SWOT Analysis: Ajinomoto Company

SWOT Analysis

Ajinomoto company Malaysia 

Analysis of Strategic Factors (SWOT)

According to Gurel, (2017), SWOT Analysis is an instrument used for the strategic management and strategic planning in the organizations. To build organizational strategy and competitive strategy can use this analysis effectively. Furthermore, SWOT analysis is significant with the situational analysis that helps the managers to identify organizational and environmental factors. The SWOT analysis consists of four components include strengths, weaknesses, opportunities and threats of the company. In addition, strengths and weaknesses are measured by the internal factors. Meanwhile, the opportunities and threats are measured by the external factors.  

By using SWOT analysis the, the manager can classify what are the areas that can be utilized such as strengths and opportunities. Indeed, the areas that need to pay more attention on it such as weaknesses and threats. In the process of identification, SWOT analysis can be done by comparing the company with others competitors. Below is the SWOT analysis for Ajinomoto company.

Strengths   Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper S1: Established and well recognized brand S2: Market leader S3: Strong brand loyal customer base S4: Comprehensive production technology S5: High responsiveness to customers S6: Stakeholder engagement	Weaknesses W1: Higher spending on advertising W2: Focus is way too high in seasonings business
Opportunities O1: Introduce new products to the market and expand abroad O2: Acquisitions of smaller brands O3: Innovations in the existing products O4: Boosting demand in the Middle East O5: Globalization O6: Marketing strategy O7: Population growth O8: Research and Development (R&D)	Threats T1: Natural Disasters T2: Increase in labor cost T3: Increase in customer’s expectation T4: Government policies T5: Product substitution in seasonings is high T6: Low entry barrier T7: Unpredictable economy T8: Price wars with competitors T9: Consumers don’t perceived it as a “healthy products”

Strengths are a positive side of the organization because the characteristics and situations are more effective and efficient compared to their competitors. Strengths all the internal factors of the company that help the company in achieving for the success. The strengths of Ajinomoto company are as below:

Ajinomoto is an established and well recognized brand. The brand is popular among all the generation of Baby Boomers until Gen Y. In addition, Ajinomoto has started the business in Malaysia market since 1961 as Ajinomoto (Malaysia) Berhad. The business specialization was in producing Monosodium Glutamate (MSG). Malaysia is the first Japanese oriented company that has set up. The brand is retail and  industrial consumption. Furthermore, the logo of Ajinomoto brand easy to recognize where the logo is white and red. Usually people will call Ajinomoto whether in what type of the food seasoning. The main Ajinomoto product is Umami seasoning that has become the essential items in almost every household.

Ajinomoto is a market leader in the food seasoning or Umami seasoning. From the figure 1, we can see that the seasoning and processed food is the highest sales in 2017. Ajinomoto is offering the niche or specific product and help them to be a market leader in their business. They  also had the retail and industrial product that can be useful for the both parties. Over the past 50 years, Ajinomoto has been committed to improving and develop a wide range of product to exceed the taste of Malaysia and industrial. Furthermore, the brand also is well known and familiar with consumers.  

Strengths of Ajinomoto Company

Figure 1: Ajinomoto Group Business Expansion (Source: Corporate Summary Ajinomoto Co., Inc. 2018)

The Ajinomoto brand is a strong name and its advantages for them to have a loyal customer. Because the product is a household product and  it’s easy for them to have a customer. The customer will keep purchasing the product because the product is needed to consume regularly. For example, for the food seasoning is essential for certain housewife and also for the restaurant chef to add to their dishes. They believed that the Ajinomoto brand can give a good tastier for the cooking. Same goes to the Ajinomoto mission were to contribute to the world’s food and wellness and to better lives in the future.  

