Business Strategy 13 BUSINESS STRATEGY Business strategy Name of the university Author note

BUSINESS STRATEGY 13 BUSINESS STRATEGY Business strategy Evaluation Name of the student Name of the university Author note Executive summary This report had discussed about the sustainability challenges faced by Wilmar along with the major problems in the palm oil industry. Introduction 3 Problem statement 4 Evaluation of the business strategy of Wilmar 4 Determination of the internal and external factors of Wilmar 6 Resource based view analysis 6 PEST analysis 8 Recommendations 10 Determination of the social responsibility 11 Conclusion 12 Reference 13 Introduction Management of the social

Running head: BUSINESS STRATEGY
Business strategy
Name of the student
Name of the university
Author note

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Executive summary
This report had discussed about the sustainability challenges faced by Wilmar along with the
major problems in the palm oil industry. The need for deforestation for lands in palm tree
cultivation is one of the challenges for this industry. Wilmar is getting criticized for their
negative impact on the environment. In this report, the internal and external analysis is being
done for Wilmar along with the analysis of the current business strategy of them. There are
number of limitations identified. These limitations can be overcome by means of a few
strategies, which are recommended in this paper.

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Table of Contents
Introduction......................................................................................................................................3
Problem statement...........................................................................................................................4
Evaluation of the business strategy of Wilmar................................................................................4
Determination of the internal and external factors of Wilmar.........................................................6
Resource based view analysis......................................................................................................6
PEST analysis..............................................................................................................................8
Recommendations..........................................................................................................................10
Determination of the social responsibility.....................................................................................11
Conclusion.....................................................................................................................................12
Reference.......................................................................................................................................13

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Introduction
Management of the social responsibilities is one of the ways of gaining competitive
advantages in the current time. This is due to the reason that contemporary business entities are
facing the challenge of the social organizations such as NGOs in their business operations.
Probability of emergence of negative branding is more in the current time and thus the
contemporary business entities are initiating and focusing more on the social responsible
activities to ensure their positive branding (Epstein 2018). However, the companies who are
directly associated with the natural resources are facing the major challenge of managing their
social image due to the reason their business activities are having direct impacts in the
environment. For example, the palm oil industry is facing the same issue in managing their social
responsibilities. With the current increasing trend for palm oil due to their alterative usages, this
industry is also increasing at a rapid rate. This is further creating pressure on the environment
because forest lands are getting acquired for the palm tree plantation (Mba, Dumont and Ngadi
2015).
Rapid rate of deforestation is causing reduction in the green cover from the earth,
increase of carbon emission and destruction of the biodiversity including the flora and fauna. In
the current time, deforestation is getting caused by different means and growth of the palm oil
industry is one of the major contributors. The increase in the demand for palm oil is creating
opportunities for the palm oil producers and they are acquiring vast forest lands for palm tree
plantation (Choong and McKay 2014). In addition, palm tree industry is also accused for the
destruction of the biodiversity and human rights abuses. Wilmar being the market leader and
biggest player in this industry is also accused for the same. They are accused for their alleged
new investment in Nigeria, which is criticized by the NGOs for abusing the human rights and

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environmental degradation. Hence, it is important for them to come up with more sustainable
solutions, which will be beneficial for all the stakeholders involved.
This report will discuss about the major problem being faced by Wilmar in their business
along with determination of their current business strategy. In addition, the internal and external
analysis will also be done, which will help to identify the key areas of improvement and
strengths. A few steps will be suggested in this report that will help Wilmar in overcome their
identified challenges.
Problem statement
The problem identified for Wilmar is catering the increasing demand for palm oil across
the world along with managing their business sustainability and socially responsible image. This
is challenging for them because it is important for Wilmar to increase their production process to
meet the growing demand in the market and maintain the market leadership status. However,
with the increase in the production and operational facilities, more forest lands are getting
acquired for the added land resources for cultivation of palm tree cultivation. This is causing
criticisms from the side of the social organizations and larger communities for affecting the
forests reserves. Hence, the major challenge for Wilmar is to increase their business operation
without affecting the social factors.
Evaluation of the business strategy of Wilmar
Evaluation of the business strategy of Wilmar is important because based on the current
business strategic intent of them, it can be concluded whether they are effective or not. Based on
the reports including the annual reports, Wilmar is following number of business strategies
including product development strategy, market development strategy and strategic alliances

