BTE 4220

ASSIGNMENT
1
SWOT Analysis in Halal
Industry in Malaysia

SYED SHAH AREEB HUSSAIN

0824507

Contents
1.

2.

3.

4.

SWOT ANALYSIS .................................................................................................................. 2

1.2.

DEFINITION ................................................................................................................... 2

1.3.

STRUCTURE................................................................................................................... 2

1.4.

NEED FOR SWOT ANALYSIS ...................................................................................... 3

CONDUCTING SWOT ANALYSIS ...................................................................................... 3

2.1.

SWOT/TOWS MATRIX .................................................................................................. 4

2.2.

TYPES OF STRATEGIES ............................................................................................... 4

SWOT ANALYSIS IN HALAL INDUSTRY IN MALAYSIA .............................................. 5

3.1.

STRENGTHS ................................................................................................................... 5

3.2.

WEAKNESSES ............................................................................................................... 6

3.3.

OPPORTUNITIES ........................................................................................................... 7

3.4.

THREATS ........................................................................................................................ 7

3.5.

STRATEGIES .................................................................................................................. 8

CONCLUSION ....................................................................................................................... 8

1. SWOT ANALYSIS
1.2. DEFINITION
SWOT is the acronym for Strengths, Weaknesses, Opportunities and Threats. It is an analytical
framework to help summarize in a quick and concise way the risk and opportunities for any
company across the value chain. The components of The SWOT analysis are described as
follows:
Strength: These are characteristics of the businesses, or project team that give it an
advantage over others
Weaknesses: These are the characteristics that place the team at a disadvantage relative to
others, and are also called limitations.
Opportunities: These are the external chances that can help improve performance in the
environment.
Threats: These are the external elements in the environment that could cause trouble for
the business or project.
1.3. STRUCTURE
The SWOT analysis consists of 4 major component Strengths (S), Weaknesses (W),
Opportunities (O), and Threats (T). These 4 components are grouped into two factors.

The internal factors pertain to the internal environment of the company. These are usually
classified as Strengths or Weaknesses.

The external factors pertain to external forces on the company. These are classified ar
Opportunities or Threats.

1.4. NEED FOR SWOT ANALYSIS

The SWOT analysis can prove helpful on more than one fronts. First and foremost it can be used
to increase the companys profits. However, the usefulness of SWOT analysis is not limited to
profit-seeking organizations. SWOT analysis can be used in any decision-making situation when
a desired objective has been defined. For example, SWOT analysis is often used by non-profit
organizations, governmental units and individuals as well.
Moreover, SWOT analysis may also be used in a pre-crisis planning and preventive crisis
management. During a viability survey, use of SWOT analysis can greatly help by creating
recommendations. Hence SWOT analysis can become one of the driving forces for the success of
any organization.

2. CONDUCTING SWOT ANALYSIS

Before performing the SWOT analysis, it is necessary to highlight the objectives for which the
SWOT analysis is being performed. This is because what may prove to be the strengths for one
objective may also prove to be the weaknesses of another and likewise for the opportunities and
threats. Hence one must clearly define the objectives before starting the SWOT analysis.
The main method to follow when conducting SWOT analysis maybe simply put into four steps
List external opportunities
List external threats
List internal strengths

List internal weaknesses

Once these steps are completed, a significant list of potential strategies are developed. Then the
impact of the different factors in the analysis is assessed and based on that a suitable strategy is
selected.
2.1.SWOT/TOWS MATRIX
After selecting the factors for each of the components of the SWOT, a matrix of these factors can
be constructed in order to develop the strategies that take into account the SWOT profile.
Table 2-1: SWOT Analysis Matrix

OPPORTUNITIES

THREATS

STRENGTHS

S-O (Max-Max Strategy)

S-T (Max-Min Strategy)

WEAKNESSES

W-O (Min-Max Strategy)

W-T (Min-Min Strategy)

Once the factors of each of the components are compared, the appropriate analysis to be
performed can be selected.
2.2.TYPES OF STRATEGIES
Based on the four components, there are four different strategies as given in the Table 2-1.

S-O: The Strengths-Opportunities strategies pursue opportunities that match the

companys strengths. These are the best strategies to employ. However, many firms may
not be in a position to do so. Companies will generally pursue one or several of the other
three strategies first to be able to supply the S-O strategies.

