Case study question

CASE STUDY FRASER AND NEAVE MARKET EXPANSION Fraser and Neave Holdings Bhd. (F&N) is expanding its footprint in the Asean Region and has set in motion a plan to become a regional food and beverage player to be reckoned with The group started the ball rolling by acquiring Nestle (M) Bhd. canned milk business in Thailand last year. This was a strategic investment for F&N as it provides the group with quick access to the Thai market and made it one of the top five non-alcoholic food and beverage companies in the country and the largest canned milk producer in south-East Asia. The acquisition also enabled F&N to gain entry into the largely untapped markets of Indochina with a total consumer base of about 224 million. As part of its regional aspiration the group recently launched a new corporate brand to unify the soft drinks and dairy brands, thus enabling consumers anywhere in the region to distinguish the groups many brands as part of the F&N group range of products. The group sees a major thrust in Indochina and Thailand in the coming year Contribution for group revenues in the year of 2007 is about 68% compared to 86% five years ago and contribution from oversea market become double during the same period. The group also been eyeing Indonesia market but there has not been a right opportunity and a vehicle. F&N goal was to exceed RM5billion in group revenues and RM450million in group profit before interest and tax in the next five years. According to the F&N CEO, the exciting thing about the business F&N bought from Nestle is the availability of popular ready to drink (RTD) products such as the Bear brand range which commend better margins. Bear, Carnation, and Milo UHT are recognizable brand in Indochina where the group sees the future main area of growth As F&N become established from year to year, the company will be spending around RM450million to build a new milk factory in Pulau Indah Klang as to increase the capacity for local and ASEAN market and another factory in Bangkok to cater for the Indochina and Thai markets. Recently, the hikes in fuel and electricity tariff have made it even tougher for F&N to avoid slowdown in sales and orosion of profits especially in the domestic market. F&N CEO also highlighted that everybody is facing inflationary pressures and the good thing about our business model is that our unit cost and selling price per unit are low, and moreover, our products are for the daily consumption". F&N business philosophy was to increase sales as volume, to sell million and millions of cans to make the money. The primary focus of F&N is to sell more cans rather than try to increase the price of the cans. To boost sales, the group is also trying to widen the application of it dairy product in food preparation via promotion and campaigns. In the pipeline is also the development of a full range products under different branding and focused on a more healthy and wholesome angle. Most profitable of F&N division has a 80% to 70% of the drinks market share. Despite being the market leader, F&N was not "standing still but working hard to activate and push the market as mentioned by the F&N CEO Question 1 Identify the external forces that would affect the growth of food and beverage industry in Malaysia and ASEAN region in the future. (15 marks) Question 2 Does F&N have the core competencies? Justify your answers. (6 marks) Question 3 Identify and explain any there (3) strategies adopted by F&N to achieve its vision to become the regional food and beverage player. (10 marks) Question 4 What are the specific reasons motivate F&N decision acquiring Nestle's canned milk business in Thailand rather than "organically develop? (10 marks) Question 5 Define market share and two (2) marketing efforts to boost F&N drinks sales. (10 marks) Question 6 In your opinion, which of the grand strategy was implemented by F&N? Explain why and provide your answer with appropriate graphically illustration (9 marks)