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(CARTWRIGHT and Cooper 2016). Thus, multiple strategies are being followed by them. It is
also identified that the mission statement of Wilmar is to provide the maximum value to the
customers in the most sustainable way. This denotes the fact that customer value is the most
focused element for Wilmar but sustainability is also mentioned. However, in this case, the
sustainability might be in terms of alternative fueling advantages palm oil over the non
renewable energy sources. On the other hand, the vision statement of Wilmar states about the
target of maintaining their market leadership in the global palm oil industry. This denotes that
increasing in the production process will only meet their vision of global market leadership,
which might be detrimental towards managing the environmental sustainability.
In terms of the product development strategy, Wilmar is venturing in new products such
as packaged palm oil brands for domestic customer use and industry supplies of fuel based palm
oil to the concerned stakeholders. This is helping Wilmar in targeting and catering to the larger
customer segments and generates higher sets of volume and profit margin. In addition, it should
also be noted that Wilmar is having diversified businesses apart from their palm oil sector, which
is also denoting their product development and business diversification strategy (Alessandri and
Seth 2014). In terms of the new market development strategy, Wilmar is already operating across
the world and tapping new regions for both market opportunities and business facilities. For
example, their new venture in Nigeria is also the part of new market development strategy. In
terms of the strategic alliances, Wilmar is having number of mergers and joint ventures with
different entities across the world (Ozmel, Robinson and Stuart 2013). For example, they are
partnered with PZ in their new venture in Nigeria and they are partnered with Ocean Nutrition in
the Canadian markets. The major advantage that is being gained by Wilmar from the initiation of
the strategic alliances is the higher market penetration in different markets by leveraging on the

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competitiveness of the partnered firms. Moreover, it can also be concluded that Wilmar is
following both vertical and horizontal growth policy in their global business operations.
Determination of the internal and external factors of Wilmar
Determining the internal and external business factors will help to identify the key areas
of improvement for Wilmar and the areas where they should be more focused. In doing so,
resource based view will be used for determining the internal factors and PEST analysis will be
used for determining the external factors.
Resource based view analysis
According to the resource based view, the first step is to identify the tangible and
intangible resources, which adds value to the entity. Among the tangible resources, the major
ones are financial resources, equipments, assets and facilities of Wilmar and intangible resources
include the trademarks, patented technologies and brand goodwill in the market. Thus, it is
important to determine the extent to which these resources are adding competitiveness for
Wilmar and the resources to be improved. VRIO analysis will be done in this case.
Valuable Rarity Inimitability Organizational
capability
Financial
resources
  
Equipments  
Facilities  
Land resources  

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Trademarks    
Technologies    
Goodwill   
According to the above tubular analysis, it is identified that each of the identified
resources for Wilmar is adding value in their business. In terms of the financial resources, they
are adding value by enabling them in further investment. With the access to huge financial
resources, Wilmar is having the capability of further investing in the new markets and maintain
their market leadership status (Pang, lee and DeLone 2014). In addition, the financial resources
of Wilmar are inimitable in nature due to the reason that no other competing firms in the palm oil
industry are having the capability to match the financial power of Wilmar and will also be
difficult to match. In terms of the facilities and assets, Wilmar is also gaining value due to the
fact that their operational facilities are strategically located around the world. This is helping
them in tapping the potential markets across the world. Wilmar is also capable enough in
managing their worldwide business with their expertise (Nieves and Haller 2014).
In terms of land resources, it is not adding value to Wilmar due to the reason that there
are number of criticisms being faced by them due to their land resources such as in the case of
new venture in Nigeria. This is affecting their brand value and goodwill in the global market.
However, this resource is difficult to imitate because of the huge investment and global presence
required. No other competing firms in the world are having the worldwide access to land
resources as Wilmar and it is also further helping Wilmar in gaining the geographical
advantages. For instance, certain African regions are the home for palm trees and thus suitable
climatic and natural conditions are being gained by them (Qwen Raddats and Burton 2014).

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Trademarks are the major source of gaining competitive advantages because it is the key
differentiating factor in the market. The trademarks of Wilmar are rare and inimitable in nature
because it is legally protected as well as challenging for other firms in gaining the same value
and identity as Wilmar. The technologies are also being considered as a source for
competitiveness due to the reason that the efficiency that is being gained by Wilmar is not
comparable to others (Hall et al. 2014). The patented technologies of Wilmar also cannot be
imitated by others. However, in terms of goodwill, it is identified that Wilmar is not capable
enough in managing them because goodwill is being affected due to their unethical approach in
the business.
PEST analysis
Political factors In terms of the political factors, the major challenge for Wilmar is facing
the different political scenarios in different countries. They are having
their operations across different countries and each of these countries is
having different regulations and legislations. This is causing Wilmar in
facing stricter regulations in the developed countries and weaker rules in
the developing and underdeveloped countries (Feintrenie 20140. Political
risks are also more for Wilmar due to the requirement and involvement of
huge investment. For instance, Wilmar invested huge in their Nigerian
operations and if it gets stop for the issues emerged, then the loss will be
big.
Economical factors Wilmar is facing considerably favorable economic conditions due to the
increasing demand of the palm oil in different sectors. However, the
major challenge is the negative goodwill. This is due to the reason that in

