Strategic Recommendations for Old Chang Kee: A Business Report

This report provides a comprehensive strategic analysis of Old Chang Kee Pte Ltd (OCK), a prominent Food and Beverage (F&B) chain in Singapore. The analysis begins with an executive summary and introduction, followed by an examination of OCK's current financial situation. External and industry analyses are conducted using PEST and Porter's Five Forces frameworks to understand the competitive landscape. Internal analysis includes SWOT analysis, exploration of OCK's value, core competencies, and value chain activities. The report identifies key problems, such as customer loyalty and rising labor costs, and proposes strategic recommendations, including generic business and functional-level strategies. Finally, the report suggests changes in value chain activities, key measures, and environmental and social impact considerations during the implementation of the selected strategy.

Table of Content
Executive Summary (Elaine) 2
Introduction 2
Current Company Financial Situation (WJ) 2
External and Industry Analysis 2
PEST Analysis (to revise based on comments) 3
Define the industry 4
Application of Porter’s Five Forces to Old Chang Kee (WJ- to revise based on comments) 4
Internal Analysis 5
SWOT Analysis (Elaine) 5
Old Chang Kee’s Value (Kelvin- to link with Core competencies and value chain) 6
Old Chang Kee’s Core Competencies (Kelvin - to revise based on comments) 6
Value Chain Analysis (Kelvin )
(Below highlighted are examples from other group only) 7
Issue/Problem definitions (Below highlighted are examples from other group only) 8
Lack of Customer Loyalty 8
Rising Labour Cost 8
Development of Different Strategies 8
Generic Business Strategy (Below highlighted are examples from other group only) 8
Functional-Level Strategies - Human Resource Strategy and Efficiency (Below highlighted are
examples from other group only) 8
Selection of Alternative (Below highlighted are examples from other group only) 9
Implementation: 9
Changes in Value Chain Activities 9
Key Measures 10
Environmental and Social Impact Recommendation 10
References 10
Appendices 11
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1. Executive Summary (Elaine)- 164 words
The report sets to provide a thorough analysis of Old Chang Kee Pte Ltd (OCK) and its
potential strategic plan to achieve competitive advantage against its competitors and
obtain business sustainability in the long run.
This report covers a brief introduction of OCK and its current financial situation followed
by an in-depth eternal analysis of OCK in Singapore using PEST analysis and Porter’s
Five (5) Forces. SWOT analysis will also be used to analyse OCK’s strengths and
weaknesses as well as how it could explore opportunities and migrate possible threats.
Its value chain activities and core competencies will also be explored.
The crux of this report will identify the key problems that OCK is facing to improve from
its current position with two proposed strategies – generic business strategy and
functional-level strategy.
Finally, recommendations will be covered to identify the changes in value chain activities
during the process of implementation of the selected strategy and three key measures
will be suggested to track the implemented changes.
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2. Introduction (56 words)
In Singapore, buying comfort food could be as synonymously tied with Old Chang Kee
(OCK). The company has been producing quality products since 1956 (Rajaram, 2014),
with more than 90 outlets islandwide (Rajaram, 2014). As OCK is a Food and Beverage
(F&B) chain which sells mainly snacks, it possesses a wide array of food and services
that attract different consumer types.
3. Current Company Financial Situation (WJ)
Abstracting financial information from their annual report for the FY2018, OCK saw a rise
in profit, generating revenue of S$85.5 million, an increase of S$7.1 million (9.1%) from
their total revenue in FY2017 (S$78.3 million). OCK’s signature puff products
remained the major contributor to its revenue and accounted for
approximately 30.1% of the total revenue in FY2018, as compared to
approximately 31.8% in FY2017. Other income that contributes to the rise
comes from revaluation gains from the factories in Malaysia and Singapore,
an increase in government grants and disposal of unwanted assets.
OCK will be geared to improve their business even further, with new factories
in Woodlands and Malaysia opening by FY2018, as well as the well-accoladed
flagship outlet in London, United Kingdom, giving them a foothold and good
publicity for future expansion. Efficiency of existing factories will also improve,
pushing the system that is already effective even better.
