Boh Plantation Swot Analysis

1.0 SWOT ANALYSIS

1.1 Strengths

The first strength will be the production process of the tea leaves. Boh plantation uses exhausts fans that delivers hot air around the facility, because it dries the tea leaves quicker than if it were to be left to dry out on racks and would not be affected by the environmental factors. Boh’s production facility is located in Cameron Highlands, Pahang which is considered as a strength because of the moderate climate, fertile soils, high altitude and the abundance of rainfall which is suitable for growing high quality tea. The factory is also built next to the plantation to avoid unnecessary transportation costs and risks to increase the company’s revenue (BOH, 2017).

1.2 Weaknesses

        The first weakness is the additional cost and liability to set up and maintain these exhaust fans. If one of the exhaust fan malfunctions, the entire operation might be disrupted, hence, causing losses to Boh. The company’s factory still utilizes old machinery which slows down the production process and when compared to other companies that are currently using modern machinery, Boh is considered inefficient and will not be able to raise production if the demand for tea rises. However, Boh’s location has drawbacks where the first would be the difficulty of employing workers because of its location, Cameron Highlands, which is 3 hours away from Klang Valley. To retain and attract more employees, Boh must fork out extra benefits and offer higher salaries, which will result in a higher company expense (BOH, 2017).

1.3 Opportunities

With the growing trend of bubble tea, Boh Plantations can seize this opportunity to expand its wings into different markets. Including bubble tea into their current product line will not only diversify its market but also open up the opportunity to franchise it to other companies. Another opportunity is that Boh may also take advantage of creating more health focused tea beverages to cater to the increasing number of health-conscious consumers that are demanding for a variety of tea that promotes health benefits (BOH, 2017).

1.4 Threats

One the threats that will affect Boh Plantation is the Pesticides Act 1974. This Act will be a threat towards the company because it is strict with regards to the types of pesticides used and how it is used on the plants (PESTICIDES ACT 1974, 2015). In addition to that, absorption of pesticides in the soil will harm the environment, therefore, Boh must find new ways to cultivate the tea plantations. The company will also face competition from other local tea companies and importers such as Lipton and Twinings. These products will be judged based on quality, taste and aroma (BOH, 2017).

2.0 PEST ANALYSIS

2.1 Political

        Ever-since Putin came into power, Russia has seen multiple political and policy changes due to the president’s unpredictable and irrational actions that other countries are unable to understand. Russia’s wealth in natural resources, geographical location and political tensions with certain countries are to be taken into consideration because there may be possible unstableness with the government’s policies that may affect businesses (Allen, 2017).

Current and incoming businesses should be aware that there are uncertainties with its current government due to the incoming 2018 election. Furthermore, corruption is also an issue when doing business in Russia as it was found to be the most problematic factor. The political environment in Russia may affect Boh negatively or positively but it is really dependent on what the government policies (Allen, 2017).

2.2 Economic

        Russia’s economy is unpredictable and unstable as its government. The economy is dependent on the price of oil, where they were in recession throughout 2014 – 2015 due to the sanctions and trade wars with the U.S and Europe. However, when comparing Russia to other western countries in terms of efficiency, their labor productivity is deemed inefficient despite being a developed nation (Allen, 2017).

        As of 2017, the financial sector has improved drastically over the recent years and the confidence of businesses are on the rise. Despite that, loan demands are still low and the quality of assets are weak. According to the bank of Russia, it has been forecasted that household expenditure will grow and business activities are growing. These economic factors are currently stable but Boh should still be wary of its changes (Allen, 2017).