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recent time, there are good number of criticisms being faced by Wilmar
for their business operations, which is further reducing their viability
among the shareholders and investors (Alonso-Fradejas et al. 2016).
Thus, the economical viability is getting reduced for Wilmar. Emergence
of the global economic recession is also a major challenging for Wilmar.
Social factors In terms of the social factors, Wilmar will face the major challenges
because of their negative branding in the market. The more will be the
emergence of issues similar to what happened in Nigeria, the more will
be the negative branding in the market for Wilmar. They are operating
across the world and are thus facing the diversified social situations in
different regions (Castiblanco, Etter and Ramirez 2015). The uprooting
of the communities due to the encroachment of lands is creating negative
impression among the customers and will affect the long term market
potentiality of Wilmar.
Technological
factors
In terms of technology, the major challenge for Wilmar is to develop
strategy, which will be effective, efficient as well as sustainable. This is
due to the reason that technology is only factor based on which they can
initiate the business sustainability. As identified in the above analysis,
Wilmar is already having the access to some patented technologies.
However, currently, they are having the need for such technologies that
will reduce the requirement for acquisition of new forests lands for
increasing production level (Wisena et al. 2014). Moreover, it should be
noted that huge investments are involved in research and development of

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new technologies, which will further increase the risks for positive return
on investments. In this case, Wilmar is having the challenge of accessing
same level of technological infrastructure in different countries.
Recommendations
The above internal and external analysis has identified a number of positive and negative
factors. On the basis of the negative factors, the following section will discuss about a few
recommended steps that will help in overcoming them.
It is recommended that Wilmar should initiate the strategic alliances with some of their
competitors rather than new or different players. This is due to the reason that existing players in
the palm oil industry are already having own land resources and cultivation and thus strategic
alliances with them will help Wilmar to gain the increased areas without new land acquisitions.
In addition, with the help of the horizontal integration, Wilmar will also gain competitive
advantages due to the reason that intensity of competition will get reduced for them. The
potentiality of the strategic alliances between the competitors in the same industry will be more
as they both will have expertise and knowledge in doing business in the industry. Hence, this can
be a viable and effective option for Wilmar in improving their existing business strategy. It is
also recommended that Wilmar should invest in the regions where palm tree is having natural
climatic conditions and where the palm trees are native. This will help Wilmar in gaining the
maximum productivity from the plantation. The change in the soil structure and composition due
to the palm tree plantation can also be avoided with this strategy. The soil where the palm tree is

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native will not change its composition due to the plantation process. Hence, sustainability can be
improved along with productivity.
Technological development or change is needed because technological change will help
Wilmar in increasing their existing production rate without increasing the plantation area. This is
due to the reason that technological improvement will increase the efficiency of the available
areas and Wilmar will have no need to increase the plantation for increasing production. In terms
of the marketing, this factor should be used as the point of differentiation, which will further
reduce the negative perception about Wilmar in the market.
Determination of the social responsibility
One of the major stakeholders of Wilmar that will be impacted by the recommended steps
is the upper level managers. This is due to the reason that upper level managers are facing the
lawsuits and other barriers for the land acquisitions such as in the case of Nigerian project. Thus,
with the implementation of the recommended steps, the need for land will get reduced and thus
the upper level managers will find fewer barriers. Moreover, the upper level managers will also
be able to concentrates and invests more in the internal development over the new area
development (Orsato, Clegg and Falcao 2013). Thus, it can be concluded that potential
consequences of the recommended steps will have favorable impacts on the upper level
managers. However, they may find ethical dilemmas if the recommended strategy is not offering
the desired outcome. In that case, the managers will find it difficult in alternating between the
sustainability and profitability.
On the other hand, another stakeholder that will also be impacted from the recommended
steps is the local communities. These communities are the direct victims as they are to be

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uprooted for the land acquisitions. However, with no need of land acquisitions in place,
communities will not get uprooted and their interests will be saved. In this case, the major
consequences for them will be positive and favorable. However, the ethical dilemma for the
communities will be to balance between protecting their native place and huge compensation.
This is due to the fact that if the lands are not getting acquired, then the communities will also
not get huge compensation for the uprooting.
Conclusion
This report concludes about the amended business strategy of Wilmar. It is identified that
with the current business strategy in place, Wilmar is not sustainable enough and thus facing the
wrath of the social organizations. Business sustainability is important in the palm oil industry
considering the extensive environmental degradation being done by them. In terms of this factor,
this report concluded a few strategies that can further help in developing the long term viability
for Wilmar. The internal and external environmental analysis also identified the challenging
scenario for Wilmar. It is concluded that Wilmar is having the need for more efficient process to
increase the rate of production with the existing resources.

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