W-O: The Weaknesses-Opportunities strategies overcome weaknesses to pursue

opportunities. In this strategy the internal weaknesses are matched with external
opportunities. The main objective of this strategy is to minimize the weaknesses such that
full advantage of the opportunities can be taken.

S-T: The Strength-Threats strategies identify ways that the firm can use its strengths to
reduce its vulnerability to external threats. The different strengths are first matched to the
threats and then are used to minimize the threats.

W-T: The Weaknesses-Threats strategy establishes a defensive plan to prevent the firms
weaknesses from making it susceptible to external threats. In this strategy, the
weaknesses must be minimized in order to avoid the threats faced by the company.
3. SWOT ANALYSIS IN HALAL INDUSTRY IN MALAYSIA

Malaysia is a well-developed Modern Islamic country. It efficiently incorporates Islamic

principles into the modern world. One of the most important aspects is the development if the
Halal industry. Halal food industries hold especially crucial positions in the Malaysian food
industry as a very large number of consumers demand for halal food. Hence in this context
performing a SWOT analysis can prove very beneficial. For this reason in this study, a SWOT
analysis is performed wherein some of the evident factors of each of the components is listed.
3.1. STRENGTHS

Malaysia is considered worldwide as a modern Islamic country and hence has a good
Islamic image.

As compared to the certifications of other non-Muslim countries, the Malaysian Halal

Certification is considered more valid. This is because extensive research and analysis is
performed to ensure the halal nature of food in Malaysia.

As compared to the other ASEAN countries, the labour productivity in Malaysia is

comparatively higher.

Compared to other ASEAN countries, Malaysian products are also considered as more
safe and of better quality.

3.2. WEAKNESSES

Several problems are faced when dealing with Malaysian exporters. These include

Lack of professionalism

Lack of follow-up and correspondence

Very short-term perspective

SMI entrepreneurs lack legal/social/cultural environment in the importing countries

There is no consistent supply

Malaysia is not able to adapt to local flavors.

Inefficient Sea transport.

Branding unique to the country has not been established properly.

The packaging is not able to guarantee long shelf-life.

The cost of production is comparatively higher and Malaysian products are about 20%
more expensive.

There is a lack of strategic alliance (importers and distributors) and a lack of private
agents to market the products due to scarcity of entrepreneurial skills

Entrepreneurs do not have enough capital to effectively export their products.

Not able to identify consumer needs in terms of taste and preferences.

Almost all the local processed product type and categories do not follow market labeling
requirements.

Some of the ingredient list do not specify the percentage the ingredients, nutritional facts,
serving size, customer service information.

3.3. OPPORTUNITIES

60% of the Saudis consumers are youth (< 35 years) and thus indicating a growing
consumer markets and willing to try new products.

Saudis consumers have purchasing power.

GCC is a growing region. Average GCC (8%); Saudi Arabia (10%).

Rising costs of production in EU & USA.

Tourism industry in Malaysia contributes to developing awareness among Arab

consumers who have been to Malaysia.

Strong government supports for SME development in food processing

Strong government support in halal products and halal-hub center

3.4. THREATS

Stiff Competition of the Malaysian food products from Thailand, Indonesia and the
Philippines. The prices of the Malaysian products are generally higher due to the higher
production costs.

Subsidized tariffs for air transportation by Thailand.

Chinese products invading the markets, translated into cheaper prices.

7

With declining USD, the products from Malaysia are more expensive.

Weak R&D that match SME requirements

3.5. STRATEGIES
1. Identify relevant market
a. Introduce food products that are more appealing to the younger generation (eg.
packaging)
b. Target the promotion to younger generations
2. Improve professionalism of Malaysian entrepreneurs
3. Upgrade processing technology
a. Upgrade the processing technology of SMEs through government incentive
schemes (e.g. soft loan, tax deduction, technical support)
4. Develop a systematic raw materials procurement system
a. Establish contract farming for raw materials supply
b. Train SMEs entrepreneurs in price forecasting
5. Formulate Malaysian food branding
6. Develop a unified brand for all Malaysian food products produced by new SMEs
players
4. CONCLUSION
SWOT analysis has often proved to be an effective decision making strategy. It is a simple yet
powerful tool that can prove useful in many ways. Though the halal industry in Malaysia is
extremely well-developed, there are several weaknesses and threats faced by the company. The

only way to overcome these is by careful SWOT analysis to determine the appropriate strategies
that can further improve the halal industry.