase in
profits. Since it offers mostly commodity products, demand is guaranteed to be exponentially
high, especially during a pandemic. The large market size with thousands of branches across
Malaysia together with newly acquired subsidiaries allows them to have more market share
positions despite being in a competitive environment in the industry. But the threat from
competitors is not strong enough to close the segment because the benefits outweigh the
disadvantages.

PPB's engineering and utilities segment was profitable despite a 3% decline in revenue.
Even in the case of MCO enforcement which limits physical operations and strict SOPs, the

29
segment is still profitable with an increase of 28% from the previous year due to several key
projects successfully implemented in 2020. The service market covers both the southern and
eastern parts. from Peninsular Malaysia. According to PPB's financial report, Chemquest Sdn.
Bhd. Group (CQ Group) is a group that emphasizes water and sewage sector engineering and
has executed 140 outstanding engineering projects that have accumulated up to RM 3.3 billion
in contract value. Throughout 2020, the CQ group has started work related to water and sewage
in Sarawak, Johor, and Selangor worth RM 143 million under contract. This segment is also
operated through subsidiaries and associated companies that contribute significantly to project
implementation. This result shows the potential market potential of PPB to accompany a better
position in the market share with services offered throughout the country. Therefore, put the
segment in the favourite place for PPB's business growth prospects. There are no visible signs
that the segment will close soon as PPB has presented a strong statement to increase automation
by acquiring more advanced technology and improving the efficiency of the construction
process.

• As there are few mills in the region that can crush soybean, resulting in most
soybean being imported as crushed products, should PPB enter the crushed
soybean milling business?

PPB is now in a better position to make a choice on whether to enter the crushed
soybean milling business. Analyse the present market demand for crushed soybean products in
the area, as well as any projections for that demand. Consider aspects such as the expanding
size of the population, shifting patterns of consumption, and the availability of alternative
products. Following that, conduct a competitive analysis of the milling industry for crushed
soybeans. Determine the existing competitors, their market share, distribution routes, pricing
tactics, and any potential obstacles to entry. Think about how the resources, competencies, and
competitive advantage of PPB could help position the company in the market. Investigate
prospects for value addition that go beyond the products made from crushed soybeans. Take,
as an illustration, the case of by-products that are capable of being manufactured and marketed,
such as soybean meal, oil, or other derivatives. Consider both the size of the market for these
extra products and their potential profit.

As a result, the infrastructure for processing is also very crucial. Conduct a cost-benefit
analysis to determine the appropriate level of investment for establishing a facility to mill
crushed soybeans. Take into consideration things like the machinery, the technology, the

30
location of the facility, the environmental requirements, and the timetable for commencing
operations. Determine whether PPB is financially viable, as well as its potential return on
investment. Evaluate the degree to which PPB's overall business strategy, goals, and key
strengths are aligned with the decision to enter the crushed soybean milling business. Consider
any potential synergies with your present activities as well as any benefits of diversification.
PPB will be in a better position to make an educated decision about whether to enter the crushed
soybean milling business if it considers these aspects, does extensive market research, and
consults with industry experts.

• Should the firm move more operations to Vietnam since labour is cheaper?
Yes, the firm should move more operations to Vietnam due to the country’s rapid
economic growth. The firm can achieve economies of scale due to lower costs which could
increase the efficiency of the operation. Lower operating costs will result in higher profits and
reduce debt obligations. According to the statistics, Vietnam indicated outstanding growth in
terms of revenue and profit with an increment of 11.6% in 2020. The fact that the region still
provides positive earnings during the pandemic, proves the strong resilience against the
COVID-19 outbreak and economic crisis. The firm has built a solid customer base in Vietnam
with millions of revenues every year, developing more facilities will increase the production
and scope of market penetration. Hence, attract more customers and enhance customer social
responsibility. The firm has offered its product throughout the ASEAN countries through its
factories in Malaysia which operate under local regulations and are bound by the country’s
economic well-being. Having amass of factories under one roof might open each of them to
external crises that lead to potential losses and the event of winding up. Due to that, opening
other branches in foreign countries can help the firm to spread the economic risk over several
available markets and mitigate the impact of the global outbreak. Although Malaysia is one of
the countries with the highest GDP in the Southeast Asia region, the inflated cost of living
along with the raise in minimum wage force local companies to milk out earnings for high
wage payments. Bringing the company toward globalization reduces the overall risk
vulnerability.

