Executive Summary

Team xxx has written this case study about the company, Dutch Lady Milk Industries
Berhad. Most of our content is derived with information found online and aided with in-depth
explanations from the textbook. In this report, we have included the company background,
vision, mission, and organizational structure. We then discuss the internal and external factors
that influence their company. Lastly, we analyze Dutch Ladys business and operation strategy,
and marketing mix.

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Introduction
In this group assignment, we have written a case study on Dutch Lady Milk Industries
Berhad (Dutch Lady Malaysia). Dutch Lady is a subsidiary of Royal Friesland Campina and is
engaged in the manufacturing and sale of dairy products, such as milk and fruit juices, in
Malaysia since the 1950s.

Business Environment
The combination of external and internal factors that influence an organization is
collectively termed the business environments of an organization. The six external business
environmental factors are: domestic, global, technological, political-legal, sociocultural, and
economic environments.

Domestic business environment

A domestic business environment is the place and situation in which the company is
conducting their business; in this case, Dutch Ladys domestic business environment is Malaysia.
Dutch Lady is in a perfect competition market - a market that has many small firms producing an
identical product. Many other firms in Malaysia sell dairy products, e.g., Nestle and Fonterra.
Despite the competition, most Malaysians prefer Dutch Ladys products because the companys
brand image is strong.

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Global Business Environment

The Global Business Environment refers to the international forces that affect a business
(Ebert & Griffin, 2015). In 1954, the Friesland (Malaya) Pte. Ltd. was formed to import
materials from Holland to Malaya and Singapore (Dutch Lady Milk Industries Berhad, 2013).
Later, Royal Friesland Campina founded a Malaysian Branch named Dutch Baby, now known as
Dutch Lady. Dutch Lady is a subsidiary of Royal Friesland Campina which is already a
multinational corporation, so Dutch Lady has no interest to expand internationally. (Friesland
Campina, 2014)

Technological Environment
Technological Environment is the advance of technology in society that allows firms to
be more productive. Dutch Lady focuses on improving the content and nutritional value of their
products through thorough studies and research. This enhancement of their products bring the
necessary DHA to growing children and healthy brain development (Dutch Lady Milk Industries
Berhad, 2013). Furthermore, they have their own website for their customers to get more
information about their products. When their customers have a better understanding of what
materials Dutch Lady uses in production, they will have more confidence in the company's
products. This improves customer loyalty and results in an increase of profit.

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Political-legal environment
Political-legal environment is the relationship between a businesses and the government,
this includes new policies and laws. During 1987, the Company underwent an equity
restructuring exercise to comply with the Governments New Economic Policy. Dutch lady Milk
Industries was delisted from the Stock Exchange of Singapore in 1989, in compliance with the
Governments national policy to promote the Kuala Lumpur Stock Exchange (Dutch Lady Milk
Industries Berhad, 2013).

Sociocultural environment
Sociocultural environment includes the customs, mores, values, and demographic
characteristics of the society in which an organization functions (Ebert & Griffin, 2015). To be
successful, every organization must understand the culture and characteristics of its consumer
market. Malaysia has a majority of muslims who can only consume items that have been
certified as Halal. Through the introduction of the Halal Policy statement to Dutch Ladys
company, the company was able to cater to Muslim consumers as well.

Economic environment
In this case study, the economic environment is the current economic situation of
Malaysia. Dutch Lady has many products and although the price of each product is different, the
range of prices set by the company is reasonable. Currently, the economy of Malaysia is doing
well so Dutch Ladys products are affordable to the citizens of Malaysia.

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Company Background
Dutch Lady is one of the biggest milk companies in the world and was established in
1963. It was the first milk company in Malaysia that to be listed on Bursa Malaysia (local stock
exchange in 1968). Permodalan Nasional Berhad is one of the shareholder of this company.
Dutch Lady's holding company is Royal Friesland Campania, which is multinational company
that markets and produces high-quality, nutritious, and natural ingredients and products. Their
key characteristics are convenience, reliability, health, and taste.

Description of products/services
Dutch Lady sells various types of products for home use and export market. Examples of
these products are: powdered milk, condensed milk, fruit juice drinks, yoghurt, desserts, cream,
baby and infant food, cheese, coffee creamers, and butters. Dutch lady was the first company that
introduced Growing-Up Milk such as Dutch Lady 123 and Dutch Lady 456 to the market which
is specially designed for children aged between three and five. (Dutch Lady, 2014).

Vision
Dutch Lady has a stating that: innovation is at the heart of what they do. They want to
improve Malaysians life quality with tasty dairy nutrition by combating nutrient deficiency and
obesity. Passion and teamwork are the elements that lead them to success, as shown in their two
slogans: Winning Together and Caring Together. Dutch Lady truly believes that if they
provide a high quality of products to their customers, not only can they improve their customers
health, but also can capture value from customers. (Dutch Lady, 2014).

