IJM Plantation Berhad: Strategic Analysis and Management Report

This report provides a comprehensive strategic management analysis of IJM Plantation Berhad. It begins with an introduction to strategic management and the company's background, including its mission, vision, and objectives. The report then delves into an environmental analysis using PESTEL factors and an industry analysis employing Porter's Five Forces. A capability analysis follows, including value chain analysis and a resource audit, culminating in a VRIO model assessment. The report also examines strategic challenges faced by the company, such as the EU's palm oil import policies. Finally, the report evaluates the company's proposed strategy, offering insights into its suitability, acceptability, and feasibility, including a SAF analysis based on the TOWS model. The analysis covers various aspects of the business, including political, economic, social, technological, environmental, and legal factors influencing the company's operations, as well as the competitive dynamics within the plantation industry. This report offers a detailed overview of IJM Plantation Berhad's strategic position and potential future directions.

Strategic
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
2. Mission, Vision and Objectives..........................................................................................3
2. Environmental analysis .....................................................................................................4
3. Capability analysis............................................................................................................10
4.Proposed Strategy..............................................................................................................18
5.Strategy Evaluation.............................................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................5
.........................................................................................................................................................8

INTRODUCTION
Strategic Management refers to process of planning, monitoring and analysing activities
of a company which is required to attain goals and objectives (Ahlemann and et.al., 2012). This
report is based on IJM Plantation, Berhad which is a public trading company. Its headquarter is
situated in Malaysia and IJM Corporation is its parent organisation. Along with this, respective
company was founded in 1983 as well as there are subsidiaries companies which are working
under IJM Plantation such as Dynasive Enterprise Sdn. Bhd, Laserline Sdn. Bhd and many more.
This report explains about mission, vision and objective of respective organisation. Along with
this, analysis of macro environment with the help of PESTEL analysis. Therefore, capability
analysis, industry examination and so on assist in formulation of effective strategic plan. In
addition to this, respective company has also conducted resource audit as well as value chain
analysis which will help them to prepare their VRIO Model. Along with this, SAF analysis was
conducted on the basis of issues that was determined by TOWS model. This will aid organisation
that the strategy that they have chosen was suitable, acceptable as well as feasible.
Strategic Challenge:
According to the article published by Arthur Neslen (2018), EU institutions is defying by
UK in order to push hike of palm oil imports which have been linked to deforestation, leaked
document show (UK defies EU over Indonesian palm oil trade, leaked papers show, 2019).
European parliament has ban EU biofuels with the use of palm oil which incurred loss of 150000
orangutans in Indonesia since 2002.
2. Mission, Vision and Objectives
IJM Plantation Berhad along with its subsidiaries direct as an upstream agribusiness firm
in Indonesia as well as Malaysia. This company is indulging in process of cultivating of oil
palms, processing of fruit brunches into crude palm oil any many more. Mission, vision as well
as objectives of respective company is described below:
Mission
To maintain highest standards of performance in plantation and agribusiness
Vision
To be a leading regional plantation group
(Annual Report For The Financial Year Ended 31 March 2018, 2019)

Evaluation of Statements:
Mission as well as vision statements of an organisation is necessary to clarity to the
stakeholders. Analysis of the mission is based on criteria of clarity, focus and motivation. It is
explained as follows:
Clarity Mission of respective organisation is specific and clear which means in
order to maintain performance standard of plantation as well as agribusiness.
Focus Mission of IJM plantation is to concentrate on its core business in plantation
sector as well as agribusiness with vision to become the leading regional
plantation group. The main motive of this two statement is to enhance
market position and aware people about business and its product and
services.
Motivation Vision as well as mission statement are market oriented as it does not consist
any benefit of staff. As the mission statement describes about delivering
customers value of organisation. The vision statement states about inspiring
and motivating workers in order to accomplish goals and objectives of
company.
2. Environmental analysis
Macro trend analysis
Macro trend refers to external environment such as political, economic, social and other
factors which affect the functioning as well as operations of an organisation. In context of IJM
Plantation Berhad company in Malaysia are affected by these macro factors:
PESTEL Description
Political  These political changes have a great impact on the industries in
Malaysia. Though this country is free form corruption but has high
taxes and subsidies of government.
 But to operate business in Malaysia is effective. Industries like
plantation can operate their business effectively.