Ajinomoto was the world leading seasoning technologies. Because, the seasoning technology by Ajinomoto based on two fundamental scientific strengths. First, the strength in clarifying all of the factors that comprise food satisfaction and center on taste, flavor and texture. Second, the strength in integrating the customer needs and preferences by applying innovative, original materials and blending technologies. Ajinomoto has also applied  the advance technology to discover new materials and findings to expand the portfolio of enhancers or modifiers of umami, sweetness and other taste. Currently, they focus on the development of ‘kokumi’ which will have a unique taste-modifying profile. In addition, this company also has several analyses in the production technology, including the taste analysis and control technology, flavor analysis and control technology, and texture analysis and control technology.

Ajinomoto is concern about their stakeholder in the business. One of the stakeholder is customers. The customer is a person who helps them in generating revenue. Without customers the business is nothing. Ajinomoto believes that if has a good relationship with the customer will help them sustain in the business for a long term. There are some ways how the Ajinomoto response to their customers or consumers. For example, they provide the customer call center. This customer call center was functioning to help customers easily reached them. Indeed, Ajinomoto implements this Customer Call Center to improve customer satisfaction and has established customer service teams at five food product companies in Japan which is first, Ajinomoto Co., Inc. Second, Ajinomoto Frozen Foods Co., Inc. Third, Ajinomoto General Foods. Fourth, Inc.; J-Oil Mills, Inc. and lastly,  Yamaki Co., Ltd. Furthermore, the center also records and analyzes the “voice of the customer” (VOC) daily and shares it with business divisions and product development departments to enhance development of better products and services.

Weaknesses of Ajinomoto Company

Ajinomoto stakeholder comprises of a customer, shareholder, supplier, employees, regulatory agencies and statutory bodies, and non-profit organization. Ajinomoto strongly trusts that engaging stakeholders is helping the company to achieve the sustainability goals.

Weaknesses are the negative side of the organization because more disadvantages compared to the competitors. It refers to the situations where the currents existence and ability capacities of the organization are weaker compared to the competitors. Weaknesses are to be alleviated in order to reduce the negative impacts brought with them. The weaknesses of Ajinomoto company are as below:

Ajinomoto heavily relies on advertising in doing their promotion. This company was doing a lot on the advertising such as online and Television. For example, they advertise through TV advertisements. The usual product they advertise by using a familiar character such as mother and daughter. The latest is for the brand Tumix and Seri-Aji. This brand is a product extension of the Ajinomoto brand. Sometime customer did not realize that the product is under Ajinomoto brand. From the advertisement we can relate to who Ajinomoto want to segment their market.  In my opinion, Ajinomoto (Malaysia) Berhad can use as many platforms as they want. Because they have established company that has a strong financial. In addition, the advertising also should be more creative that following the trends. For example, using the social media platform because this is the fastest medium to be reaching the customers.

Ajinomoto is one of the company that manufacture of seasoning and chemical ingredients based on amino acid technology. Especially the sweeteners and the flavor enhancer which is monosodium glutamate (MSG). This is one of the factors that Ajinomoto is more focused in seasoning business. They have their own expertise and skill employees in producing it. Besides, the product line also all based on seasoning the food. For example, the pepper, chili flakes, instant flour and others. All of their products are in seasoning food and including MSG. In addition, Ajinomoto also more generates the profit from this business and it’s been the nature of their business.

Opportunities are the external factors of the company that help the company to strive for the success. Indeed, opportunities also are any advantages because have positive and favorable characteristics. Opportunities are to be exploited, if possible, in order to be fully utilized. The opportunities for the Ajinomoto company are as below:

Ajinomoto can introduce new products and develop the company sustainability. Ajinomoto can jump to another business, but still related to the food. For example, launch a restaurant because they usually do sponsor in the cooking competition. Furthermore, Ajinomoto also can expand abroad more. Because previously they also have been penetrating the Middle East, South America and Africa. They can expand more in Europe and others countries.  

Opportunities for Ajinomoto Company

The Ajinomoto brand is well recognized, it’s an opportunity for them. In addition, Ajinomoto is also a market leader in this industry. With this situation, indirectly can help them with acquisitions of smaller brands. There is a lot of the emerging brand in a market that still unskilled in the food industry. Ajinomoto can help them by acquisition their brand and be more wide in the future. There are some advantages for smaller brand site, such as low of cost in establishing a new company, can learn a new thing from the big company, and others.  

