Sime Darby Plantation

Topics: Palm oil, Oil palm, Sime Darby Pages: 21 (6079 words) Published: April 7, 2013
The palm oil is the most efficient oilseed crop and is able to produce up to ten times more oil than leading oilseed crops per hectare. Malaysia and Indonesia addresses 85% of the world’s palm oil need and accounts for 56.5% of world edible oil and fats while being the only vegetable to have a crop-specific sustainable certification standard. The cultivation of palm oil was established in 1917 by British Planters in Tennamaram Estate, Selangor, Malaysia. (Sime Darby Plantation, 2011a). Malaysia produces 17.57 million tonnes of palm oil accounting 11% of world’s oil and fat products (MPOC, 2012a)

Sime Darby was founded in 1910 and grew to become the largest conglomerate in Malaysia. Sime Darby Plantation (SDP) is the agricultural division of Sime Darby Group and with the merger of Sime Darby Berhad, Golden Hope Plantations Berhad and Kumpulan Guthrie Berhad in 2007, SDP is one of the world’s largest palm oil producers with 2.4 million tonnes of Crude Palm Oil (CPO) annual output.

Besides planting and cultivating palm oil, SDP also manufactures oil and fats products. SDP supplies 6% of world palm oil demand with 878,797 hectares of land in 3 countries for its downstream activities, namely Malaysia with 359,534 hectares, Indonesia with 299,263 hectares and Liberia with 220,000 hectares. SDP has a total of 201 estates with 62 oil mills. SDP’s downstream division operates in 14 counties across the globe refining CPOs to produce edible oils, fat products, oleochemicals and biodiesel (Sime Darby Plantation, 2011b). Appendix 1 shows the upstream and downstream activities of SDP together with its geographic location.

Malaysia’s palm oil industry accounts for RM 53 billion gross national income being the fourth largest economy contributor. Under the Economic Transformation Program, Malaysia targets to achieve palm oil GNI of RM 178 billion by 2022 which will create 41,000 new job opportunity with at least 16,000 jobs earning average monthly income of MR 6,000 (Pemandu, 2012). Indonesia is the world largest CPO producer with 21.0 million tonnes in 2010. The Forestry Ministry has identified 30 million hectares of land suitable for palm oil cultivation in Sumatra and Kalimantan. The CPO production in Indonesia is projected to increase by 5.7% yearly (Data Consult, 2011).

The palm oil cultivated in Malaysia and Indonesia is the Tenera breed, a cross breed from Dura and Pisifera variety for a higher yield production. Oil Palm trees has over 20 years of productive lifecycle (USDA, 2007).The physical condition for cultivation of palm oil is +/- 10 degrees of the equator and the prime plantation area being +/- 5 degrees if the equator, both Malaysia and Indonesia has the perfect condition to cultivate palm oil.

The objectives of this paper are to analyse the industry, market situation and the market leadership of SDP. This paper intends to develop a strategic marketing plan with a few business goals. The marketing plan is set to achieve a 100% business growth from its previous years. As per Appendix 2, last fiscal year, SDP produced 1.48 million metric tonnes of palm oil and 352 thousand metric tonnes of palm kernel oil and the marketing plan aspires to double this amount in five years. The plan will address the current competitive market, demand and the recent 2008 financial turmoil while explaining how to implement the strategic plan on its day to day operations.

The marketing plan will address the turbulence of business environment in which SDP operates and the decisions about changing the marketing mix, formulation of segmentation, targeting and positioning strategies of the company to succeed and reflect new strategies suitable for the changing environment. The objective is also to strengthen the competitive position while increasing customer satisfaction and achieving business target according to its resources and abilities. The plans will also advice on how the business units in...
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