Company analysis.

Taylor’s Scientific Management Theory stated approach that is, develops a standard method for performing each job, but in some situation Individual are different from each other so the most efficient way of working for one person may be inefficient for another, or in other situation the economic interests of workers and management are rarely identical, 

so that both the measurement processes and the retraining required by Taylor's methods are frequently resented and sometimes sabotaged by the workforce. Some resolvent is recommended, senior management from IJM can resolve the issue through direct communication, questionnaire and interview to understand each employee’s character, thought, and requirement, thus IJM can create a win-win situation that fulfill employee needs, increase company profitability, and elimination of inefficiencies. 

From the Max Weber’s Bureaucratic Theory that apply in IJM, we can know that there is a tall hierarchy in IJM among offices and department, it cause making decision-making slow or even impossible when facing some unusual case, and similarly delaying change, evolution and adaptation of old procedures to new circumstance. 

So we recommend that IJM can reduce the hierarchy level by remove department that are inadequate or irrelevant for company’s latest business strategy, IJM also can merge those small department into one in order to increase decision making speed and information flow in the company. This is in order to ensure that the company will maximize the profit and minimize the risk to the lowest possibility.

IJM Corporation Berhad will have some of the benefits when they apply the Weber’s bureaucracy concept. Bureaucracy can enhance the speed of IJM Corporation Berhad in the operations by promoting the rules and regulations of work and a chain ofcommand. Because each of the departments have their own specialize and expertise. This will help the IJM Corporation Berhad to minimize the mistake that maybe did by employees. Other than this benefit, employees in the IJM Corporation Berhad will feel that they have job security and protected such as a steady salary, and other perks, like insurance, medical and disability coverage, and a retirement pension. On the other hand, bureaucracy also has some cons. One of the limitations is bureaucratic regulations and rules are not very helpful when unexpected situations arise. Bureaucratic authority is notoriously undemocratic, and blind adherence to rules may inhibit the exact actions necessary to achieve the IJM corporation Berhad goals.

Other than Weber’s bureaucracy concept, IJM Corporation Berhad also has applied the Taylor’s Scientific Management theory. This theory has some strengths and weaknesses. For the weakness is individual are different from each other. The most efficient way of working for one person may be inefficient for another. Furthermore, IJM Corporation has much of employees. Each employee may have their own way for handle the task. Their work may not perform well because all have to follow the procedures. 

As a result, the employees who wanted to perform to the best of their capabilities were forced to conform to an informal, group-made norm that was always lower than their optimal performance. Other than weakness, Taylor’s Scientific Management theory also has strength. One of the benefits by using this theory is IJM Corporation employees can focus on the individual task and worker level. This can help the management to supervise and monitor closely with the employees. As a result, this can increase the productivity of the work. 

 

The reason because of which IJM plantations have been able to meet the increasing needs from the refineries is because with each passing year more and more of their planted acreage is moving towards the maturity stage, which in effect means more and more crude oil can be extract by the company from the “matured” fruits. “ IJM Plantations has a total acreage of 78,981 acres, of which 51,507 acres have been planted and 22,225 acres have matured” ( ).

Maturity profile of planted acreage Source:

The fact that IJM plantations only performs a regional geographic segmentation strategy, focusing on Sabah only, they are better equipped with utilizing their resources to produce better quality oil and effective distribution. “Personal Selling is being used by the plantation as a communication tool” (Velayuthan, 2005, pers. Comm., 19 Sept), which has made it easier for the refineries to understand the product offered and the value adds effectively. This has also given IJM a chance to understand the needs and requirements of the refineries in a better way.

Competition

Essentially there has “no direct competition” (Velayuthan, 2005, pers. Comm., 19 Sept.) in the plantations industry, every channels distributor is relying on each other to survive because of the price factor is fixed under market sales. But plantations companies they do compete in terms of “operative efficiencies and technologies” (Philip, 2005, pres. Comm., 7 Oct.) and based on the industrial size. For example, IJM medium-size plantations compete with other medium-size companies such as Golden Hope, and KLK plantations on operatives and technologies efficiencies. For the indirect competitors, Soybean is the key oil competing with palm oil in the international market.

