Market and Business Potentiality of Hills Organic Farm in Malaysia

This report discusses the market and business potentiality of Hills Organic Farm in Malaysia, including industry analysis, competitor analysis, marketing mix strategies, and manpower planning.

Running head: BUSINESS MANAGEMENT
Business management
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Executive summary
The aim of this report is to discuss about the market and business potentiality of Hills Organic
Farm in doing business in Malaysia. In doing so, the industry analysis and competitor analysis is
being done. It is identified that the intensity of competition will be more for Hills Organic Farm
in the Malaysian market. Based on the identified business situations, marketing mix elements for
Hills Organic Farm are recommended in this report that discussed about the approach should be
taken in gaining maximum return. The manpower planning is also recommended for Hills
Organic Farm to manage their employees in their business.

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Table of Contents
Introduction......................................................................................................................................4
Industry analysis..........................................................................................................................4
PESTEL analysis.............................................................................................................................5
SWOT analysis................................................................................................................................6
Competitor analysis.....................................................................................................................7
Market research and analysis...........................................................................................................7
Identification of the targeting strategy.............................................................................................9
Identification of the positioning strategy...................................................................................10
Determination of the marketing mix strategies.............................................................................11
Product.......................................................................................................................................11
Price...........................................................................................................................................11
Place...........................................................................................................................................12
Promotion..................................................................................................................................13
Strategic manpower plan...............................................................................................................13
Gaining business sustainability......................................................................................................14
Financial projections......................................................................................................................15
Conclusion.....................................................................................................................................15
Reference.......................................................................................................................................16

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Introduction
In the current business scenario, effectiveness of the planning process prior to the
incorporation of the business is important to ensure the long term viability. In this case, selection
of the target market is important due to the reason that the business approaches and processes
should be based on the trend of the target market. Moreover, it should also be noted that
entrepreneurship ideas should also be innovative enough in order to gain competitive advantages
in the market. In the current business scenario, competition in any business sectors is high and
thus following the conventional process or approach will not be effective (Urbancova 2013).
These are the major factors, which should be considered in having an ideal business plan for a
new venture. It is planned that organic farming sector of Malaysia will be targeted and the new
venture will be Hills Organic Farm. This will involve farming activities of organic vegetables
and fruits and tapping the domestic market in the initial stage and export market in the next
stage. In the current business state of affairs, sustainable business models are having larger
business viability (Beske, Land and Seuring 2014).
This business plan will discuss about the marketing and business opportunities for Hills
Organic Farm, which will include the industry and competitor analysis. In addition, the market
research and analysis will also be done in identifying the market trends. The product portfolio
will be analyzed and the extent to which it will meet the value proposition for the target
customers. Based on the business approach of Hills Organic Farm, human resource planning will
also be done in this report, which will include the effective process and approach of managing
the employees. Financial projection will be done for Hills Organic Farm.
Industry analysis

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It is identified that domestic organic food industry in Malaysia is still in their nascent
stage and more than 60 percent of the demand of organic food is met by importing. Thus, the
domestic industries in this sector in Malaysia are having favorable trends. Operating and
initiating the farming activities in Malaysia by Hills Organic Farm will be successful due to the
reason that domestic activities will reduce the cost of operation and more competitive price
points can be offered. This is due to the reason that majority of the organic foods are getting
imported in the country and thus they are carrying high price. In this case, the competitive
pricing of Hills Organic Farm can help in gaining competitive advantages by the means of cost
leadership (Teng and Wang 2015). In addition, it is also identified that due to the major
relevancy of imported items, local organic farms are limited and thus the intensity of competition
will be low for Hills Organic Farm. With the total valuation of the organic farming industry of
Malaysia worth of RM 800 million, there are huge opportunities can be tapped by Hills Organic
Farm.
PESTEL analysis
Political factors  Malaysia is having stable political environment with low risks of
political instability
 Business friendly political regimes.
 Favorable diplomatic relations with other major economies
Economical factors  Malaysia is one of the most developed economies in the South
East Asian regions.
 Market potentiality is increasing
 However, entry of new competitors due to globalization will pose