4. External and Industry Analysis
4.1. PEST Analysis (to revise based on comments)
Political
OCK have been around most of modern day Singapore, thus they are well-
acquainted with the way political changes affect the country. OCK’s UK flagship
store has recently reached out to the Lesbian Gay Bisexual Transexual Queer
(LGBTQ) community of the UK, showing their support for the community. This gives
the local LGBTQ community a comfort in knowing that a company with strong local
roots supports the cause. However, they have yet to reach out to our local LGBTQ
movement, Pink Dot, sending a wave of confusion across the local LGBTQ
community, as seen by the comments section in major social media
platforms .despite operating in a fairly reserved country. But OCK has since chose
to keep mum about this . Coupled with the government’s interest in support the
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growth of Small to Medium Enterprise (SME) within the F&B to improve service
level and operational effectiveness, it reflects a positive political environment (Ying,
2017).
Economic
In 2016, the F&B industry contributes to $14.4 billion of the country’s GDP, and
enjoys a healthy employment rate of 300,000 men. Singapore government’s
International Partnership Funds started in 2017 to assist Singapore-based
enterprise as co-investors, in a bid to help local firms internationalise (Seah, 2016).
This assistance can allow OCK to accelerate existing overseas branches, bringing
in more revenue. With its recent announcement of increased profit margins and
enhanced operating facilities, OCK solidifies its place as a leader in industry.
Socio-Cultural
In addition to actively hiring seniors for continual contributions to the society, OCK
attained Halal certification to ensure that their products are catered to everyone
including Muslims. Despite all the upside of OCK, there are issues that are left
unanswered which caught up to them in the recent future. Singaporeans has
developed a healthier lifestyle where healthy eating has taken priority in choosing
food options. OCK has received backlash on their use of palm oil from
unsustainable source after a petition subscribed by 8000 citizens was made against
them. OCK has since made a switch to use sustainable palm oil (Toh, 2017).
Technological
Recent technological advancement allows OCK to tap into handheld platforms to
boost their business. The development of application-based services, like
Deliveroo, allows customers to order their food off the app, wherever they are.
4.2. Define the industry
From humble beginnings, OCK has grown to be Singapore’s iconic savory snack
brand in the savoury snack industry with flagship presence in Australia, UK and
Thailand. OCK has been around locally for more than 60 years constantly improving
their product, hence becoming a household name.
4.3. Application of Porter’s Five Forces to Old Chang Kee (WJ- to revise based on
comments)
Threat of New Entrants
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The threat of new entrants is moderate even though the industry is attractive in view of
the number of buyers. New entrants trying to enter the market would face difficulties
competing with locally grown powerhouse, OCK, and established global fast-food
chains such as McDonalds and KFC.
Threat of Substitution
As the government has focused on healthier living, consumers may turn from buying
savoury snacks to healthier options such as fruits and superfoods as their form of
snack or a meal (Rajaran, 2014). Hence, the threat of substitute is high.
Bargaining Power of Buyers
As they price their products affordably, it gives the buyer the chance to compare the
cost to other similar outlets. With the savoury snack market being competitive in
pricing, consumers have a reasonable amount of bargaining power with their choices.
With the accessibility of its outlets and reputation, OCK has an advantage against its
competitor. Thus the buyer would have moderate bargaining power.
Bargaining Power of Suppliers
OCK needs to establish good relationships with their suppliers as its stakeholder.
However, the bargaining power of suppliers is low as the quantity of orders for raw
materials are in bulk and manufactured in OCK’s own factory (Rajaram, 2014).
Rivalry among established companies
To increase sales and have an edge against its rivals, OCK has opened coffeehouse,
overseas flagship store in the UK, implemented mealtime promotions and even
participated in national events, such as National Day. The rivalry amongst existing
companies are high and intense as each firm constitutes a strong threat to profitability
towards each other.
Overall, based on the analysis and value identification, convenience is becoming a big
factor in the savoury snack industry, thus with its evolution, OCK is currently doing
very well within a relatively attractive industry.