Smaller plantations companies have to rely on other medium plantations companies such as IJM plantations to collect palm oil fruits and send to mill for extraction into crude palm oil. In order for IJM to extract more output, their estate palm oil fruits quantity are limited and therefore smaller companies palm oil fruits are needed to collect for extraction to increase crude oil output for IJM. Crude oil is then supply to other larger plantations companies such as IOI, and PPB plantations refinery to refine oils and with “licensing by Malaysia Palm Oil Board (MPOB)” (www.mpob.org, 2005) market out to the “four main palm oil export countries that is India, Europe, China, and United State of America” (Vince, 2005).

IJM plantations Berhad have the sustainability in the market because of the following reasons:

Investor in people Pro-base road technology in Desa Talisai South estate for better environment to workers IJMP conducted training programmed for all its conductors, plantation cadets and estate assistant managers in order for them to be more knowledgeable on the plantations industry. Care for environment IJM participated in the “free burning zone” policy. Networking and sharing with the public on the oxbow lake conservation area. Returning to community Building schools for workers children in the estate area.

PEST Analysis

 

Political Environment

· The “state sales tax increase from 5 % to 7.5% in 2005” (Raj, 2005). The implication for the IJM plantation is that they have to generate more revenue to cover the cost of the state sales.

Economic Environment

· In year 2005, the Prime Minister decided to de-peg the ringgit in order to strengthen the Malaysian ringgit. These in turn make an impact on the price of the palm oil to “decrease from RM1, 400 to RM1, 380 per tonne in April 2005” (Velayuthan, 2005, pers. Comm., 19 Sept.). However, this is not a major implication to the company as IJM plantation assumes a fluctuation of price from now and then depends on the world economic.

Social Changes

· In these days, the society is becoming more health conscious. As a result, they are more concern and careful with the consumption of food. There are several reports shows that palm oil does promote heart disease (http://www.cspinet.org/palmoilreport/) (palm oil report-heart disease). This is a negative implication to the SBU, therefore in order to increase the consumption on palm oil and to minimize the health impact, IJM plantation do intensive research and development with the establishment of “IJM plantations Quality, Training and Research Centre in 2002”.(IJM plantations Annual Report, 2005).

Technology Changes

· IJM is adopting and implementing the Integrated Pest Management. The integrated approach is calls for “amalgam different techniques” (IJM annual report, 2005) to maintain a high level of biodiversity in the estates, which in turn serves to keep the level of pest population below the established thresholds. By implementing the approach, it will enhance the quality of the crop as it minimizes the usage of pest.

· “Bio-composting facility” (IJM annual report, 2005) was established to set the goal for the ‘zero waste’ for its palm oil mills. This facility enables the IJM plantation to convert mills waste into natural fertilizer. Besides, it also shows that IJM plantation is trying to protect the environment and ensure a sustainable agribusiness

SWOT Analysis

Analysis of products

Strengths Oil palm can harvest everyday Able to produce good quality palm oil by doing consistent R&D Small plantation player with the younger state Downstream activities Production cost will reduce as plantation matures	Weaknesses Limited growth of opportunity because of increasing forest reserve in Sabah. No refinery activities.
Opportunities · Benefit from current high CPO prices	Threats Tight competition with other strong market shareholders in the industry.

Analysis of competition

Strengths Substantial R&D is being done to improve on current product quality. Extraction 21% and compare to the industry is only 20%. Efficient palm oil supply chain	Weaknesses Golden Hope is expanding their plantations to Indonesia because of limited availability of land. KLK gain more competitive advantage as they improve technologies
Opportunities Spot price-the price of the palm oil change depend on the market environment, which means lesser threats from the competitors as most of them are following the spot price.	Threats U.S is promoting “Cruel Oil campaign”. Spot price will limit the opportunities for growth.

