A chemical used to make plastics and tan leather, Melamine, was found in milk products from China’s biggest producers and linked to at least four infant deaths in September 2008.
The impact of the melamine scandal on the milk industry in China was great. Sanlu is reportedly facing bankruptcy amid the milk scandal as well as domestic companies Mengniu and Yili. (Chao, Sen and Tsai, 2008) It is noted that Beijing-based Sanyuan is the biggest winner in the scandal because its milk was found to be free of melamine.Customers largely abandon domestic powdered milk but foreign brands milk only got limited quota for entering the Chinese market. (Chan, Griffiths, and Chan, 2008) The market confusion caused by the melamine related issue that make people rush to find substance for the milk product. This is an external condition that prompted more consumers to go for soymilk as an alternative to dairy milk. From the case of Vitasoy, it is realized that external condition would influence the management practices that covered the internal resources and capabilities and the strategic actions.Vitasoy has goodwill of branding that offering a wide range of high-quality, nourishing and tasty products.
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According to the 2009 annual report by Vitasoy, the net sales increased by 7% in Hong Kong and Macau through a successful product innovation programme. Because of the back of effective brand building, distribution network expansion and market penetration, net sales grew strongly by 56% in Mainland China. The development and introduction of new products exclusive to the domestic market also boosted sales growth in Mainland China.By the strong brand equity and product innovation capabilities, the sales performance of the Australia and New Zealand operation was impressive. The growth momentum was able to maintain in the North American market by re-focusing on fast-growing products and penetrating into new alternate business channels.
Vitasoy got rich experience on promoting and distribution network on the health food. The company increased the budget on advertising on public education and brand image building in China and Hong Kong market.Indeed Vitasoy have six records on wining “Top 10 Favourite Brands”. It took the role of the daily health partner of the consumer. Those build up a reliable image in the food and beverage category. Vitasoy caught the opportunity to open up the China market. The Vitasoy co-operated with the Shenzhun Vita Guang Ming Food and Beverages Limited Company.
After the Melamine scandal, Vitasoy extended the monitoring systems to manage cooperative strategy. However, that not means the trust between the partners was destroyed.Indeed, Vitasoy planed to strengthen the support on the manufacturing capacity of the Shenzhun Vita Guang Ming Food and Beverages Limited Company by installing new high-speed packaging and filling machines to replace existing ones. This action would strengthen the efficiency and enhanced substantially. To conclude, Melamine scandal influenced the management practices of Vitasoy.
It caught the opportunity by Melamine scandal and strength its own internal resources and capabilities with strategic actions. That led more consumers to go for soymilk as an alternative to dairy milk.Based on the goodwill of branding, strengthened distribution network and extended the monitoring systems, consumers switch to Vistory soy milk products after the melamine milk chaos as soy milk is the closest alternative On the other hand, Vitasoy also built the confident on the other food and beverage included milk product. Reference Chao, L. Sen, G. and Tsai, G. I, 2008.
“Chinese Tainting Scandal Pulls Milk off Shelves”, Wall Street Journal – Eastern Edition, Vol. 252 Issue 64, pB8. Chan, E.
Y. Y. , Griffiths, S. M. and Chan, C.
W.L, 2008, “ Public-health risks of melamine in milk products”, Lancet, Vol. 372, Issue 9648, p1444-1445. Hanson, D, Dowling P, Hitt, M, Ireland, R.
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