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challenge for Hills Organic Farm.
Social factors  Social globalization is high in Malaysia.
 Customer preference towards the newer and
Technological
factors
 Being a developed economy, Malaysia is having improved
technological infrastructure.
 However, the organic farming sector of Malaysia is not developed
and will be challenging for Hills Organic Farm.
Environmental
factors
 Malaysia is following stringent regulations regarding
environmental protection.
 Hills Organic Farm will face low challenges for having organic
approach.
Legal factors  It is important for Hills Organic Farm to follow the legal elements
in relation to the employee management and customer factors.
 Amendments in the legal state will pose challenges for Hills
Organic Farm.
SWOT analysis
Strengths  Hills Organic Farm will be the first domestic producer of organic
food products.
 Cost advantage of Hills Organic Farm over their competitors.
Weaknesses  Being a new entrant, Hills Organic Farm is having lack of
expertise in the market.

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 Lack of brand value and identity compared to their competitors.
Opportunities  Increase in the preference for the organic products.
 Opportunity to tap the other neighboring countries.
Threats  Emergence of new competitors.
 Emergence of economic recession.
Competitor analysis
Some of the major competitors for Hills Organic Farm are Zenxin Organic Park, TM
farms and Titi eco farm resorts. All these companies are offering similar sets of offerings for the
customers including organic vegetables and fruits. The major advantage that these existing farms
are having over Hills Organic Farm is the brand value and market presence. This is due to the
reason that Hills Organic Farm will be the new venture in the market and thus their brand value
and identity is limited (Lee and Yun 2015). On the other hand, the economies of scale will also
be limited for Hills Organic Farm due to the high investment involved. However, the advantages
of Hills Organic Farm will be mainly on the basis of their long term viability where they will be
ahead in terms of pricing.
Market research and analysis
Market analysis of Hills Organic Farm will be done based on the target market. The
identification of the target market customers will be done based on the different segmentation
variables. The following section will discuss about each of these segmentation variables.
Demographic variables In terms of the age groups, customers aged between 25 and 55 will be
targeted due to the reason that young adult age groups are having

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awareness about the health benefits of the organic foods and thus they
will more prefer organic products of Hills Organic Farm even at a
premium. On the other hand, customers at the age above 50 will also
prefer the healthy alternatives. Hence, the targeted age group for Hills
Organic Farm will be wide and vast. In terms of income level,
premium segment will be targeted due to the reason that they are
having the affordability in availing the premium priced organic
products. However, in the later stage, middle income segment will
also be targeted due to the reason that economies of scale will enable
to offer more competitive price points.
Geographic variables In terms of the geographic segmentation, tier I and II cities of
Malaysia will be targeted in the initial stage. This is due to the reason
that tier I cities will have maximum amount of targeted premium
customers for Hills Organic Farm. On the other hand, tier II cities
will also pose higher level of opportunities due to the reason that
competitive rivalry will be low in these regions. Thus, targeting the
tier I and II cities of Malaysia will help Hills Organic Farm in having
both premium target segments along with higher level of
opportunities.
Psychographic variables In terms of the psychographic segmentation, customers seeking
organic products at more competitive price will be targeted. This is
due to the reason that Hills Organic Farm with having their
production process in the country will be able to offer more

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competitive price points compared to their competitors. In addition,
customers seeking healthier alternatives will also be targeted as the
products of Hills Organic Farm will be positioned on the basis of
their utility as well.
Behavioral variables Loyal customer segment will be more targeted due to the reason that
they will form the continuous revenue generation process. In
addition, targeting the loyal customers will also help in generating
positive word of mouth in the market that can further help in gaining
higher market share. Early adopters will be targeted due to the fact
that this customer group will be more acceptable towards the new
concepts and brands in the market.
Identification of the targeting strategy
Identification of the targeting strategy is important due to the reason that effective
targeting strategy will only help in attracting the segmented customers. In this case, the Porter
generic strategies will be beneficial in determining the targeting strategies. It is recommended
that cost leadership strategy will be the most effective for Hills Organic Farm due to the reason
that they are having the advantage of local production and farming facilities in Malaysia. With
the help of the cost leadership strategy, they will be able to attract the larger sections and ensure
higher sales volume (Haenlein and Libai 2013). In addition, it should also be noted that majority
of the organic food brands in Malaysia are operating in the premium and higher end segments.
Thus, cost leadership strategy of Hills Organic Farm will ensure the low intensity of competition
in the middle income customer segments.