5. Internal Analysis
As part of the F&B industry, OCK have placed strong emphasis in locations of their
outlets (Old Chang Kee Ltd 2018). Strategic locations such as MRT stations that are
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convenient for office-goers and shopping malls for capturing sales from mall-goers. OCK
set up their own factory to supply to its business operations where cost effectiveness and
productivity were achieved ("Old Chang Kee: From a Small Stall to a Renowned Global
Snack Chain through Automation" 2018). The overseas venture to London has
strengthened its presence in the globe which enhanced OCK with an edge over its
competitors (Tan 2018).
Since 1956, OCK adopted a customer-orientated approach during its rapid expansion
phase (Tan 2014). Its continued effort in bringing the food varieties of best quality and
implementation of various payment methods strengthened its bonds with its clients (Tan
2014). OCK transformed its production facility to meet the requirements of the HALAL
certification to ensure that the Muslim community is not left out ("Old Chang Kee Ltd -
Corporate Profile" 2012).
5.1. SWOT Analysis (Elaine)
Strength
OCK prioritises branding as its key business development strategy. It promotes
distinctive flavours while conserving its heritage ("Old Chang Kee - Quality Food in
Singapore" 2012). In addition, the constant research and development of its products has
surpassed its competitors, proven by the reception of its target audiences. OCK has a
strong brand recognition established for producing hot snacks and lip-smacking quick
bites at affordable prices.
All OCK products, outlets and central kitchens are officially certified “Halal” by Majlis
Ugama Islam Singapura (MUIS) since 7 Jan 2005. This would mean that its products can
be consumed by all including Muslims. The HACCP certification achieved by OCK Fresh
helps to ensure that the food produced by them are of quality hence building customer’s
trust. OCK has been awarded the Influential Brands Awards as the TOP BRAND under
the F&B Kiosk category for five years from 2013 to 2017.
http://www.oldchangkee.com/our-awards.htm
Weaknesses
One weakness of Old Chang Kee could be its availability of delivery services for small
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orders which prevent it from competing against popular F&B chains such as McDonalds
and KFC. Secondly, OCK does not have a loyalty program in place to retain its
customers or attract new customers. There also appears to be a lack of promotions such
as discounts or cash rebates tied up with other organisations, credit card companies or
banks. For example, Polar has collaboration with PassionCard holders which allows
cardholders to enjoy 10% discount for purchases exceeding SGD10.
Opportunities
To catch up on the increasing trend of the world’s population reliance of mobile usage,
OCK can consider creating mobile application to build customer loyalty such as allowing
customers to accumulate stamps from every purchase in return of discounts or free
snacks from OCK.
With competitors providing delivery services to increase market share, OCK also should
entice customers who tap on convenience by collaborating with delivery vendors such as
Grab, Deliveroo
Threats
According to Alexandratos (2008), food cost are constantly increasing. There might be an
overall increase in the cost of raw food materials. This is when the business will get
affected in terms of rising food cost and therefore our pricing will be affected.
Another threat that OCK might face is hype of healthier food choice in line with the
Singapore’s government call to its people to stay healthy. With the increased availability
of healthier choice followed by the government’s call, an increase can be seen in
restaurants offering healthier menus as well as healthier choice symbol (HCS) (Tan,
Deurenberg-Yap, Ling, Naidu & Ai Ng, 2007).
Like many F&B industry players, OCK could face threats such as difficulties in hiring staff
and coping with increased of labour cost due to labour deficiency (Labour Shortage May
Be Biggest Challenge For Singapore Economy: MAS chief 2016).
5.2. Old Chang Kee’s Value (Kelvin)
The value of OCK to children would be the range of fried food on the menu.
With its pricing significantly more affordable compared to major fast food
chains, it attracts customers easily. To young adults and students, OCK is
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often that conveniently packaged comfort food that helps them stay awake
during lessons and lectures. The convenience of its various locations and
affordability of their products provide the working elites with convenient
meals wherever they go. For the older generation, OCK provides them with
job opportunities as they hire middle to old age to operate their various
outlets✔Interesting! (Old Chang Kee Ltd 2018). Value is created from its value
chain which translates into core competencies for the company. A company’s
core competencies are competitive advantages that gives the company the
edge over its competitors.
