Reference no: EM133569599

Case Study: Farm Fresh on expansion mode Milk producer Farm Fresh aims to expand its presence both locally and in the region, as part of its strategy to maintain competitive advantage. While its expansion will allow the company to meet its near-term demands, group managing director and group chief executive officer Loi Tuan Ee said the group's longer-term plans "promise an even more transformative outcome". "Currently we are in the planning phase of developing a new manufacturing hub in Bandar Enstek, Negeri Sembilan, which will function as a central-processing facility for our products in Peninsular Malaysia." "By integrating our research and product development capabilities, we intend to use the facility to develop and test new product offerings for the Malaysian market," he said in the company's latest annual report. Loi added that Farm Fresh had also ear-marked Sabah and Sarawak as a growing market for its products. "We aim to set up a farm and integrated processing facility, which will allow for raw milk to be processed and a greater volume of our products delivered to key market centres in this region of Malaysia." Separately, Loi pointed out that Asian countries had historically relied on imports, primarily from Australia, to meet their dairy needs. "Due to the vast distance needed to be covered in the importation process, however, the dairy reaching these countries shores have mostly consisted of powdered or reconstituted dairy." Loi said this was a gap that Farm Fresh intends to address through its fresh-milk based products. "Furthermore, we believe that we possess a compelling competitive advantage due to our superior breeding capabilities, whereby we have leveraged our ownership of one of the largest gene banks of the original Australian Friesian-Sahiwal cattle to deliver unrivalled milk yield and cattle resilience in tropical climates.' Presently, Loi said Farm Fresh had identified three key markets in Asia-Pacific, namely, Indonesia, the Philippines and Hong Kong. "Both Indonesia and the Philippines are rapidly developing economies with large populations and both offer the potential to replicate our highly successful home dealer network to drive penetration in rural areas." he said. "Meanwhile, Indonesia consumers have a high demand for halal products, which we intend to capitalise on through our strong reputation in Malaysia." In both countries, Loi said Farm Fresh plans to establish processing facilities and manufacture its products locally by importing milk ingredients from its Kyabram facility, Australia, which will enable the production of chilled products. "Our initial focus will be on the greater Jakarta and metro Manila areas." Loi said Farm Fresh will employ a different model in Hong Kong. "We have already incorporated a subsidiary (IFFM HK) to drive the importation, marketing and Food and Drug Administration approval of some of our dairy and plant-based products," he said. Additionally, Loi said Farm Fresh intends to roll out regenerative agriculture practices across all its farms by 2024. "These are practices that involve the recycling and reuse of liquid and solid waste generated by our herd for key functions across our farms."

Required:

(a) Explain the relevant external factors that could affect the future growth of Farm Fresh in the Malaysian market.

(b) Briefly explain FOUR (4) challenges Farm Fresh might face during their business expansion drive in Malaysia.

(c) Explain FIVE (5) primary factors that drive Farm Fresh to engage in international market.

(d) Farm Fresh builds one of its capabilities via collaborative partnership with an Australian partner. Discuss TWO (2) other approaches that can be undertaken by Farm Fresh to build and strengthen its capabilities.