Economic  It means change in interest rates, exchange rate and many more.
Economic factor is favourable in Malaysia (Austin and Pinkleton,
2015). It is because this country provides economic opportunities and
is very popular location for international trade.
 Along with this, business operating in this country can easily perform
their transaction across the world. Therefore, economic factor for
plantation industry is favourable.
Illustration 1: Malaysia Corruption Index
(Source: Malaysia Corruption Index, 2019)

Illustration 2: Malaysia GDP Annual Growth Rate
(Source:Malaysia GDP Annual Growth Rate, 2019)

Social  Malaysia has a multi-cultural society and support immoderate of their
religion (Cartwright and Cooper, 2012).
 In this country, business must operate their business in ethical manner
and also take care of the needs as well as preferences of their societies,
communities and many more.
Technological  Malaysia has high speed of Internet as well as individuals used eco-
friendly vehicle as their source of transportation.
 Communication in Malaysia is defined by extreme form of politeness
as well as negotiation.
Environmental  Malaysia environment is deeply influenced by deforestation as well as
pollution. The country has effective policies for rainforest protection.
 Plantation industry, can effectively operate their business because
having facilities such as deforestation, rainforest protection, it will
bring a growth and development in the organisation.
Illustration 3: Malaysia Population
(Source:Malaysia Population, 2019)

Legal  Malaysia has several legal laws that every business operating in this
country has to follow it so that they can run their business in effective
and legal manner. Laws in Malaysia is based on British law
developments (Bang and et.al., 2012).
 Along with this, every organisation must have two directors as well as
it need to be a registered firm. These legal laws must be followed as
well as adopted Plantation industry in order to perform their day to
day operation as well as functions in effective and legal manner.
PESTEL Analysis Summary:
PESTEL Overall rating Opportunity/threat
Political
 Free from corruption
 Ease of doing business
Favourable Opportunity
Economic
 Change in rates
Favourable Opportunity
Illustration 4: Malaysia Average Temperature
(Source: Malaysia Average Temperature, 2019)

 Economic plans
Social
 Urbanization
 Business ethics
Favourable Opportunity
Technological
 High speed of internet
 Eco friendly vehicles
Favourable Opportunity
Environmental
 Pollution Unfavourable Threat
Legal
 Two directors Moderate Opportunity
Industry Issues (Porters Five Force Model)
These factors are described below in terms of IJM Plantation company:
Porters five forces Description
Bargaining power of Suppliers-High Plantation industry has a high impact of
supplier on their cost as well as production
(Conley, Bican and Ernst, 2013). Due to this,
companies operating in plantation industry
such as IJM plantation have to incur high cost
on their products. In addition to this, it also
have a great impact on profits of plantation
organisation.
Bargaining power of Customers-High: Plantation industry has high influence of
customers on their products. It is because there
are times when customer buy product in bulk
for which they pay low price to the company.
For example IJM plantation company have to
lower the price of their product so that they

able to gain sustainable profits.
Threats of new entrants-Low: Industry of plantation have less threat of new
entrants because they become barrier for the
new entrants. Plantation industry such as IJM
Plantation are not affected by current players
and they are able to maintain their profits as
well as chain of customers.
Threat of substitutes-Low: Plantation industry have less number of
substitutes which does not create barriers for
them. For instance, IJM Plantation company
does not have substitutes which provides them
opportunities to create strong customer base as
well as also fluctuate the price of product.
Competitive rivalry-High: Industry that belongs to plantation have large
number of competitors which affect their
operation as well as functions (DeWaal, 2013).
Plantation industry such as IJM Plantation
company have strong competitors which
influence their sales as well as profits.
Summary of Industry Analysis:
Porters Five Force Level of force Industry attractiveness
Bargaining power of Suppliers High Unattractive
Bargaining power of
Customers
High Unattractive
Threats of new entrants Low Attractive
Threat of substitutes Low Attractive
Competitive rivalry High Unattractive

3. Capability analysis
Value chain analysis:
Value chain activities Activities Value? Competitive
Advantage?
Primary activities
Inbound Logistics Plantation industry have
strong supply chain so that
they can supply their product
in different countries as per
the need and preferences of
the customers.
Strong customer base, increase
in profitability ratio.
Operations Plantation industry use quality
fertilizing seeds which aid
them to produce organic as
For better quality crop. Build
customer trust
Illustration 5: Value Chain Analysis
(Source: Value Chain Analysis, 2019)

well as eco-friendly products.
Outbound Logistics IJM plantation supply their
products and services in
different countries
Build strong chain of customers
and fresh good quality plants as
well as crops.
Marketing and Sales IJM Plantation company does
not make use of advance
technology due to which they
are not able to improve their
quality of their goods and
services (Ethiraj, Gambardella
and Helfat, 2016).
Better quality Products. Strong
brand image
Service IJM plantation provide quality
products as well as centre for
training and research.
Satisfy needs and preferences
of customers.
Support activities
Firm Infrastructure This company deals in the
production of plantation and
serve their products and
services at international level.
For smooth functioning of cash
flow as well as it also provide
support of rich resources.
HR Management HR management of Plantation
industry hire skilled and
talented employees as per the
need of company.
Experienced as well as skilled
employees to operate activities
which will aid in the growth of
an organisation
Technology Development Due to lace in use of advance
technology, respective firm is
not able to produce of
effective quality of products.
Provide quality as well as cost
effective products.
Procurement This company provides goods
and services at affordable
Better management of cost.