5.3. Old Chang Kee’s Core Competencies (Kelvin)
Old Chang Kee’s core competencies are its strong branding, prices, and collaboration
with the well-established companies. OCK is established in the early 1956 where its
savoury curry puff became its signature item which attracts people travelling from various
locations to purchase it for consumption (Tan 2014). Notwithstanding, the founder of
OCK is steering its company towards a social responsibility corporate where they give
back to society with their earnings and to employ elderlies as its staff (Liao 2015).
Although curry puffs are widely common in this food industry, its competitors are unable
to compete against OCK in terms of its flavour and prices. OCK understands that their
prices should be kept low as its target audience can range from young kids to people of
seniority, therefore it is essential to keep its business operations cost low to provide
affordability to its consumers (Ying 2017).
Furthermore, the collaboration with trustable and quality suppliers will equip OCK with the
base ingredients for its production line in a consistent manner.
Corporate Social Responsibility
Mr Han Kee Juan, the helm of OCK group, embraced the policy of favouring elderly
applicants as this is his way of contributing to the society (Liao 2015). This approach sets
OCK apart from its competitors as most companies would prefer employees of younger
age. With this approach, it strengthen OCK’s core competencies by narrowing the
distance between its consumers and the company. In addition, elderlies that are given a
chance to continue working in the field will provide OCK with its loyalty and commitment
to better promote the brand (Yusof 2019). The top management placed heavy emphasis
on safety and environment violations by constant reviewing its strict qualification process
for all working partners, ceasing any business relationships with any parties that were
involved in such cases (Koh 2018).
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Human Resource Management
F&B depend greatly on operations staff running its outlets due to its relatively high
turnover rate of 2.9% among all industries ("Labour Market Report Q1 2018" 2018). With
90 outlets being run by OCK in Singapore, the absence of employees would cause a
significant impact to OCK’s sustainability and generated income. Its Human Resource
(HR) management have received compliments from Singapore Workforce Development
Agency with the implementation of unique flexi-work arrangement for operations staff
where special arrangements could be made to accommodate work-life balance ("Helping
Employers Tap into Strengths of Older Workers" 2006). The loyalty of the employees
would translate into lower absentee rate and the ability of providing value-added services
to the consumers. Staff that are well-trained with its skills were able to rotate among
different workstations when required which will further translate into cost savings for
OCK.
5.4. Value Chain Analysis (Kelvin ) 256 words
Outbound Logistics
The outbound logistics are essential to OCK’s distribution network due to its high volume
of turnover in multiple outlets across Singapore (Old Chang Kee Ltd. 2018). Delivery were
made by vehicles with OCK’s brand, from its manufacturing facility to various outlets.
OCK strives to have its products on its shelves, minimising all down-time to provide the
convenience and assurance to its consumers therefore its outbound logistics have to be
well executed (Yusof 2019).
Convenience
OCK business expansion plans include the placement of their outlets in strategic
locations to suit the needs and convenience of its consumers (Tan 2014). Its kiosk were
mostly placed in MRT stations as well as shopping malls where human traffic are highly
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consistent. OCK’s snacks are readily made for consumers to choose and its staff to pick, clearing
the queue in the shortest time possible.
Quality
OCK strives to achieve consistency in its production by adopting automation technology
into its factory ("Old Chang Kee | Inspiring Stories" 2018). The use of automation in their line
assembly have greatly increased its quality and production output as line workers are
able to focus on manual tasks such as quality control and overall housekeeping of the
production line. In addition, with the attainment of HALAL standards certifies OCK in its
stringent quality control measures ("Old Chang Kee - Quality Food In Singapore". 2019).
