A Case Analysis on Biscuits (Monde Nissin Corporation)

 

SYNTHESIS:

Monde Nissin Corporation is the country’s market leader in the dry bakery industry, having consistently making it since 2000 in the highest position a dry bakery product manufacturer can reach in the “Top 1000 Corporation in the Philippines”.

Since its first fast-selling biscuits, Nissan Butter Coconut and Nissin Waffer, rolled out of its Laguna Plant in 1980, Monde Nissin Corporation have embraced delivering excellence through its intensive market research and continuous product innovation lead by its talented pools of people.

Subsequently, it also ventured into instant noodles in 1989 and introduced wet, dry and no-cook noodles in its Lucky Me! brands.

To further expand its market share and complete its line of dry bakery products, Monde Nissin Corporation bought MY San Corporation, the leading manufacturer of famous cracker brands: SkyFlakes, Grahams, and Fita, and which have settled, too, in the “Top 1000 Corporation in the Philippines”.

Currently, Monde Nissin Corporation products are under the brand names: Monde, MY San, and Lucky Me!

POINT OF VIEWS:

The analysis, alternative courses of action, recommendations and action plans in this paper were proposed while under the point of view of a market researcher/practitioner and were approached under the given year 2003, 2004 and 2005.

STATEMENT OF THE PROBLEM:

This paper treats Monde NIssin Corporation and Monde MY San Corporation separately, and aims to answer the question: How can Monde Nissin Corporation increase their market share in the biscuit and cookie industry and other dry bakery products? for Monde Nissin Corporation only.

OBJECTIVES:

To be able to increase the market share of Monde Nissin Corporation, this case analysis is guided by the following objectives:

  1. To identify and to analyze the position of Monde Nissin Corporation in the biscuit and cookie industry in the Philippines for the year 2003, 2004 and 2005
  2. To propose courses of actions and to evaluate which among it can yield the highest market share for Monde Nissin Corporation for the year 2005

 

AREAS OF CONSIDERATION:

Terminologies:

  • Dry Bakery Products / Dry Bakery Market – refers to biscuits, cookies, pretzels, crackers, and similar other goods. Instant noodles not included.
  • Instant Noodle – will refer to noodles industry/market
  • Snack Foods – “in-between” hunger meals that quickly resolve a person’s starvation before or after regular meals took placed.
  • Substitutes – products or services that have different forms but offer the same functionality or core utility (Kim & Mauborgne, 2005)
  • Alternatives – products or services that have different functions and forms but offers the same purpose (Kim & Mauborgne, 2005)

Constraints of the Study:

  • Revenues for Monde Nissin Corporation and Universal Robina Corporation were not provided to properly identify their position among the selected players in the 2003-2004
  • A total of 40% market hold in the entire dry bakery industry were given to both Monde Nissin Corporation and Monde MY San Corporation, declaring both companies to be the highest player of all
  • Although Monde Nissin Corporation was declared to be the leading manufacturer of dry bakery products in 2005, having taken the number 50 slot of the “Top 1000 Corporation in the Philippines”, it is still unclear whether its revenues have been mostly from its dry bakery products or from its instant-noodle brand, Lucky Me! It is therefore unclear whether Monde Nissin Corporation is truly the market leader in the dry bakery industry.
  • SWOT Analysis can not properly be provided as the data for the company’s Strengths and Weaknesses are insufficient to actually make a good analysis, and whatever will be indicated will be by assumptions only.

Assumptions:

  • Monde M.Y. San Corporation contributed more in the 40% biscuit and cookie market share it holds with Monde Nissin Corporation
  • Manufacturing dry bakery products only, Monde MY San Corporation positioned at slot 260 last 2005 in the “Top 1000 Corporation in the Philippines” presents that solely manufacturing dry bakery products can go as far as it had reached back then; With Universal Robina Corporation following at slot 485.
  • The Lucky Me! products strongly pull up the revenue of Monde Nissin Corporation declaring it the market leader in both the instant noodle and the dry bakery categories.
  • Monde NIssin Corporation, Monde MY San Corporation, Universal Robina Corporation, Republic Biscuit Corporation, and First Choice Food Corporation are the country’s largest and leading dry bakery product manufacturers, having all the research and development facilities, strong advertising campaign and wide market reach.

Frameworks and Analysis:

  • Porter’s Five Forces Analysis:

Industry Competitors

The competition in the dry bakery market is divided into three groups: uthe Large Manufacturers, which produce the popular biscuit and cookie brands found in the supermarkets down to sari-sari stores; vthe Neighborhood Bakers, which often sell newly-baked dry bakery products on per piece basis, are within the neighbors’ reach and are available to the localities most of the time, and wthe Cottage or Backyard Producers, who make specialty biscuits and cookies using traditional or secret recipes and are personally sold either seasonally or on per request basis in much higher prices.

In summary, there is a high industry competition in the market because there is a high number of industry players.

Potential Entrants

Since manufacturing dry bakery products, most specially biscuits, cookies, pretzels, and crackers, require low cost and by-volume-sold ingredients: flours, shortening, baking powder, sugar, milk, cheese and other dairy products; and are baked in large quantities, entering the industry is easy. As of the case was written, there were already sixteen (16) local and ten (10) foreign manufacturers competing in the dry bakery market share, all catering to introduce new products or to new customers through their own advertising campaigns based from the market studies done by their own research and development facilities.