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It is also recommended that Hills Organic Farm should also follow the product and
service differentiation strategy due to the reason that it will ensure the unique value propositions
for the customers. As discussed in the previous section, there are number of organic farms
operating in the Malaysian market and thus differentiation will help Hills Organic Farm in
gaining the competitive advantages. It is recommended that the differentiations should be on the
basis of products. For instance, being the importers, all the existing farms in Malaysia are
offering limited product ranges (Sirianni et al. 2013). However, in this case Hills Organic Farm
will have the advantage of offering market adaptable products and the products, which are not
being offered by their competitors. On the other hand, differentiation can be offered by Hills
Organic Farm in terms of service process. For instance, the organic products can be sold through
the exclusive stores across the country. This will also help in gaining the better and greater brand
recall value from the target customers.
Identification of the positioning strategy
Determination of the positioning strategy is important due to the reason that based on the
approach of the positioning in the market; sales potential for the products of Hills Organic Farm
will be influenced. In this case, it is recommended that Hills Organic Farm should position their
products based on the price and customer benefits. This is due to the reason that cost leadership
will help Hills Organic Farm in pricing their products lower compared to their competitors. Thus,
positioning based on price will be beneficial in attracting the customers and fending off the
intensity of competition. On the other hand, positioning on the basis of customer benefits will
also be beneficial for Hills Organic Farm due to the reason that customers will buy the organic
products based on the benefits to be gained. This will ensure that distinctiveness for Hills
Organic Farm will be more compared to their competitors.

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Determination of the marketing mix strategies
This section will discuss about the different elements of marketing mix that will create
value proposition for the target customers. Each of the four elements of the marketing mix will
be discussed in the next section.
Product
It is recommended that the core product level to be offered by Hills Organic Farm is the
nutritional benefits of fruits and vegetables. This is due to the reason that irrespective of the
vegetables being organic or not, customers will buy vegetables for the nutritional benefits. In
terms of the augmented product level, the added benefits to be gained by the customers from
having organic foods will be offered. This is due to the reason that organic food products are
having the added benefits over the traditional food items. Leveraging on this benefit will help in
customer attraction. It is also recommended that market adaptable approach should be followed
in offering the products. Initiation of the market adaptable approach in the Malaysian market will
enable Hills Organic Farm in offering the products according to the local taste and preference
pattern. This will help Hills Organic Farm in gaining competitive advantages over their
competitors.
Price
It is recommended that Hills Organic Farm should follow economic or market penetration
pricing strategy in operating in Malaysia. This will be beneficial for Hills Organic Farm because
initiation of the premium and higher end pricing will increase the competitive rivalry for them
due to the fact that all the existing players operating in the Malaysian market are following
premium pricing. On the other hand, this should also be noted that with the help of the market

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penetration pricing strategy, Hills Organic Farm will be able to cover the larger target segments
in less time. This will increase their sales volume and will also enable Hills Organic Farm in
offering the organic food products beyond the existing niche segment. However, it should be
noted that the market penetration pricing strategy of Hills Organic Farm will be economical in
comparison with their close competitors in the same industry, but it will be premium compared
to the conventional items. Offering the maximum value proposition even with premium pricing
will be effective in attracting new sets of customers.
Place
It is recommended that Hills Organic Farm should follow Omni Channel distribution
strategy, which will include both the online and offline mediums. The major advantage that will
be gained from it is the larger market coverage and reach. Offline channels will include the
exclusive stores where the entire ranges of organic products of Hills Organic Farm will be
available. However, in the later stage, extensive distribution strategy should be initiated in order
to have the higher market reach and exposure. On the other hand, e-commerce marketplace will
be involved in reaching out to the target customers through online mediums. Involvement of the
different e-commerce portals will be beneficial in gaining the further reach in the market. Hence,
it can be concluded that Omni Channel distribution strategy will be the most effective for Hills
Organic Farm.
Promotion
In the case of promotional activities of Hills Organic Farm, it is recommended that they
should follow Omni Channel marketing strategy. This is due to the reason that in the current
time, online mediums of promotion are as effective as the conventional ones. Thus, for the