The innovation is good for the company to sustain more because the customer preference is the company’s priority. Ajinomoto can do some innovation to the product where can attract the customers in the long term.  For example, the Ajinomoto competitors like Maggi, they produce a lot of product extension such as instant noodle. In my opinion, Ajinomoto also can do as what their competitors do. Even though Ajinomoto already has the instant packaging of flour where just can make it instantly and the instant porridge too. This is a way to attract the customers’ preferences because it’s always changing. Besides, nowadays the customer also busy with works and don’t have enough time breakfast.

Ajinomoto (Malaysia) Berhad can expand the market development because the boosting demand in Middle East countries.  The are several Middle East countries that has been reached, such as Saudi Arabia, Kuwait, Yemen, Jordan, Qatar, Brazil, United Arab Emirates, Bahrain, and Oman. The Islamic Development Department of Malaysia (JAKIM) has certified that products manufactured by Ajinomoto (Malaysia) Berhad as Halal. The “Halal” certification not only reflects, that is fit for Muslims consumption, but a deep understanding of local cultural norms too. Ajinomoto (Malaysia) Berhad can expand in business through the halal certification. This company has gained the demand because the halal certification too. As we know the Middle East countries is  more Islamic population. The countries are more concern about the product that they will consume. As stated in annual report Ajinomoto (Malaysia) Berhad has got the JAKIM halal certification since 2004.

Figure 2: Ajinomoto Overseas Market (Source:Annual Report, 2017)

Globalization refers to a world without border. With globalization, a business can enter the international market without any restriction. The penetration of the global market is for introducing their products and services to the worldwide, by this they can increase numbers of sales and build the prestige image for the company, because usually people trust more on products and services that goes international. Besides, Ajinomoto (Malaysia) Berhad can acquire or merger with another local brand to take advantage of the market. In addition, Ajinomoto (Malaysia) Berhad can gain competitive advantages and reduce the cost and risk through the capital and sharing resources.

Threats faced by Ajinomoto Company

By using a marketing strategy, the organization can introduce the new product and services in the market. Marketing strategy includes advertising and promotion through numerous channel. For example Ajinomoto (Malaysia) Berhad can promote their business through discounts, advertising through media social such as Instagram, Facebook or YouTube and also advertising through supporting any campaigns, so more people can know about their products and services.

A growing population means greater demand, therefore, it will bring more customers to the company. Ajinomoto could have increased in the number of buyers or consumer, and by this, it will contribute to the increase in the company’s profits.

Technology advancement help company in research and development (R&D) for innovation, for developing new products or services and also to increase the quality of existing products and services. In addition R&D will bring benefits to the company by producing great products and reducing operation cost. In addition, Ajinomoto is a world leading in technology, but by R&D they can gain more profit in the future. For example, introducing the MSG that will have more benefit rather than bad effects. This is because nowadays people tend to have a healthy lifestyle.

Threats are the external factor of the company where the element that makes difficult for the organization to reach the goals. Threats are to be mitigated, if possible, in order to reduce the negative impacts brought with them. The threats of Ajinomoto company are as below:

Natural disasters give impact to company activities in various ways. They disrupt business operations directly through loss of lives and the destruction of property and equipment, and indirectly through the business transaction with partners such as clients, suppliers, and providers of finance. When the store that sells the Ajinomoto product physically damage during the natural disaster, they will no longer be capable of providing the customers the products as before. Example of natural disaster that’s usually happening in Malaysia are floods, landslides, epidemics, forest fires, tsunami, cyclonic storms, and haze.

Increase in labor cost will affect the company’s net income, because the company will increase its cost of operation by paying more salary to its workers. In the latest announcement by Malaysian Prime Minister in the Budget 2019, stated that the minimum wages of employee is RM1100. It is good news for employees but not for the employer.

