Yee Lee Firm Bhd group (YLC) is a holding company which is the edible oil repacker in Malaysia in 1968. Through its subsidiaries, it functions in four segments which are developing, plantation, trading and others which related to tourism services and investment holding. YLC not only manufactures baking oils and also as a marketing and distribution company which really helps to do marketing on beverages and distributing to customers. Its immediate subsidiaries are Yee Lee Trading Co. Sdn. Bhd. , Yee Lee Palm Oil Establishments Sdn. Bhd. , Yee Lee Edible Oils Sdn. Bhd. , South East Asia newspaper Products Sdn. Bhd. , Canpac Sdn. Bhd. , Intanwasa Sdn. Bhd. and Yee Lee Marketing Sdn. Bhd. In 1993, YLC was shown on the KLSE.
PEST analysis
Political Factors
In order to boost the demand of using palm oil, Malaysia federal government provides subsidies for that domestic use only since the cooking oil crisis in January 2008. This situation encourages more Malaysian to use preparing oil that produced by palm oil. Through the shortage time, federal negotiates with cooking food oil manufacturers to increase their creation capacity by using palm oil to produce cooking oil. Because of this, it encourages those housewives who like palm oil than others. Therefore, this has created a chance for Yee Lee Organization Berhad to produce preparing oil in low cost. This also good for YLC Berhad because using hand oil to create cooking food oil can reduce the cholesterol in the food while food preparation. Hence, their products are the first choice for individuals who want cook with low fat oil.
Economic Factors
Malaysia had opted through two recessions and two distinct slowdowns since 1970s. Each had its own causes and characteristics. The first downturn was at 1975 induced by the 1973-74's oil great shock, accompanied by the 1985 recession, which was dragged down with a pointed slowdown in global development. The 3rd was a steep recession in 1998 which caused by the Asian currency crisis, followed by the downturn in 2001, that was struck by the bursting of the dotcom bubble and terrorist invasion on the united states. The GDP also fallen about 45% since the crisis. So, to be able to encourage more people to use hand oil baking oil, authorities launched a marketing campaign "Palm Oil Reduces Cholesterol" to encourage visitors to use more cooking food oil that made by palm oil. Besides, federal also provides the subsidies for those low income households who are employing this cooking oil. Using this method advertising campaign, people can learn about the value of the GDP growth and also the current economic climate will be retrieved all together.
Social Factors
Malaysia is known as one of the most developed among the developing country. There are plenty of exported goods originated from Malaysia, especially palm oil. Palm oil is one of the world's most popular vegetable oils. In Malaysia, almost 80% palm oil is exported to other country. Just lately, there are a few issues about the oil industry which resources are limited. Due to the limited oil, municipality encourages Malaysian choose the baking oil which is made by hand oil. Therefore, YLC produces the cooking food oil by implementing the idea of palm oil-made baking oil. Besides that, producing cooking oil with palm oil are more cheaper than those are not using hand oil. So, YLC also uses this possibility to concentrate on those housewives who wish to buy cheaper cooking oil.
Technological Factors
Due to the improvement of technology, oil industry in Malaysia has used the most and efficiency machinery to produce cooking oil. Therefore, YLC has unveiled AUM cooking oil machinery which would work to remove and produce baking oil. Besides that, one of the YLC subsidiaries products that happen to be gloves, are produced with multiple uses alongside the state-of-the-art technology and stringent in-house quality guarantee procedures. Employing this new technology, the gloves that are produced are non-sterile, ambidextrous, and disposable.
PORTERS 5 FORCES
The rivalry between existing vendors in the market
In today's industry, many companies have increased their sizes in order to competitively fit. If they are rivalling among each other in term of sizes, they remain competing in term with their brands image, product quality, costs or market talk about. This would bring about a higher rivalry and threats Lee Yee Firm Bhd. Since LYC's competition like Lam Soon Group and PPB Group have a well-established brands, so YLC must provide good services and good rates strategy in order to lessen the rivalry and risk as well as increase their market talk about in Malaysia.
The power exerted by the customers in the market
The transitioning cost for Yee Lee is low because their product's price does not have big differences weighed against their competition. Cooking oil is matter about how precisely good quality they have and exactly how useful it is. Therefore, Yee Lee must do more R&D and put some new organic material in order to boost the usage.
The impact of the suppliers on the sellers
The ability of suppliers has influences in every the industries. In addition, it can affect the cost of creating a product for particular organization. Lam Soon and PPB has own suppliers to allow them to control the cost and get a good price to choose the recycleables. So Yee Lee must establish its suppliers to be able to lower the expense of production. Purchasing natural materials from other suppliers is difficult to get lower prices because they're selling predicated on selling price and the prices also afflicted by the demand-supply customers.