Vietnam is low on skilled workers which contributes to the cheap labour. In addition,
according to studies conducted by Japan International Cooperation Agency, the average income
for workers in Vietnam is only $300 only representing half of the regional average income of
$1,992 and the global benchmark of average workers’ income of $ 2,114. Their quality of life

31
is poor as they do not receive enough wages to start savings. This is also due to the local job
opportunities that offer simple manufacturing jobs tasks such as food and clothing processing
that associate with small amounts of wages. The downside of Vietnam may not be seen from
an equal perspective by other countries as they can grab the advantages of low-cost labour and
place low-cost facilities in the country. The work culture that has already been developed in
Vietnam, especially in food processing can allow the PPB to hire foreign workers with the
appropriate skills to increase the production of animal feeds and consumer products. In
Vietnam, company policies allow foreign owners to exercise 100% control over the businesses.
The leniency will provide huge support to the PPBs operations in the foreign region as it has
full accessibility to form a business structure that suits the firm’s strategies, missions, and
visions.

Vietnam’s economic growth is majorly dependent on low-cost labour and exporting

low-value goods. It remarks as one of the competitive advantages of encouraging more foreign
investors to build their operations domestically. Hence, the government has implemented tax
incentives to spark the attractiveness of Vietnam as a golden spot for business expansion. The
government has introduced a preferential tax rate that charges 10% of taxes for a corporation
for 15 years consecutively. The PPB not only can enjoy cheap labour expenses but also reduced
tax rates. The cheap labour was also caused by the low cost of living in Vietnam. Consumer
goods, transportation, and healthcare followed the low wages and purchasing power of the
residents. Since the Vietnamese Dong is much lower than Malaysia with RM 1 equivalent to
VSD 5,105.31, the average pay for factory workers in Vietnam is only 5,300,000 which is
equivalent to RM 1040 per month compared to Malaysia with wages ranging from RM 1,400
to 1,600. Moving operations to the region with lower labour costs can reduce a ton of
expenditure and leave the firm with extra cash to prepare a contingency approach for potential
economic crises. As lower direct labour costs contribute to lower product prices, PPB can
remain competitive in the foreign market by offering affordable products that meet the
consumer’s quality requirements. The PPB can emphasize its foreign operations on whether
wants to invest in animal feeds or flour milling depending on the country’s local consumer
behaviours and demands.

Even though moving operations to a foreign country anticipate a lot of benefits but it
also comes with several drawbacks that the firm needs to beware of. The labour costs mirror
the level of skills required in performing certain jobs outline. It means the higher the costs
spend on personnel services, the better the productivity and quality of jobs performed. In this
case, hiring personnel around the Vietnam vicinity with most of them specializing in

32
manufacturing low-value goods is matching the PBB’s operations under the grain and
agribusiness industry. But as it is far from the headquarters, the foreign personnel’s
performance will be harder to supervise comprehensively. The quality criteria might be defined
differently in Vietnam as compared to Malaysia. The commodities are usually sold at lower
costs than the actual market price in Vietnam with expected low quality. Therefore, the PPB
needs to allocate enough supervisors to mentor or advise personnel in the working field. The
firm also needs to establish a working ground communication by developing an integrated
information system that links the headquarters and foreign operations.

The firm requires to disburse extra expenditures to ensure the products meet the quality
standards and the information system works properly according to the user’s instructions. The
decision on moving the operations only by looking at cheap labour is quite complicated as there
are a lot of factors that the firm needs to analyze such as supply chain risks, legal challenges,
and value systems. Moving the operations still holds more value as PPB can increase the profit
margin with lower operating expenses because of low wage rates, Vietnam’s growth in GDP,
and an increase in demand for animal feed. The firm can generate more sales by widening the
target market and gaining a higher position in the market share.