Analysis of customers

Strengths · High level of customer satisfaction. · High brand awareness within the target market. · Most of the promotion is done through personal selling, which means a close relationship between corporation and customers.	Weaknesses May not fulfill “ALL” customer needs
Opportunities High product confidence and satisfaction Able to set “Premium Price” Dedicated Customer Service and Consumer Relations. Customers focus (e.g. responding to market needs.	Threats Changing consumption trend Increase cost in advertising due to increasing customer size. Increase of palm oil plantations portfolio of competitor brands.

Analysis of markets served

Strengths Personal selling approach makes it easier to understand the customer needs. Low distribution cost due to limited regional market segmentation.	Weaknesses Limited segmentation because the supplier of the crude oil is made only to two refineries.
Opportunities Increase the segmentation with the introduction of refined palm oil. Improve and focus more on distribution channel.	Threats Others small plantations are potential competitors. Unable to meet the increasing needs of Crude Palm Oil throughout the world due to limited plantation size.

Internal Corporate Analysis

Strengths Stable internal structure. Sixth largest land-bank in Malaysia Steady increase in the number of employees to meet the operational needs, currently at 5046. Training Programs Constant update of technology for improved extraction. Cable car system being evaluated for efficiency in crop evacuation.	Weaknesses IJM has more focus on its core business of construction as the return on equity (ROE) is higher for construction as compared to plantations. Reduced plantation assets due to IJM restructuring. No refinery resulting in extremely limited market.
Opportunities Increase the market size by having a refinery and henceforth supplying refined to the end consumers. Increase in market share as more ‘immature’ and ‘young’ plantations become ‘mature’ Maintain internal stakeholders of the company, such as employees, satisfy with the steady internal structure.	Threats Loosing shareholders due to them loosing confidence in the company Other plantations taking over IJM with new innovative oil extraction methods.

Marketing Goals

• To capture more market share by using multimarket strategy as this will help the company to diversify the risk of serving only one market.
• Efficient distribution will contribute to higher sales volume.
• To create consumer awareness by using integrated communication tools.
• Profitability can be increased by applying diversification strategy and value-marketing strategy.

Recommended Strategies

Market Strategies

• Market Scope Strategy

Currently IJM plantation is exercising the single-market strategy because the SBU is concentrating its efforts on a single segment of a market. It is relevant for the company to apply the single segment market as the product is of business product. Therefore the target customer will be segmented in the same range.

Recommendation:

It is recommended that IJM plantation should move into multimarket strategy. It is made in relation to that IJM plantation plan to go into the downstream activities (cluster plant) to seek growth prospect in the oil palm refinery. By applying the multimarket strategy, the company is able to serve several distinct groups. Besides that, it will also enable the company to earn higher sales volume and capture more market share.

• Market-Geography Strategy

IJM plantation is currently using local market strategy. Presently, IJM plantation is a medium sized plantation so the company limits the distribution of production to the local market because IJM plantation does not have a refinery centre at the moment. Therefore, the company will be concentrating to serve the customers in Malaysia.

Recommendation:

National market strategy is recommended to the IJM plantation to seek growth in conjunction with the new plan to venture into the oil palm refining. With the new plan to be implemented, the new line of product will be export to the country such as China, India and Indonesia. The group believes that IJM is prepared to go nationally as IJM plantation have the available resources and are in the position to take risk.

• Market-entry Strategy

IJM plantation enters into the market after the market is in growth. Currently, IJM plantation is practicing the laggard-entry strategy. IJM is one of the followers to climb up the ladder of success to capture more market share.

• Market commitment Strategy

Currently, IJM plantation is at average commitment strategy.

Recommendation:

Followed by the introduction of the new refinery, IJM plantations should move forward into strong commitment strategy. Since the company is penetrating into the market nationally with the new product, IJM plantations should be more committed by doing in-depth research and development on the product to produce quality crude oil. This is in order to ensure that the company will maximize the profit and minimize the risk to the lowest possibility.