In the twenty first century, businesses are all focused in customer experience, and most of the food industry are facing pressure because they couldn’t deliver the level of service that customers are demanding, especially in terms of technology advancements. In the food industry customer have high switching cost, therefore if the company are unable to satisfy their customers and the customers will change to another brands.  

Policies of a country whether local or foreign will affect a  business due to the legally mandated involuntary compliances. Regulatory requirements continue to increase, and the company need to spend a huge part of their optional budget on being compliant, and on constructing systems and strategies to maintain up with the escalating requirements.

The substitute product is a product that can replace the original one. Ajinomoto has high product substitution in the market. Because there are a lot of brands that offering the seasoning food in the market. For example, in stock seasoning brand such as Knorr, Maggi and others local brand. This is the brand that can replace and consume by customer if Ajiomoto product did not in the market. In addition,  in topping seasoning brand such as Schwart, and McCormick is one of the product substitutes can replace the Aji-Shio seasoning topping. Aji-Shio seasoning topping of Ajinomoto such as black paper, chili flakes, and herbs.

As discussed before, there is a low entry barrier in Ajinomoto business. Low entry barrier because we can see there are a lot of brands that offering the same product as Ajinomoto. Besides, Ajinomoto also is a household d product where can be found easily in the market. In addition, the nearest competitors of Ajinomoto are Maggi and Vedan. Furthermore, local and new brand also can be part of this business.

Economic factor plays an important role in a business environment due to the economic element comes in all directions. For example, inflation gives impact to all types of entity. Higher prices increase the business costs and also the spending of consumers. The business is independently with the economy because if the economy drop as well as the business also will collapse. But sometimes the business can sustain because several factors.

Price wars is when the price offered by the company same or a little bit different with the competitors. The company needs to compete in term of quality product because the range of price does not affect the customers. The price that Ajinomoto offers is more reasonable and affordable to the customers. For example, in stock seasoning the price of Tumix Pack 1 kilogram is RM13.90 meanwhile, for Knorr Pack 1 kilogram RM17.60. The price is slightly different, but the customer will choose depends on price and quality. Since this is the household product, the customer more prefer brands that can suit their taste while cooking a dish.

Most of ajinomoto are seasoning products and contain MSG. if taking Monosodium glutamate (MSG) too little does not actually endanger health unless taking this ingedient too much. But many people have made a perception if the meals that contains MSG means that the ingredients or the meals is harmful not good for the health.

After performing the SWOT analysis, we will proceed with the TOWS Matrix, which helps company to identify the strategic directions and methods to capitalize the strengths and opportunities and at the same time to mitigate weaknesses and threats.

Internal factors                                 Analysis summary                                              (IFAS) External factors Analysis summary (EFAS)	Strengths	Weaknesses
S1: Established and well recognized brand S2: Market leader S3: Strong brand loyal customer base S4: Comprehensive production technology S5: High responsiveness to customers S6: Stakeholder engagement	W1: Higher spending  on advertising W2: Focus is way too high in seasonings business than others business
Opportunities	SO STRATEGIES	WO STRATEGIES
O1: Introduce new products to the market and expand abroad O2: Acquisitions of smaller brands O3: Innovations in the existing products O4: Boosting demand in the Middle East O5: Globalization O6: Marketing strategy O7: Population growth O8: Research and Development (R&D)	Example: 1) Product Development (S1+S3+O1+05+07) 2)Market Expansion ( S5+04+05)	1) Increased customer base (W1+O1) 2) Innovation in products (W2+O3)
Threats	ST STRATEGIES	WT STRATEGIES
T1: Natural Disasters T2: Increase in labour cost T3: Increase in customer’s expectation T4: Government policies T5: Product substitution in seasonings is high T6: Low entry barrier T7: Unpredictable economy T8: Price wars with competitors T9: Consumers don’t perceived it as a “healthy products” (because contains MSG ingredient)	1) Responsiveness towards customers (T3+S5) 2) Use of technology (T2+S4) 3) Engagement with customers (T3+S6)	1) Alternative methods of operation (W1+T2+S4) 2) Reaching new markets (W1+T6+T8+O1)

From the TOWS Matrix above, there are four quadrants that represented the four main strategic alternatives available for the company. These strategic alternatives formed depend on the strengths and weakness of the company as the opportunities and threats are beyond the command of the society.