• What is the solution for cheaper chicken from Vietnam under-pricing PPB’s
chicken in Malaysia?

The problem that was brought up concerning cheaper chicken from Vietnam
undercutting the prices of PPB's chicken in Malaysia is one that relates to competitiveness in
commerce and the market. To find a solution to this problem, a comprehensive strategy that
includes participation from a wide range of stakeholders—including the government,
corporations, and consumers—is required. There are a few potential remedies, which include
establishing quality standards and certifications, promoting the local chicken business,
conducting research and development, supervising and regulating market activity, and so on.

The first step in the approach is to take control of quality certifications and standards.
To safeguard the interests of native poultry farmers, the authorities in Malaysia can impose
rigorous quality criteria on imported chicken. This may involve the implementation of
certificates and inspections to guarantee that imported chicken satisfies the necessary criteria
and guidelines. Next, encourage the development of the local chicken industry. Local producers
of chicken can receive assistance from the government in the form of subsidies, grants, or tax

33
incentives, which will assist them in lowering their production costs and increasing their level
of competitiveness. This assistance can be put toward updating production methods, raising
product quality, and improving the efficiency of supply chains.

Research and development ought to be carried out by the government. The promotion
of research and development in the poultry sector may result in the creation of creative
solutions that enable Malaysian chicken producers to increase their output while
simultaneously lowering their expenses. They can maintain their position as a competitive
player in the market by making investments in technology, genetics, and environmentally
responsible farming practices. Not least but certainly not least, there is the matter of market
surveillance and regulation. It is possible for the government of Malaysia to improve market
surveillance and enforcement procedures to guarantee equitable competition. This involves
keeping an eye on the trade in chicken coming from Vietnam to identify and prevent any
unethical or unlawful business dealings. The local chicken sector in Malaysia might use some
support, and the problem of underpriced chicken imports could be helped by putting into action
an all-encompassing strategy that makes use of a combination of several different tactics.

8. Conclusion

It is clear from the case study of PBB Group Berhad that making investments in the
creation of a solid and effective infrastructure may have a positive impact on the bank's
operations. To remain competitive and satisfy changing client needs in the banking sector, PBB
Group Berhad must upgrade and modernize IT systems, improve digital banking capabilities,
and ensure safe and dependable networks. The bank may increase operational effectiveness,
streamline procedures, and provide consumers with better services by modernizing its IT
systems. This involves supporting novel features and functions as well as managing higher
transaction volumes and enabling real-time data analysis.

To meet the rising demand for digital services, it is crucial to improve the capabilities
of digital banking. PBB Group Berhad can draw tech-savvy clients and offer easy banking
experiences by investing in mobile banking applications, online account management
platforms, and secure payment systems. The success of the bank depends critically on ensuring
safe and dependable networks. Data protection, fraud prevention, and operational continuity
are all aided by investing in reliable network infrastructure and cybersecurity solutions. To
reduce risks and create a secure banking environment, sophisticated security solutions

34
including firewalls, intrusion detection systems, encryption protocols, and frequent security
audits are required.

In conclusion, PBB Group Berhad may gain a lot by spending money on building a
reliable and effective infrastructure. These expenditures have the potential to raise customer
satisfaction, draw in new business, and keep hold of current clients. They can also save
expenses, increase operational effectiveness, and help the bank's expansion in the world of
online banking. PBB Group Berhad may establish itself as a dominant force in the banking
sector by giving these areas priority.

