1.

0 Introduction
Every organization is confronted with macro-environment, which deals with such
factors that have direct influence on supply and demand of the firm. These factors are
beyond the control of organization agitating it to formulate such strategic measures that
support the organizational goal and strategic planning. The dynamism in the arena of
market is surfacing such uncertainties that have significance impacts on the functions of
organization. In order to comprehend these vague possible issues, a series of checklists
have been framed to grab an increment in the organizational effectiveness or its survival
to some extent. The main framework widely used with its in depth strategic concentration
on environmental influences is PESTEL analysis. This analysis evaluates the external
environment of the firm on the basis of factors like political, economical, socio-cultural,
technological, environmental, and legal.
1.1 Small Medium Industries
Definition of SMI/SME:
SMI Small and medium industries
SME Small and medium enterprise
Generally, SMEs are defined into two broad categories:
1. Manufacturing, Manufacturing-Related Services and Agro-based industries
"Small and medium enterprises in the manufacturing, manufacturing related
services and agro-based industries are enterprises with full-time employees not
exceeding 150 OR with annual sales turnover not exceeding RM25 million"
2. Services, Primary Agriculture and Information & Communication Technology (ICT)
"Small and medium enterprises in the services, primary agriculture and Information
& Communication Technology (ICT) sectors are enterprises with full-time
employees not exceeding 50 OR with annual sales turnover not exceeding RM5
million"
In summary, detailed definition of SMEs by size are:
Category
Micro-enterprise
Small enterprise
Medium enterprise
1. Manufacturing,
Sales turnover of Sales turnover
Sales turnover
Manufacturing-Related less than
between RM250,000 between RM10
Services and AgroRM250,000 OR and less than RM10 million and RM25
based industries
full time
million OR full time million OR full time
employess less
employees between 5 employees between
than 5
and 50
51 and 150

2. Services, Primary
Agriculture and
Information &
Communication
Technology (ICT)

Sales turnover of
less than
RM200,000 OR
full time
employees less
than 5

Sales turnover
between RM200,000
and less than RM1
million OR full time
employees between 5
and 19

Sales turnover
between RM1
million and RM5
million OR full
time employees
between 20 and 50

(Source: http://www.smi.net.my/?pr_content=7)
1.2 PESTEL Analysis

(Source: http://www.theglobalentrepreneurs.com/global-marketing-intermediateand-macro-environment/)
1.3 Company Background
Beryls Chocolate and Confectionary Sdn Bhd (Beryls) was created with
one aim in mind excellence. Since our establishment in 1995, weve focused on
ensuring the creation, supply and maintenance of the very best chocolates for both
the Malaysian and international market. With a vision of being a leading
international brand that is synonymous with the highest quality chocolate
products, Beryls has focused on a simple set of values at every step of our
journey.
Quality, innovation and the very highest levels of service these are what we
promise our customers and partners alike. The reason for this dedication is a
simple one as we aim to keep our customers happy. Every Beryls product carries
this implied promise of the very best in chocolate products and we believe that the
Beryls brand is now synonymous with that expectation.

Beryls is after all more than just another manufacturer.

We commit a substantial amount of time, effort and resources towards the
development of unique chocolate combinations. Many of these use local and
regional ingredients including durians, mangoes and even chilies to create
chocolate blends like no other. This development process starts however with the
finest raw materials including some of the worlds best cocoa beans from Ghana.
The use of the best raw material is, we believe important in ensuring the finest
finished products.
Throughout this development and manufacturing process, we maintain a devotion
to the highest quality and production standards. This rigor is backed up by a group
of creative and innovative employees who ensure that they keep an eye on what
our customers want. The end result produces high quality, safe and consistently
excellent chocolate products.
Mission Statement
Constantly strive to satisfy customers needs through premium quality products
Stay competitive and enhance our customers enjoyment of the finest chocolates
Provide employees an opportunity to develop their skills
Share our success with employees and shareholders alike
Be responsible to the countries and the communities where we do businesses

(Source: http://www.berylschocolate.com/eng/greeting.html)
Range of Product

2.0 Macro Environment PESTEL Framework

PESTEL stands for Political, Economic, Social, Technical, Environment
and Legislative. It is a strategic planning technique that provides a useful framework for
analyzing the environmental pressures on a team or an organization. PESTEL framework
is considered as the best strategic equipment to measure business position and expected
relevant growth or decline in the market and also gives the directions for possible profit
oriented business operation. This analysis works as a useful tool in planning process
which may include; organizational planning, strategic planning, financial planning,
marketing planning, product development planning and most importantly in research and
development reports. It is one of the effective tools that summarizes the scattered aspects
in one horizon, especially when entering into the new markets or when the purpose is to
go beyond the geographical boundaries. It helps the organization to eyeshot the
comprehensive realities of the new environment and its market features which aid to
penetrate in it with most effective strategic concerns and groundings.

