Enhancing Business Strategy with Information Systems in Traditional Chinese Herbal Tea Industry

1. Information System in Traditional Chinese Herbal Tea IndustryFinal Presentation Module Name: Strategic Management and Information Systems Module Code: BIS3324 Module Tutor: Alan Kwong Prepared By : Raymond Tse M00501669 Chu Hin Chung, Samuel M00501664 Jemy Tang M00501665 Wong Ka Lun, Alan M00501672 Prepared On : 16th Apr 2014 Group : Two (2)

2. To overcome the business competition, understand the customer favors and makes them like the product is very important mission; meanwhile reduce the business cost is another significant key to make the business win and successful. Therefore apply appropriate Information System (I.S) can increase the strength on above two mentioned factors. Information system are applications such as CRM, POS, ERP…ETC. The object of our investigation is local traditional herbal tea company “Hung Fuk Tong Holding”. We will elaborate how’s the strategy management determinate the IT system to make use with business. Introduction

3. This project is to explore the business model adopted by a Chinese Traditional Herbal Tea Manufacturer ‘Hung Fook Tong Holding Ltd’ in Hong Kong. With the rapid competitive of market share, the company had taken progressive steps to review its business environment from time to time. From market share in point of views, the company had adopted new Information System with creative methodology to overcome the market competition. With the references of IT Department’s interview, customers’ survey, collections of company’s information; these are the methodologies used to convince whether information system is a crucial adaptive approach to enhance the business strategy. Objective

4. In order to obtain the information about company’s situation accurately by following methods: Interview - Carry out a Company Interview with HFT’s Executive Director Mr. Ricky Szeto. On-site visit and interview with IT department, obtains a chance to work with I.T. department in a 4-day on-site workshop. . Consumer Survey - Firstly via the google surveys web tools to setup and send out the consumer survey to HFT members email and post it on most popular internet discuss forum to wait for feedback. Porter Five Forces – To analysis the company’s strengths, weaknesses, opportunities, and threats can be revealed from its results of findings. Methodology of Study

5. Methodology i) Interview with Executive Director – Ricky Szeto Company Vision Business Strategy – Two Projects involved new IT technology ii) Consumer Survey Survey for HFT members and popular discuss forum Street Survey iii) Porter Five Focus Analysis I. Rivalry Among Competing Firms in Industry Pressure Rate: Lower II. Threat of New Entrants Pressure Rate: Lower Threat of Substitute Products Pressure Rate: Middle IV. Bargaining Power of Suppliers Pressure Rate: Lower Bargaining Power of Buyers Pressure Rate: High

6. Summaryof strategic issues of the company Traditional Chinese herbal tea not hard to make, any drinks manufacturers can produce similar product. Drinks product will have expired time issue, manufacturer need to handle the stock control and sell out the product on time. Establish a well brand name; understand the consumer favor and keep developing new product in market.

7. Summary of strategic issues of the company HFT have investment on new IT technology project to increase their market share and enhance internal company progress. The drinks market is very intense competition, new product launch on every month and consumer change their favorites very fast. HFT have to always understand the consumer thinking by using some new IT systems. (such as CRM system)

8. The new methods will be enabled by the new proposed I.T. systems i) Instant Order@ E-coupon ii) Smart E-order Strategic IT System(s)

9. Instant Order@E-coupon Instant E-coupon is a strategy planning to absorb the potential market from social media networks. Social media networks have become a dominant force of almost every aspect of a person’s communication strategy. Businesses are remaining competitive by reaching their customers through social media networking. With effective management practices and low cost social media marketing, businesses have been able to use inexpensive ways to increase their visibility online. The extreme growth of social media has also assisted businesses in tapping into previously unknown markets. Strategic IT System(s)

10. Smart E-order Smart E-order is one another strategy planning in ‘CRM system’ to increase interactive relationship between customers and the company. This new system enables the selling process visible to the company’s management system and have critical decision making process to project the needs on future purchase order of raw material CRM systems give businesses the ability to personalize and customize relationships with their customers regardless of which employee deals directly with them at any given time. Strategic IT System(s)

11. Evaluation had been reviewed on existing I.T. System Two newly implemented I.T. system have been operated since October 2013 (Smart E-order) and(Instant Order@E-coupon) will be able to increase market share from 10% to 15 % after 1 ½ years implementation (1% equivalent to one hundred thousand HK dollars) I.T. Project Strategy

