CASE STUDY PAPER

PORTER’S GENERIC STRATEGIES ADABI SDN. BHD.

Rabiatul Adawiyah Binti Mohd Sofi
radawiyahsofi@gmail.com
Business Economics in UiTM Kedah

INTRODUCTION

Company’s background

With various curry products in 1984, Adabi Sdn Bhd started their journey in Batu Caves
Industrial Zone in Malaysia. In the next two years, they moved to a bigger factory in the Taman
Kepong Industrial Area and build two more factories in Taman Ehsan Industrial Area in 1990
and 1992. Next, they move to its current location in Rawang Integrated Industrial Park due to
the sudden increases in consumer demand and market growth.

In recognition of its contribution to product quality, Adabi has won a variety of awards,
including the Superbrand Status (Reader's Digest Malaysia), Anugerah Kecemerlangan Industri
(MITI), International Food and Beverage Award (New Millennium Award in Paris) and Anugerah
Produk Terpuji (Malaysian Institute of Food Technology).

Mission and Vision

Adabi Consumer Industries Sdn Bhd's key vision is to manufacture high-quality halal
food items that suit local and foreign tastes. Their mission is not only to prioritize high-quality
ingredients and products, but also to encourage daily home cooking so that customers can
enjoy the cooking experience and provide nutritious food for their families. In addition, they want
to make sure that they foster family happiness and happiness through delicious food.

Business problem

Adabi has been the leading household brand in the food manufacturing industry and
household brand in every home in Malaysia. Adabi strives to meet the demands of customers
by offering a range of goods. To boost sales and develop their business, Adabi will continue to
follow their strategy by introducing new products every year. However, the range of Adabi
products might too big before the customers became aware of their product’s preferences.
There are several kinds of ready-made Adabi food packages, as we can see. For example,
canned food categories offer peanut gravy, mussels paste and many more.
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ADABI SDN BHD ANALYSIS

Michael porter’s five generic strategies.

Strategy is able to give businesses a competitive advantage based on Porter’s

understanding. Three different foundations called as bases generic strategies which are cost
leadership, differentiation and focus.

Figure 1 Porter's five generic strategies

Cost strategy

Type 1 Cost leadership - low cost.

As the leading manufacturer of bumiputra food, Adabi Consumer Industries Sdn Bhd has
been able to execute this strategy. It is focused on economies of scale and standardization of
goods. In general, large companies can manufacture goods in large quantities by reducing the
price per unit of the product themselves by introducing innovative technology, controlling the
supply chain and investing in low differentiated products.

Most of the Adabi products, such as paste, seasoning and sauce, is much cheaper than
other products. Adabi nasi goreng seasoning, for example, is sold at a lower price to promote
and draw more buyers. Nasi Goreng seasoning by Seri Aji is RM1.60 while Adabi’s brand is
only RM0.80. By attracting more customers, more goods will be sold, the more demand for the
items, and more profits will be earned.
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Type 2 Cost leadership – best value.

This approach is when the business aims to generate higher profits by adopting a low-
cost strategy while providing the best service relative to the other industries on the market.

In this case, Adabi also provides cost leadership – the best value strategy as their
products are high quality and certified halal which resulting in delicious dishes, shortening the
cooking time and making customer easy to use. Unlike other businesses, in addition to offering
more and more foreign dishes, Adabi also offers a variety of local dishes, with an emphasis on
halal and quality ingredients. For example, chicken rendang, rice cube, mushroom pasta sauce
and many more.

Differentiation

Type 3 Differentiation.

In adopting this strategy, the company focuses its attention on developing a specific
product or service that sets its offerings apart from competitors. Since the product or service is
uncommon and almost difficult to replace, this strategy provides customers with high switching
costs and as a result, broad customer loyalty. This tactic encourages organizations to charge
higher prices to capture a majority of their market share.

Despite being a well-known brand, Adabi is still committed to ensuring the growth of its
market share through the latest technological developments to benefit their consumers.
Approximately RM500,000 will be expended annually on research and development (R&D) to
produce new goods that meet consumer demand. Their goal is to make high-quality foods,
prioritizing their food safety, ensuring that their products are suitable for consumption and taste
delicious.

Adabi not only serve the local market, it also international market. Recently, Adabi has
also diversified they product portfolio, including Flamitoz and Powercat pet food brand. Adabi
successfully launched the Flamitoz snack brand 2014, which contains four exciting flavors. Next
is Kerispi in 2019, offering two delicious styles. In addition, the reason why Adabi is different is
that they also provide a service order in their website for wedding doorgift. The price range is
reasonable and convenient for customer to choose. Adabi have manufactured and sold more
than 200 high-quality products. In order to meet the needs of customers, Adabi is committed to
expanding and diversifying its product range, from balanced meals to snacks and fast food.

Focus

Type 4 Focus – low cost.

This approach emphasizes the combination of cost strategies. It is adopted by

organizations that want to improve their operational efficiency while targeting on certain niche of
products or services in the market. However, it is important for companies to ensure that this
niche market is broad enough and has growth opportunities, while other companies exclude this
market segment. The company may decide to focus on its resources from multiple factors,
including geography, buyer characteristics and products specifications and others.
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For example, Adabi focuses on products that are considered halal and muslim products.
They also ensure that the raw materials obtained and used in the manufacturing process have
halal certified and most importantly are certified by JAKIM. They also make sure that all finished
products that sold in Indonesia are halal-certified by MUI (Majelis Ulama Indonesia) while the
production process is clean and free of non-halal and dirty ingredient. Adabi is committed to
developing more halal products by making sure that the halal guarantee mechanism is a core
part of their business. Hence their trademark, “Ingat Halal, Ingat Adabi!”

The production process such as equipment and machinery, will be control under
hygienic conditions by Good Manufacturing Practice (GMP) routines. During the preparation,
collection, processing, storage and delivery, any food that does not meet the halal food
regulations must be physically isolated.

In addition to different food tastes, Malaysians also care about hygiene. Adabi also cares
about its product hygiene. This is why Malaysians choose Adabi products because of their
commitment to the product. By setting the standards for the quality of processes and materials
used, Adabi has always been committed to providing consumers and their customers with the
highest quality products. Therefore, all Adabi products are guaranteed to be 100% halal,
hygienic, and healthy. Because of its commitment to quality, Adabi has received a lot of awards
and honors. For example, Adabi products are the first products that obtain halal certification
through Islam Affairs Division of the Prime Minister’s Department.

CONCLUSION

In conclusion, Porter’s Generic Strategies is one of the best strategies to use by Adabi to
achieve their competitive advantage. When Adabi apply the cost leadership strategy, they can
enjoy higher profit from their products. In addition, by using differentiation strategy, Adabi can
create a barrier for market entry for new companies. Focus strategy will reduce investment in
resources and Adabi can benefit from the specialization that was provided. Besides,
organizations that using focus strategy can enjoy higher customer loyalty.

Until today, Adabi have survive as they always find ways to increase their market share
while understanding their customers. However, they need to increase their product awareness
since Adabi strategy is to introduce new products every year. For example, they can focus on
low cost marketing such as using social media advertising, influencers marketing and many
more.

REFERENCES [APA styles]

1. Adabi. (2020) Adabi. About Us. https://www.adabi.com/about-us/.

2. Rachael Kam. (2007) Adabi’s growth strategy. The Star.
https://www.thestar.com.my/business/business-news/2007/09/24/adabis-growth-strategy