SO Strategies

Ajinomoto is a well-recognized and established brand, and there are so many of loyal customers. Thus, it comes to the idea of enhancing the company through the product development. This is because, product development involves new innovation which is by introducing new product and extend it to the global market since there is increasing of population growth in this world

Ajinomoto is a well recognized and established brand and there are so many of loyal customers. Thus, it comes to the idea of enhancing the company through the product development. This is because, product development involves new innovation which is by introducing new product and extends it to the global market since there is increasing of population growth in this world.  

Another SO strategy is to expand the market into the next level of growing. It is known that Ajinomoto is succeeding towards the market and when the business revenue have plateaued, thus it is the best time to go global with the products since there is high responsiveness to customers. The demand is higher from time to time and the opportunity also becomes high to have market expansion.  

The corporation already spends heavily on advertisements, therefore, it should leverage these resources to introduce its products to new markets to reach a wider audience. The corporation should rely on research and development (R&D) to ensure to focus on other businesses rather than solely focusing on seasonings business by using innovation in its product offerings.

The threat of increased customer expectations can be addressed through high responsiveness towards customers which can assist the corporation in meeting their demands. The increasing labor costs can be reduced by the use of comprehensive technology to reduce the number of workers required to perform the tasks in the organization. Stakeholder engagement will enable the corporation in maintaining a balance between the demands of stakeholders to ensure that they are able to generate and maintain a competitive advantage over competitors.  

The high spending on advertisement can result in creating challenges for the enterprise as the labor costs increases which can be addressed through the use of alternative methods of operations by levering technological resources. The overall operating costs of the company is considerably high due to advertisement spending which could reduce its profits and increase the number of competitors for the enterprise due to fewer entry barriers which can be addressed through market expansion.

SO Strategies

For SO strategy, it is suggested that Ajinomoto needs to have market expansion to abroad. This can be done by building the business relationship with others countries to expand the network. The market expansion will benefit to the company because the population and customer base will also be increasing from time to time.  From the new market, it will increase the resources and definitely there will be more money back into the business as it influences the market price and it will reduce external risks as the product already placed around the world.

The company should adopt an advertisement strategy while catering to the needs of local customers in new markets to increase its customer base.

The corporation should adopt a department which is dedicated towards monitoring the demands of customers to ensure that they are fulfilled within a reasonable timeframe. The department should also be responsible for ensuring that it engages with its stakeholders to generate a competitive advantage in the industry.

The advertisement strategy of the company should not be focused on increasing high resources; rather it should focus on meeting the demand for customers. The company should expand its operations to increase its customer base which will assist it in giving a competitive to new competitors entering into the market.

Conclusion

In conclusion, Ajinomoto Company is a well-recognized and established brand which operates in the food industry. The corporation has established its position in the market through high responsiveness towards its customers and engaging with its stakeholders. The corporation also uses comprehensive technologies in its production process to increase its efficiency. The heavy investment in advertisement and main focus on seasoning business is key weaknesses of Ajinomoto Company. The opportunities faced by the corporation include increasing demand in the Middle East, expansion of business, acquisition of small brands, globalization and effective marketing strategy. The threats faced by enterprise include low entry barriers, increased labour costs, unpredictable economy and price wars with customers. The corporation can use different strategies to sustain its growth in the foot market such as product development, leverage advertisement to enter new markets, responsiveness towards customers to address instability in economy and threat of new competitors in the market. Various recommendations are given for the enterprise to implement these strategies such as building a relationship with countries to expand operations, use of advertisement strategy to meet customers’ demands, monitoring demand of customers through stakeholder engagement and expanding customer base to address the issue of increasing competition. These strategies will enable the corporation in addressing its issue and sustaining its future growth in the market.