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Organizational Structure
Organizational structure is very important to every company and Dutch Lady is not
exempted. Dutch Lady has many statements on risk management and internal control which is
used to establish the framework and environment; and reviews its effectiveness and integrity. In
August 2012, the company implemented an Enterprise Risk Management programme which is
issued and developed by Royal Friesland Campina N.V. (RFC). This programme is used to
establish the process for planning, managing, leading, and controlling; to ensure that the
company can successfully achieve their goals.

Internal control structure protects the assets of the company, which is used to provide
reliable financial information and ensure the maintenance of proper accounting records within
the company. The internal organizational structures are operated by senior managers who have
formal authorization procedures and line of accountability. Performance Management System
plays an important role in organizational structures; it is used to assess personal competency and
integrity. (Dutch Lady, 2012)

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Business and operation strategy

Business Strategy
A business strategy is a long term plan used by a company in order to achieve their goals.
One of the companys main objectives is growth of the organization and of their market. The
corporate vision is: To strengthen our position as the leading dairy company, driving growth.
Dutch Lady is already one of the most prominent dairy brands in Malaysia; and they plan to
further differentiate themselves from their competitors by giving back to society, providing
healthy dairy nutrition, ensuring sustainability in environment and business operations, and
taking care of their employees well. (Dutch lady, 2014)

Dutch Lady has run many campaigns and given out donations to help society. They
started a Dairy Development Programme (DDP) which helped to support local dairy farmers in
producing milk of higher quality and volume. Dutch lady also have employee volunteering
initiatives such as The Dutch Lady Blue Brigade and the Dutch Lady Doing Good teams who
impact communities by various participative activities. They have also partnered with the
Malaysian Red Crescent Society which focuses on giving aid to the needy. For example, in 2006,
RM70, 000 worth of dairy products from Dutch Lady was donated to the Johor flood victims.

Dutch Lady also does campaigning to raise awareness about nutrition throughout the
country. They have run events such as The Malaysias School Milk Programme and World Milk
Day which aims to educate consumers on the importance of proper nutrition and how milk plays
a prominent role in that. Dutch Lady also stresses on ensuring the sustainability of the
environment and business operations. They try to reduce energy waste at every level of their
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business by recycling water, using natural gas for operations, and educating employees on how
to go green.

Operational Strategy
An Operational strategy is an organizations plan of allocating resources in support of
maximizing the effectiveness of production while minimizing costs. Dutch Ladys operational
strategy is to obtain credibility for their products through standards such as: ISO, HACCP, and
OHSAS. ISO stands for the International Organization for Standardization. It ensures that
products, services, and systems meet world-class specifications of quality, safety, and efficiency.
When a company holds a ISO certification, they develop a good reputation and can easily
facilitate international trade.

Dutch Lady has achieved both ISO 9001 (standardized quality systems) and ISO 14001
(Environmental Management System). HACCP, also known as the Hazard Analysis and Critical
Control Point, is a risk assessment tool and controls food safety practices. Dutch Lady has been
awarded a HACCP certification in acknowledgement of its safe processing and packaging plants.
Dutch Lady has also achieved OHSAS 18001. This is a world-renown standard for occupational
health and safety regulations (Dutch Lady, 2014).

Human Resource Recruitment Strategy

Recruitment strategies are used to attract individuals to apply for jobs. Dutch lady attracts
its employees by promising many benefits, such as training, organizational development,
compensation, and health care. For example, employees will get EPF, SOCSO, bonus, annual

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leave, medical leave and maternity leave. Bonuses are awarded to employees according to their
individual evaluation within the company.

Dutch Lady respects its employees and hopes to inspire them to give their best efforts in
their jobs. The reinforcement of the training programs besides acquiring the right talents is
needed for the company to thrive. In 2010, a strategy called Passion for BLUE (PfB) was
implemented. PfB promoted stronger co-operation between teams and help them relate to the
companys objectives.

Research and Development

Dutch Lady Milk Industries Berhad (Dutch Lady Malaysia) has been in the dairy
production industry for more than 130 years. Dutch Lady believes that the huge amount of
nutrients and benefits of milk is very beneficial to growing up healthy and should be a part of our
daily ingestion. Dutch Lady has been conducting thorough studies to determine what nutrients
the public is in need of. They then try to create products that not only taste good, but provide
nutrients as well. For example, Dutch Lady adds DHA as a necessary nutrient in Growing Up
Milk. Dutch lady also uses different types of sugars that are less harmful than those found in
sweets. The importance of this natural sugar is that it is a type of carbohydrate. Carbohydrates
are a main source of energy to ensure the healthy growth and development of the body and brain
of growing up children. (Dutch Lady, 2014)

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Marketing Mix
Marketing mix is defined as a planned mix of the controllable elements of a products
marketing plan, which consists of product, price, place and promotion and commonly termed as
4Ps. (Business dictionary, 2014).