3.0 Macro Environment Analysis for Beryls Chocolate

As already mentioned, PESTEL describes five factors according to which

their impacts on the Malaysia based chocolate manufacturing firm is analyzed. These
external factors and their detailed analysis with respect to firm are explained below.
3.1 Political Factor
Political factor relates to any changes in the government or its
policies. Every organization is obliged to do its business operation in
compliance with laws made by the government. These laws and rules should
be acquainted in the functions performed by the organization. The government
of every country varies with respect to its policy, stability, and major
influences on the trade. In this regard, it is most appropriate for any
organization to conduct its operation and formulate its strategic plan in
accordance with the political theme of the country. Every strategic plan must
cater the importance of political impacts so that effective strategy is built to
make proper alignment and the risk of project failures due to political
instability is already comprehended with alternative choices (Porter, 1998).
In the given scenario of chocolate manufacturing industry operating in
Malaysia has to analyze that the political stability in the existing country is
pretty much secured. The impacts of political influences on the sale of the
chocolate products and its manufacturing will be observed when this
organization will intervene in such practices that are not supported by the
government. Government can intervene in the operations which are not
environmental friendly and the issues of such like are the impacts that
chocolate manufacturer will have to face from the political point of view. As a
democratic political influence, the firm can grab maximum advantages in

terms of low restrictions on the volume of production and sales scale. Hence,
there are political issues that may affect the industry and their impacts can
only be minimized if the company is already prepared to handle political
matters of Malaysia.
3.2 Economy Factors
Economic conditions of the country is the most important factor of
analysis to any country because it decides the successful and failure of any
business profitability (Worrell, 1998). Every business works on the core
concept of economics that explains the importance of demand and supply. If
the demand is low because of low economic growth and development then it
will destine the company to raise such amount of capital that will ultimately
meet the expected profit after covering the cost incurred. Making bulks of
production on just forecasting without considering demand pattern of the
country may cause an irreparable loss to the company no matter how effective
was the strategy and planning.
This is due to the fact that economic influences of the country are
beyond the control of organization and it is bound to reflect back in
accordance with economic situation. If the organization gives high concerns to
the economic choices, then it is beyond any nagging doubt that it can make
successful profits even in the realm of recession. On the contrary,
organizations keeping aside these economic conditions cannot even survive in
economic boom. The economic conditions of any country act as an
opportunity as well as threat depending upon the strategic planning made by
the firm. If the firm gives high degree of concern to the economic choices

even in the depressed economic state can make its survival and the firms
ignoring them will be seen as going out of the market.
It can be articulated with certitude justification that Malaysian
chocolate industry is most developed and competitive sophisticated market in
the world. The greatest share of market is captivated by global chocolate
industries which include Nestle, Mars, and Cadbury. In the presence of such
global giants it is very difficult for new entrants to fetch their position in the
market but the economic system and growth of chocolate market is such that
even new entrants can entertain the customer with good profitability.
The chocolate market should make contracts with cocoa beans farmer
to apprehend the price fluctuations under control. The increase in advertising
and promotions cost will yield higher margin in sales and profitability because
of increased customers interest in buying chocolate. The reason that argues
the increase in promotion is because chocolate is a luxury product and
customer will not buy until it is preceded with high promotion efforts in the
arena of market where recession is expected to strike and profitability in the
luxury market is at stake.
3.3 Social Factors
The socio-cultural environment of the country has significant
impact on the demand of the product or services. This is the reason that
organizations mainly manufacture the products according to the taste and
demand pattern of the nation in which it is operating. Especially, in industries
where the taste and variety of the food products vary from country to country
according to the socio-cultural environment. Most importantly, the