In summary, there is a high potential that new entrants can join in the competition because of low capital requirements

 

Substitutes

Because of the high competition from the large manufacturers, neighborhood bakers and backyard producers, and the possibility of the rise of new entrants in the market, customers have numerous substitutes to meet their in-between regular meals hunger. Besides the substitutes, alternatives such as chips, chocolates, fruits and noodles are also roaming in the market.

In summary, there is a high threat of substitutes because of high competition between the minor and major industry players.

Buyer Power

Dry bakery products are distributed to groceries, supermarkets, convenience stores, and sari-sari stores, where priced are already printed and declared during purchases giving customers no other way to bargain. Besides these, the increases in number of supplies (including substitutes and alternatives) decreases the price making mostly dry bakery products available everywhere and to everyone, from class AB to CDE, so bargaining is really not applicable.

In summary, buyer power is low because availability of the dry bakery products is high everywhere and to everyone

Supplier Power

Ingredients in making dry bakery products are within reach of the manufacturers, who can either import or buy locally. And because manufacturers buy in volume, their bargaining power increases as their order, too, increases, getting a much lower price.

In summary, supplier power is low because there is a high availability of supplies in the country or outside the country.

  • Product-Market Expansion Grid:
Current Product New Product
Current Market Market Penetration

-Increase availability to international market

-Form alliances to companies that can compliment the Monde products

Product Development

 

-Introduce mini cakes, breads  and pretzels to compete with Rebisco’s and Universal Robina’s

-Introduce a product that could compliment the product of another company (Promotional Alliances)

New Market Market Development

-Form a new specific market segment that is everywhere in the country and that can people relate to such as: students / employees/taxi or jeepney drivers/ entrepreneurs

-Export the products to countries with still zero exposure about the brand

Diversification

 

Moved the organization into manufacturing instant noodles alone.

– Manufacture chips and curls to compete with Rebisco’s and Universal Robina’s

  • Opportunity and Threat Matrices

Opportunity Matrix

Success Probability
High Low
Attractiveness High uForm alliances (product or pricing) to companies that can compliment the Monde products

v Increase availability to international market

wIntroduce a product that could compliment the product of another company (Promotional Alliance)

yForm a new specific market segment that is everywhere in the country and that can people relate to, such as: students / employees/taxi or jeepney drivers/ entrepreneurs

zIntroduce mini cakes, breads  and pretzels to compete with Rebisco’s and Universal Robina’s

Low xExport the products to countries with still zero exposure about the brand {Manufacture chips and curls to compete with Rebisco’s and Universal Robina’s

|Moved the organization into manufacturing instant noodles alone.

Threat Matrix

Probability of Occurrence
High Low
Seriousness High -Competitors strongly advertise to reach greater number of the market

-Increasing number of substitutes and alternatives

-Customers spending is not concentrated on food alone; communication (cellphone load) and transportation expenditures  and are eating up the customers allowances.
Low -New entrants can easily enter the market because the industry does not low capital requirements. -There is no room for buyers to bargain

– Supplier bargaining power is low

ALTERNATIVE COURSES OF ACTION

ACA #1: Form alliances (product or pricing) to companies that can compliment the Monde products

Example: Buy one Get One

 

Pro(s):

-Alliances between another companys’ products will uintroduce to customers complimentary goods that will best be suited when consuming Monde biscuits and cookies, vwhich will increase both products’ market share and wwhich will form strong lasting relationship between the products and the organizations as well. With this in line, xcommunication campaign expenditures will be diminished as it will be divided between partners.

Cons(s):

-The Monde brand and products will be affected when something went wrong with its complimentary good, and vice versa.

-There might be a exclusivity deal that would close any other opportunity for Monde for a specific period.

ACA #2: Increase availability to international market

Pro(s):

-The Monde brand and products will be known to a greater market outside the country and will be appreciated and embraced by other nationalities other than the Filipinos.

Cons(s):

-Expansion of man-power

-Restructuring of the organization

-Increase of equipments and warehousing facilities

ACA #3: Introduce a Monde product that could compliment the product of another company (Promotional Alliance)

Pro(s):

-Attract specific market segment depending on the complimentary goods chosen as partner

-Will create a niche market

-Increase revenue for a particular target line, product, and period.

Cons(s):

-Creation or remodification of a Monde product will affect production line

-Packaging will be changed from its usual to compliment the other product

-Inventory management will change and be affected

 

 

 

 

 

 

RECOMMENDATION

 

ACTION PLAN

 

 

 

 

 

 

 

 

 

 

 

REFERENCES

Top 1000 Corporation in the Philippines. (vol 21 2007). BusinessWorld, pp.70,78, 111,171.

Kim, W. C., & Mauborgne, R. (2005). Blue Ocean Strategy. Boston, Massachusetts: Havard Business School Press.

Omaña, R. M. (2006). A Bite of the Biscuits and Cookies Market in the Philippines. Retrieved from Agriculutre and Agri-Food Canada: http://www.ats-sea.agr.gc.ca/asean/4332_e.htm

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About marvzmartinez
an Engineer

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