Products
Dutch Lady has a wide range of products, built to target children of all ages. Whenever
sales decline continuously, they will launch a new product. Dutch Ladys product packaging not
only protects the product, but also improves the brand image to attract more potential customers.
The cost-effective packaging is made of recyclable materials and is user-friendly.

Pricing
Pricing is the only element that brings in revenue. Pricing objectives of Dutch Lady help
to give a proper direction of justifiable price setting (Dutch Lady, 2014). It sets as a guideline to
expand and execute marketing strategies. Dutch Lady has used penetration pricing strategies to
set a relatively low price of products in the market. This method is very effective to attract a huge
sum of customers and helps to penetrate into the market faster. Psychological pricing like odd
pricing can build up buyers belief on cheaper certain price under round numbers. Promotional
pricing and discount strategies have been also used to maximize sales temporarily to position
their products in consumers mind.

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Place
Place is the distribution channels used by Dutch Lady to deliver their final products to
consumers. Dutch Ladys products are categorized as Fast Moving Consumer Goods (FMCD),
which can be distributed easily through several channels (Dutch Lady, 2014). Dutch Lady acts as
manufacturer and delivers products to retailers such as Tesco, Giant, and convenience stores in
retailing channel. Higher profit and convenience can be generated through retailing channel to
satisfy targeted consumers needs and wants.

Promotion
Promotion helps to strengthen product image and improve high demand of goods in the
market. Dutch Lady has used advertising as their strategy to promote their latest products and
ideas through media, radio, newspapers and others. Giving away free samples and trials to
customers is also another effective promotional method (Dutch Lady, 2014). It gives them an
opportunity to try on and experience different taste of the Dutch Ladys milks. Lastly, public
relation is extremely important for Dutch Lady to spread their latest news, products, annual
reports, donation, charity, Corporate Social Culture (CSR) events and others through the source
of media (The Star Online, 2011).

Market segmentation
Market segmentation is defined as the process of subdividing a large homogenous
market into clearly identifiable segments which have similar characteristics. (Business
dictionary, 2014)." Dutch Lady divides their market by age groups, because their products cater
to infants, children, teenagers, adults and even old folks as well. (Dutch Lady, 2014). For
example, pregnant women groups are more likely to purchase Dutch Ladys milk for their babies
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because of their special formulated milk recipe. Besides that, Dutch Lady offers several types of
milk and yoghurt with flavours for different group age, especially for the growing children and
family (Dutch Lady, 2014).

Target marketing
Target marketing is defined as identifying a target market after detailed research, and
developing specific marketing campaigns focused as it (business dictionary, 2014). Dutch
Ladys products target specific market segments. For example, Frisomum Gold targets pregnant
and lactating women market, whereby products like Frisco 3 and Frisco 4 are customized for
growing children (Dutch Lady, 2014). In addition, Dutch Lady is now expanding their target
market to include children of all ages with fruit juice or yoghurt drinks.

Market positioning
Market positioning is an effort to influence consumer perception of a brand or product
relative to the competing brands (business dictionary, 2014). As we have explained, Dutch
Ladys corporate vision is to further strengthen their position as the leading dairy company and
driving growth (Dutch Lady, 2014). Dutch Lady makes use of various campaigns and strategies
to promote their brand. Target customers can remember the current slogan trust, healthy and
happiness of Dutch Lady easily, which indicates a strong brand positioning (Dutch Lady, 2014).
As a result, the chances of consumers purchasing Dutch Ladys products will become higher and
it helps to position customers loyalty towards Dutch Lady.

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Conclusion
In conclusion, people must understand the fundamental concepts of business in order to
be a successful company like Dutch Lady. Every organization must identify its environmental
factors: domestic, global, technological, political-legal, socio-cultural, and economic
environments. They must also set goals and develop a good organizational structure. Dutch
Ladys plans revolve around growing the company, innovation, and product quality. Dutch Lady
aims to achieve their goals through the management process - planning, organizing, leading, and
controlling. The company must also have their own business and operational strategies to be able
to compete with their competitors. Dutch Ladys business strategy is on positioning their brand
image. Organizations should observe the marketing mix as they do their business. The marketing
mix include products, price, place, and promotion. Segmentation, targeting, and positioning also
play very important roles in businesses. By going through all of this, Dutch Lady has come to be
a large and successful business.

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