consumption behaviour has significant impact on the product sales and in

reflection to this companies have to consider demographics changes of the
customer. Companies have to select the specific demographic segment and
produce such goods which are in compliance with socio-economic norms of
that particular segment.
Chocolate is a food product which has in depth relation with health
yielding the fact that chocolate industry has to penetrate in the market with all
factors concerning health issues. In Malaysia, costumers are becoming more
health conscious and provide an opportunity for the chocolate makers to
diversify the product with different flavours and healthy ingredients. The
chocolate consumption is seen to have more consumption in young age
children group and teenagers. This reflects that the chocolate company has to
keep its focal point on the tastes of young customers and such modifications
in the chocolate that urges the consumers to give a taste at least once in a year.
For instance, chocolate in the form of bar has attained much more popularity
in Malaysian market.
3.4 Technology Factor
A company can achieve greater success and competitive advantage
in the market by emphasizing on the aspects of technological factors as a
strategic concern (Porter, 2004). The increased pace of technology have
revolutionized the scope of markets. The emerging technologies are projecting
new opportunities to the new markets and giving threats to the existing one
surfacing the fact to compensate with new technology has become optimum
intrinsic need (Middleton, 2003).

In the chocolate manufacturing company, technology can be the most

effective tool in product development, advertising, and promotion.
Technology can alter the process of production and can yield higher quality
product at much less cost. It can also support in building a strong brand name
and product portfolio by adopting digital media to promote products. It is a
luxury food product; therefore, it demands a mass promotional effort to
persuade the customers to buy. Hence, the existing available technology in
Malaysia has much significant importance on the chocolate industry and the
industry has to adapt the concerned technology in order to captivate greater
market share.
3.5 Environmental Factor
Every organization operates in a society and it has certain
obligations with respect to its welfare. The overall environment is comprised
of many elements which organization has to cater before conducting its
business operations. In case of chocolate manufacturing firm operating in
Malaysia, has to analyze the climate factor of the environment as the greatest
opportunity. The climate of Malaysia is pretty much hot, giving high
importance to products which have cold impacts on human health and the
chocolate is the product which is more useful in hot weather in this regard.
Similarly, there are other factors as well which the chocolate company has to
etch in its strategic decision making out which corporate social responsibility
is the prior most to identify in the sense that manufacturing process and their
operations have least impacts on the society and on overall environment.

3.6 Legal Factor

It is a well known fact that every organization has to
conduct its operation which compliance with the laws of the country. The
trade laws, rules and regulations direct all the companies to set their
pricing policy, production policy, and strategic policies according to the
country mercantile laws. The chocolate industry has to anticipate the
outcomes of their business operations in such a way that are in abidance
with the rules and regulations made by the government of the country.
Like in Malaysia, there are set of general accepted rules and standards for
the safer and healthier food products which must be met in chocolate
products of the company. Ignoring such legal consideration can cause
irreparable harm to the industry and that should not be the practice by the
chocolate manufacturing company because Malaysian government does
not give flexibility to any size of industry which gives least consideration
to laws and regulations.

4.0 Conclusion
Chocolate is a luxury food product which can draw an important analysis from the
framework of PESTEL. In a nutshell, it can be said that PESTEL analysis is a useful
framework to understand the external environment in which an organization operates.
The snapshot of this analysis is discussed with respect to chocolate manufacturing
company conducting its operation in Malaysia. Among the six factors, socio-cultural,
political and technological factors are the most important issues.

The social-cultural impacts of the environment on chocolate industry are

important because it can be viewed as an opportunity as well as a threat to the industry.
As a luxury food product, customers always have changing demand pattern in the tastes
of such like products. The importance of political factor in chocolate industry is
considered because the production of cocoa been is an issue in most of the countries and
many government restricts the import of cocoa beans from some of the African countries
because of their child labour involved in producing cocoa.
The chocolate industry is mainly dependent upon the milk as the basic raw
material for manufacturing the products. The advancement in technology has introduced
such machines which are specifically made for milking cows in the most efficient and
hygienic manner. The packaging of chocolate products is yet another dimension where
the use of technology can reduced many wastes. The modern trend of technology has
introduced such digital ways that can multiply the sales of chocolate in the country like
Malaysia where the exposure of media and technology is worthwhile.

Reference:
1.0 http://www.smi.net.my/?pr_content=7
2.0 http://www.theglobalentrepreneurs.com/global-marketing-intermediate-and-macroenvironment/
3.0 http://www.slideshare.net/k.shofiq/environment-of-entrepreneurship-development
4.0 Porter., Michael E.

(1980). Competitive Strategy : Techniques for Analysing

Industries and Competitors. New York: Free Press

5.0 Hisrich, Robert (2009), Entrepreneurship. McGraw-Hill/Irwin