35
9. References

1. Le Tuyet. (2022). Vietnam's cheap labor advantage doesn't come cheap. VnExpress.
- Retrieved from: https://e.vnexpress.net/news/news/vietnam-s-cheap-labor-advantage-
doesn-t-come-cheap-4518021.html
2. Nhung Nguyen. (2016). Vietnam's economy, now driven by cheap labor, needs
productivity push: official. VnExpress.
- Retrieved from: https://e.vnexpress.net/news/business/vietnam-s-economy-now-
driven-by-cheap-labor-needs-productivity-push-official-3494149.html
3. PPB. (2020). Annual Report 2020: Resilience Through Agility and Diversity.
- Retrieved from: https://www.ppbgroup.com/images/pages/investor-
relations/annual_report/2020-2017/ppb-annual-report-2020.pdf
4. United Nations Population Division. Population growth, percent, 2021 – Country’s
ranking, Southeast Asia. The Global Economy.
- Retrieved from:
https://www.theglobaleconomy.com/rankings/population_growth/South-East-Asia/

36
case study
ORIGINALITY REPORT

2 %
SIMILARITY INDEX
2%
INTERNET SOURCES
0%
PUBLICATIONS
1%
STUDENT PAPERS

PRIMARY SOURCES

1
www.ppbgroup.com
Internet Source 1%
2
Submitted to Nelson Mandela Metropolitan
University
<1 %
Student Paper

3
docshare.tips
Internet Source <1 %
4
Submitted to KYUNG HEE UNIVERSITY
Student Paper <1 %
5
Submitted to Maastricht School of
Management
<1 %
Student Paper

6
www.coursehero.com
Internet Source <1 %
7
Submitted to Curtin University of Technology
Student Paper <1 %
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Submitted to Universiti Utara Malaysia
Student Paper <1 %
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Submitted to TAR University College
 Group Case Activities Assignment and Rubric

Read and analyze the following case studies (refer to the textbook, David, F.R. David, F.R, David, M.E (2022). Strategic
Management: A Competitive Approach: Concepts and Cases via MyLab).

Case study – PPB Group Berhad—2022

When analyzing cases, be sure that you fully answer questions and analyze the case in parts, as shown in the following areas:

• Should PPB strive to capitalize move effectively on rapidly developing countries in Southeast Asia such as Vietnam?
• Could PPB’s traditional cinema operations survive a renewed pandemic or should the company shift focus to its other
businesses or even new business areas?
• With regard to flour and animal-feed milling and bread production, the demand for such products will increase as the population
and tourism levels of various countries increase.

Recall from the case that the firm’s mission and vision are likely too general, and consideration should be taken on how both should
be altered.
• Factors to include are how PPB should allocate its resources among segments and whether any segments should be sold off.
• As there are few mills in the region that can crush soybean, resulting in most soybean being imported as crushed products,
should PPB enter the crushed soybean milling business?
• Should the firm move more operations to Vietnam since labor is cheaper?
• What is the solution for cheaper chicken from Vietnam underpricing PPB’s chicken in Malaysia?

As the Strategic Planning team, develop for Lim Soon Huat, Managing Director of PPB Group, a strategic plan that you believe will
lead the company to prosperity. Recall from the case that consumption patterns in Southeast Asia in general are moving further away
from rice to more flour-based products and this bodes well for PPB if the company can capitalize on such external opportunities.
• A comprehensive strength-weakness-opportunity-threat (SWOT) analysis and portfolio analysis is needed to facilitate PPB’s
decision-making moving forward.
• Be sure to include in your analysis what you feel the firm should be doing, not what they are currently doing or what you think
they will be doing after studying the latest news releases (unless, of course, you agree with these strategies).
• PPB is in desperate need of a clear strategic plan as they serve a rapidly growing regional market with multiple product lines
that differ significantly.