Quality have to be consistent and is not achievable if
Marketing and Sales
OCK kept their business direction toward constant renewal and improvement. In the
times where consumers are equipped with more knowledge and higher buying power, it
is essential that OCK tag along with the trends for its marketing (Yusof 2019). These
include the use of social media platforms and their website to market their brand, not just
locally but also globally (Tan 2018). The continual launch of OCK products also display
the drive to promote its brand with its diverse food range, from savoury snacks to the sale
of food items like vicemilli and nasi lemak.
6. Issue/Problem definitions (AWJ - 411 words)
6.1. Healthier Change of Lifestyle in Singapore
A reason survey conducted show a change in the calorie intake a day, from 2600 in 2010 to
2417 in 2018 (cite). This shows that Singaporeans are taking a healthier stance towards
food choices, opting to consume healthier food options such as wholegrain, fruit and
vegetable that accumulated to lesser calories overall. A large part of OCK’s business,
including its other affiliated food chains, offers puff and fried food as their main part of their
business. Based on the healthy lifestyle trend, OCK may face tough challenge changing its
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business model to acclimatise to the changes in palette and getting themselves into the diet
of locals.
Threats of rival companies that provide for this change will pose great threat to OCK.
According to a survey done by Nielsen, 75% of Singaporeans are willing to pay more to eat
healthier. Eatery such as the Daily Cut offers meals high in protein and low in
carbohydrates, making such food item more preferred than OCK’s. There are even firms
that delivers healthy food right to your doorstep, catering to busier citizens that wants to
pursue such lifestyle (cite). This will make OCK lose even more ground in the industry.
6.2. Political Influence on Overseas Branch
Expanding overseas has always been a telltale sign that a company has reached new
strides in business expansion. But the risk of the business succumbing to political effects is
ever relevant, especially for OCK. OCK’s only expansion, its flagship store in the UK, is
currently undergoing a political movement that is removing themselves from the European
Union, the movement commonly known as Brexit. OCK established its first overseas
flagship store in the UK in 2016, the same year where they declared Brexit. Most economist
see it as a vote of confidence from OCK, choosing to invest in the nation amidst political
instability, at the same time not foresee drastic dip in performance in local firms operating in
the UK.
A close watch should be kept on food chains expanding in the UK, as they will be faced
with different challenges that will affect their decision on their stay. Such as tariff changes to
affect import of food items to support the business overseas. The price of food item will also
increase due to the change in tariff cost, and may increase the price of the puffs, which
already cost $2.80 euros. Effects of the price can be an issue if OCK wants to keep the
company going abroad (cite).
7. Development of Different Strategies
7.1. Generic Business Strategy (AWJ - 578 WORDS )
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Arenas
OCK going active in related industries can give them an edge over rivals. Being first
movers of their kind also allow them to set the market for other companies of a similar
kind in the future. An industry to move into would be the frozen food section. Pushing
sales of frozen fried delights, even puffs, allows OCK to give the customers an
experience where everyone can make their own OCK delights. Adapting to the palettes
of healthier living is also another way OCK can create other food items to diversify their
menu, at the same time offer customers choices where going to their outlet can also be a
healthy affair. With OCK’s status as a historic franchise, it can move into getting affiliation
with local tourism agencies, such as Singapore Tourism Board, to push their brand in
becoming one of their main food providers. As OCK is a uniquely Singapore flavour, it
allows the tourists and visitors to experience the country through their iconic delight.
Vehicles
OCK has to reallocate their resources to develop their research and development division
to create healthier options for their menu, or overhauling their menu to as a whole.This
will help them cope with lifestyle changes amongst the clients. Increase in the training of
the their staff will also value-add to their day to day operations, not only equip with the
knowledge of healthy living, but also the ability to deal with foreign clients. Working to tie
knots with major foreign credit providers can also assist them in working with tourists.
Differentiators
Having a good branding is not enough provide a big enough differentiator to set
themselves apart from their rivals. Improving their customer service strategy, such as
better staff training, a more user-friendly online website, as well as a call center to cater
to the needs their clients is a big step forward for a snack chain, giving a personalised
touch to every customer that patronises them.
Pushing pop-up stores in other overseas markets apart from the UK can help not just in
the diversification plan. It gives them a foothold in the foreign market, allowing them to
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