12. The newly installed systems could have sufficient interaction with on existing CRM and POS systems I.T. Project Strategy (Physical View) Instant Order@E-coupon Smart E-Order

13. The newly installed systems could have sufficient interaction with on existing CRM and POS systems I.T. Project Strategy (Logical View) Instant Order@E-coupon Smart E-Order

14. Cost and Benefit Analysis

15. Political - Hong Kong is in a stable political environment Economic - Imported inflation, it will affect the cost of “Hung Fuk Tong” Social - People began to focus on health, and believes in Chinese Herbal Tea Technological – Integration with CRM system become important tools for promotion distributors and consumers External Forces Analysis by Macro Environment

16. Identify the strategic issues in this project Achievements - Net profit - Staff retention - Gained Market Failures - Lost clients - Reduce sales amount - Reduce efficiency Other strategic issues considered in this project

17. The newly implemented I.T. Systems will increase extra benefit to “Hung Fuk Tong”. For strategic management view, after the company had adopted new Information System with creative methodology to overcome the market competition, it is noticed that these new systems will be expected to simulate the rise of market share to 10 – 15 % as a whole. Value of the business strategic can be reflected in newly installed I.T. systems whether it can bring solid benefit and profit to the company. Conclusion

18. Appendix

19. ConsumerSurvey

20. Porter’sFive Forces for Hung Fook Tong I. Rivalry Among Competing Firms in Industry Pressure Rate: Lower 28 Years’ experience on produce traditional Chinese herbal drink, have large market share. HFT has strong product sale distribute network, such as MTR, KCR, supermarket & convenience stores. HFT had investing a large money on TV and other advertising in order to maintain their market share. II. Threat of New Entrants Pressure Rate: Lower New entrant need large number of investment and time to build up their brand and customer base. HFT have well developed business model and market strategy. Threat of Substitute Products Pressure Rate: Middle No secret formula for making traditional herbal drink, people can replicate easily. HFT concerns on their customer needs, thus they always improves their products. People likes to have healthful food and drink, therefore Traditional Chinese herbal drink can’t be replaced by other soft drinks.

21. Porter’s Five Forces for Hung Fook Tong IV. Bargaining Power of Suppliers Pressure Rate: Lower HFT can have larger number of order for suppliers. Multi source suppliers from different counties and locations. Bargaining Power of Buyers Pressure Rate: High Consumer easy to change their favorites . More then one Traditional herbal drink brand name selling in the market. High quality requires by current customer. HFT have own executive selling channel.

22. CEO Interview Date: March 5 2014 2:40pm – 3:00pm (20 Minutes) Location: Hung Fook Tong office Guest Room Interview Person: Mr Ricky Szeto Executive Director of Hung Fook Tong Holdings Ltd Visitor: Raymond, Alan Us: Good afternoon, Mr Ricky Szeto. IT’s pleasure to have chance to meet you today. May I say you some question about Hung Fook Tong business strategy in Information technology? Ricky: Yes, of course. Us: What is the vision of Hung Fook Tong Holdings Ltd? Ricky: We would like to popularize our traditional Chinese habit drink culture to global by every means. Us: What is your business strategy to achieve your company’s vision? Ricky: Starting from long time ago, we had tried various methods to introduce our products to the customers in different countries such as TV media, advertising and charity…..etc. Us: Among your strategy and future planning, is there any project involve new information technology? Ricky: Yes, we do. In the past year, we started two IT projects. One of them is called “Instant Order@ E-coupon”. Another on is “Smart E-order”. We have established “Instant Order @ E-coupon” mobile application to deliver e-coupon through the most popular internet social media network. The main purpose of this software is to increase the market share and selling value. Regarding “Smart E-order”, it is very convenient for the customers to place their orders through iPad inside our retail stores. All the data collected by the system which will be analyzed by CRM system. This will help our top management to understand more the trend and the needs of our existing customer. Us: Do you satisfy with the result of those 2 project development? Ricky: So far, both of projects are very successful. According to our last sales report, we have 20% more in sales. And based on “Smart E-order” result, we will soon launch 2 new products in the markets and we estimate there will be positive feedback from the market. Us: Thank you for your valuable time and your information. Interview Summary

23. Milestones

24. Milestones (cont)