The potential risk of new sellers coming into the market
The degree of barriers accessibility is important to a firm in a market share. It could restrict other company to enter into this market. To be able to maintain market share, Yee Lee, Lam Soon and PPB has generated a proper know brand. This brands also identified by all the folks in Malaysia. Besides that, they also have a good romance using their suppliers and the most crucial is their product differentiation. Which means this is very difficult for a fresh firm to enter into this market
The risk of substitute products becoming available in the market
The risk of substitute products is one of the concerns for all your industry. It can help to keep a product in very long time in a market. If the particular level threat of substitute product is high, means the products easily to substitute by others product. Like nowadays, many cooking oil establishments are using hand oil to produce cooking oil. Hand oil is easily to get and it offers many usage for us. Not only palm oil, some company also use corn to produce cooking oil. All this materials are healthy to the people. So the threat of substitute product in this industry is low.
Strategic Group Map
Competitors
Lam Soon Group
Lam Soon Goup is several companies which performs in plantations, detergent and soap creation, marketing and distributing top quality consumer product. It had been integrated in August 1950 by Ng Keng Soon. In 1995, his sons Whang tar Choung and Whang Tar Liang took over the management after his loss of life. Its operations not only in Singapore and also in overseas like Malaysia, Vietnam, Thailand and Hong Kong. However, its main operation is in Singapore which runs in developing of preparing oil and laundry soap. Lam Soon's preparing oil has about 40 % to 45% market share in Malaysia. In addition, it has its own factory in Malaysia which produces preparing food oil and soap. The talents possessed by Lam Soon are it has a well design and strong value on its brand like 'Knife' was honored as the best brands in consumer baking oil this year 2010. Besides that, 'Bio Home', one of the Lam Soon's brand, was honored as a good design in household care category's brand.
PPB Group Berhad
PPB Group Berhad starts its central business with the initial business of sugar cane cultivation and refining in 1968. In addition, it includes in developing edible oil, marketing and distributing consumer packaged goods, as well as be considered a dominant player in the grains trading, flour and canine feed milling handling. PPB Group has its functions in China, Vietnam, Indonesia, Myanmar, Thailand and Singapore. The advantages of PPB Group Berhad are it includes well-established brand names like 'Neptune' for preparing oil and 'Seri Murni' food processing as well as a stable market for food industry in Malaysia. It also becomes a leader in sweets refinery, flour milling and film exhibition. However, the weaknesses of PPB Group Berhad are the earnings are affected by the costs of CPO, organic sugar and wheat. Since the glucose and flour are handled items in Malaysia, it's very difficult for PPB Group Berhad to maintain the increasing of cost in those managed items. This will likely has some impacts during the economy downturn.
Based on the tactical group map, we can know that Lam Soon has a high market share in the industry because it has highest level of brand awareness among these three brands. So, the prices for Lam Soon's cooking oil are also high. For PPB, it has moderate brand understanding compared with Lam Soon and Yee lee. Therefore, the prices of PPB's food preparation oil are cheaper than Lam Soon. However, Yee Lee has least expensive brand awareness in the industry so the prices for its food preparation oil are lower than Lam Soon and PPB.
Recommendations and conclusion
The one of Key Success Factors (KSFs) of Yee Lee are its product's quality. Yee Lee companies cooking food oil with good quality and it was given Certificate Excellent by International trade and Minister Industry. For example, Red eagle was voted as a reliable Brand Yellow metal by the readers of Reader's digest because it is more secure compared to others brand and can withstand high heat when following the food is warmed and it can be continued to be safe and healthy when intake. Red eagle is considered as healthy cooking oil which is cholesterol-free and by natural means rich in Vitamin supplements E.
Another factor that Yee Lee can successful in its business is its costs strategy. Many housewives like to buy Yee Lee's baking oil is because the price is cheaper than others brands and customers can have similar functions by utilizing their cooking oil.
Besides that, Yee Lee has a good advertising in its own product. For instance, Lee Yee has its own marketing and distributing channel in its business. By having own marketing and distributing channel, Yee Lee can save a great deal of cost in term of finding advertising company or employing salesman to promote its products.
Furthermore, the development of technology brings a lot of benefits for Yee Lee's company. This technology helps the business to create its product in efficiency and effectively way and at the same time it can help in cost reduction. With these benefits, Yee Lee can contend with its competitors available.