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contemporary business organizations such as Hills Organic Farm, initiation of the Omni Channel
promotional activities will be effective in gaining the maximum reach in the market. This should
be noted that trendy customer segments will be majorly attracted towards the organic products of
Hills Organic Farm and these customers are highly active in the online channels. In the current
time, determination of the feedback from the customers is also important for business viability.
In this case also, initiation of the Omni Channel marketing process will be beneficial in gaining
the feedback from the customers.
Strategic manpower plan
Strategic manpower plan is also important for Hills Organic Farm due to the reason that
they should have right employees with right skills at the right place. This will ensure the
enhancements of the organizational performance and productivity. In the case of Hills Organic
Farm, it is recommended that they should follow a few steps in terms of their workforce
planning. The first step will be the identification of the human resource requirements for the new
business. This is important due to the reason that different businesses are having different sets of
requirements and based on these requirements, human resource management process should be
designed. In the case of Hills Organic Farm, the first step should involve the determination of the
human resource requirements. The next step will be the selecting the human resources on the
basis of the identified requirements. This is due to the fact that human resources are having
different skills and expertise and these should be aligned with the organizational requirements of
Hills Organic Farm. Right employees with the right skills should be selected for the right job
profiles. This will ensure that employees are satisfied with their respective job profiles and
productivity is also high.

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The last step of the manpower plan is training and development plan for the employees.
This refers to the fact that employees should be trained and equipped in order to enhance their
skills and expertise in the workplace. Initiation of the training and development activities also
helps in determining the satisfaction level of the employees. This is due to the reason that the
more trained will be the employees with respect to their job profiles, the more effective they will
be in dealing with the challenges. Thus, their level of satisfaction will also be more. On the other
hand, it should also be noted that training and development facilities can also be beneficial in
managing the workplace environment more effective. The above discussed strategic manpower
plan will help Hills Organic Farm in properly managing their employees and optimal utilization
of the available resources.
Gaining business sustainability
Gaining business sustainability is a major factor for Hills Organic Farm to gain long term
sustainability. This is due to the reason that in the current competitive business scenario, business
sustainability is important for Hills Organic Farm to fend off the competition. In this case, it is
recommended that triple bottom line should be used for managing the sustainability. According
to this model, three dimensions should be considered in attaining the business sustainability. The
first dimension is people, which refer that the customers should be provided with exact and
desired value proposition for the money. The more will be the value propositions for the
customers, the more will be sustainability of Hills Organic Farm in their business. On the other
hand, economy is another sustainability dimensions that states profitability of the business. It is
recommended that Hills Organic Farm should target the most profitable regions in the initial
stage in Malaysia. This will ensure that they will gain the business viability. The last dimension

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is the planet that refers to the environmental sustainability. Organic farming activities of Hills
Organic Farm will not have any environmental impacts.
Financial projections
Fixed Expenses
Bldgs / Real Estate
$
5,000
Leasehold Improvements 2,000
Capital Equipment 4,000
Location / Admin Expenses 4,000
Opening Inventory -
Advertising / Promo Expenses 1,200
Other Expenses 1,000
Total Fixed Expenses
$
17,200
Variable
Expenses
Inventory or Materials 300000.0
Direct labor (includes payroll taxes) 700000.0
Other expenses 500000.0
Other expenses 800000000.0
Salaries (includes payroll taxes) 9000000.0
Supplies 9000000.0
Total Variable Expenses 81950000000%
Breakeven Sales level = 0
Break even analysis
Sources of Capital
Owners' Investment (name & % ownership)
Your name & % ownership
$
6,000,000