Grading Rubric

Group Case Activities Assignment

Company name: PBB COMPANY
Student Name and Matric No.:
1. MUHAMMAD IKHMAL BIN ROSLI (1200687)
2. NOOR AMSYAR HILMAN BIN NOORAZAM (1200779)
3. RAIHAN FARHANA BINTI MD JOHAN (1200712)
4. NOOR HAWA HAFIZAH BINTI ZAINAN (1200728)
5. DAYINI HASYA BINTI HUSNI BALIS (1200729)
__________________________________________________________________________________________________

Outstanding Acceptable Poor Performance Total Remarks

Performance Performance 0 points
4 points 2 points
Strategic Profile Case presentation Case presentation Case presentation
and Case identifies key facts identifies most, but misses most
Analysis Purpose relevant to case, and not all key facts significant key facts
show how case facts relevant to the case of case, or ties them
 lead to a particular and ties facts to a to an incorrect focus
focus for analysis. particular focus for for case analysis.
the analysis.
Situation Presentation explores Two or three minor External analysis is
Analysis – trends in general elements of external significantly incorrect
External environment to predict analysis are incorrect – internal factors are
future environmental – team may not have identified as external,
concerns. Porter’s Five covered all seven four or fewer areas of
Forces model used to environmental factors, external environment
analyze company’s used Porter’s model covered, Porter’s
industry, and key correctly, or analyzed Five Factor model
competitors are key competitors used incorrectly, and
analyzed for strategy, completely. key competitors
core competencies, and either not identified
competitive response. or analysis is
superficial.
Situation Presentation uses a Presentation identifies Internal analysis is
Analysis – value chain analysis to organization’s significantly incorrect
Internal examine key internal strengths and – external factors are
factors that create weaknesses clearly, identified as internal,
strengths and but value chain or key factors are not
weaknesses for the analysis may be identified or
company. Factors incomplete. One or examined. Factors are
analyzed are critical to two internal factors not clearly linked to
strategy of firm, and are that significantly firm’s strategy or
likely to include a impact strategy of incorrect strategic
financial analysis. firm may be missing. implications are
drawn.
SWOT Analysis Presentation has Presentation contains Presentation does a
excellent analysis of good links between poor job of
strengths, weaknesses, strengths, identifying company
opportunities, and weaknesses, strategy based on
threats, showing how opportunities, and strengths,
the company can take threats and company weaknesses,
advantage of strategy. May have opportunities, and
opportunities while one or two issues in threats. Strategy
avoiding or minimizing showing how factors doesn’t take into
threats. relate to strategy, but account key factors
overall analysis is or show how to use
solid. strengths to moderate
weaknesses.
Strategy Presentation contains Presentation contains Presentation contains
Formulation three to four alternative at least three fewer than three
strategies that are strategies that are alternative strategies.
feasible and take linked to SWOT Strategies are not
advantage of analysis. Information clearly linked to
opportunities and avoid is given about why SWOT analysis, or
threats. Strategies are one of the strategies is are incorrect based on
clearly linked to SWOT better than other SWOT analysis (for
analysis. An analysis of strategies, but logic, example, marketing a
the alternatives tells while reasonable, may product that is a
why one of them is the not be entirely laid competitive
best. out. advantage for another
company.)
Strategic Presentation explicitly Presentation covers Presentation does not
Alternative outlines and explains key steps needed to include key
Implementation what steps must be implement chosen implementation steps
taken to implement strategy, but may not needed to put strategy
chosen strategy, cover all steps. into practice, and/or
including structural Recommendation little or no rationale
changes, leadership generally connected is given for suggested
changes, new controls, to SWOT – may not implementation
or incentives. provide all specifics. practices.
Recommendations flow
from SWOT analysis.
Process Issues The presentation is The presentation The presentation is
logically consistent. contains generally not logically
Alternatives and clear and logical consistent. Little
recommendation flow analyses. It is information is given
from SWOT analysis. complete, although that helps viewers
 The presentation is more information is know why
thorough and clear, needed to make it recommendations are
containing a through. given, or
comprehensive analysis Recommendations are recommendations
and clean links between generally feasible, but don’t flow from other
environmental factors more information information. The
and recommendations. would help show how presentation does not
they flow from have clarity of
SWOT. purpose.
Ethics Submission before the Submission after on Submission after the
due date (2), to submit date (0), to submit due date (0), No
Turnitin report (2) Turnitin report (1) Turnitin report (0)
with less than 25% with less than 35%
similarity. similarity.
TOTAL