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Other Investor 25,000
Other Investor 2,500
Other Investor -
Total Investment
$
6,027,500
Bank Loans
Bank 1
$
2,500
Bank 2 2,500
Bank 3 -
Bank 4 -
Total Bank Loans
$
5,000
Other Loans
Source 1
$
40,000
Source 2 10,000
Total Other Loans
$
50,000
Summary Statement
Sources of Capital
Owners' and Other Investments
$
31,400
Bank Loans 5,000
Other Loans 5,000
Total Source of Funds
$
41,400
Startup Expenses
Bldgs / Real Estate
$
5,000
Leasehold Improvements

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2,000
Capital Equipment 4,000
Location / Admin Expenses 4,000
Opening Inventory -
Advertising / Promo Expenses 1,200
Other Expenses 1,000
Total Startup Expenses
$
100,000
Year 1 Year 2 Year 3 Year 4 Year 5
Gross revenue $100,000 $120,000 $130,000 $137,800 $148,824
Cost of goods sold $11,400 $11,628 $12,093 $12,819 $13,844
Gross margin $88,600 $108,372 $117,907 $124,981 $134,980
Other revenue [source] $50,000 $0 $0 $0 $0
Interest income $0 $0 $0 $0 $0
Total revenue $138,600 $108,372 $117,907 $124,981 $134,980
Operating expenses
Sales and marketing $10,000 $10,200 $10,608 $11,244 $12,144
Payroll and payroll taxes $50,000 $51,000 $53,040 $56,222 $60,720
Depreciation $30,000 $28,458 $33,072 $33,708 $34,344
Maintenance, repair, and overhaul $1,340 $1,367 $1,394 $1,420 $1,447
Total operating expenses $91,340 $91,025 $98,114 $102,595 $108,655
Operating income $47,260 $17,347 $19,793 $22,386 $26,324
Interest expense on long-term debt $6,000 $6,720 $7,526 $8,430 $9,441
Operating income before other items $41,260 $10,627 $12,267 $13,956 $16,883
Loss (gain) on sale of assets $0 $0 $0 $0 $0
Other unusual expenses (income) $0 $0 $0 $0 $0
Earnings before taxes $41,260 $10,627 $12,267 $13,956 $16,883
Taxes on income 30% $12,378 $3,188 $3,680 $4,187 $5,065
Net income (loss) $28,882 $7,439 $8,587 $9,770 $11,818
Conclusion

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This report concludes that Hills Organic Farm is going to have the good market
opportunities in doing business in Malaysia. In addition, it is also identified that intensity of
competition will be high for Hills Organic Farm and thus it is recommended that they should
initiate market penetration pricing in their business. This report also discussed about the value
creation process of Hills Organic Farm by means of marketing mix and strategic manpower plan.
This will help them in gaining long term business viability in the Malaysian market. Business
sustainability process are also identified and discussed in this report.

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Reference
Beske, P., Land, A. and Seuring, S., 2014. Sustainable supply chain management practices and
dynamic capabilities in the food industry: A critical analysis of the literature. International
Journal of Production Economics, 152, pp.131-143.
Haenlein, M. and Libai, B., 2013. Targeting revenue leaders for a new product. Journal of
Marketing, 77(3), pp.65-80.
Lee, H.J. and Yun, Z.S., 2015. Consumers’ perceptions of organic food attributes and cognitive
and affective attitudes as determinants of their purchase intentions toward organic food. Food
quality and preference, 39, pp.259-267.
Sirianni, N.J., Bitner, M.J., Brown, S.W. and Mandel, N., 2013. Branded service encounters:
Strategically aligning employee behavior with the brand positioning. Journal of
Marketing, 77(6), pp.108-123.
Teng, C.C. and Wang, Y.M., 2015. Decisional factors driving organic food consumption:
Generation of consumer purchase intentions. British Food Journal, 117(3), pp.1066-1081.
Urbancova, H., 2013. Competitive advantage achievement through innovation and
knowledge. Journal of Competitiveness, 5(1).