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Competitive collaboration in halal industry


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Competitive Collaboration in the Halal Industry presented to 6th Muslim World Conference, Bangkok, 22nd May 2013

Competitive Collaboration in the Halal Industry presented to 6th Muslim World Conference, Bangkok, 22nd May 2013

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  • 1. The World is Undergoing Change“Competitive Collaboration inHalal Industry”Mohd. Murray HunterUniversity Malaysia Perlis
  • 2. Global Cosmetic and personalcare market Estimate (2012)> USD35 TrillionCurrent global size of Halalcosmetic & personal care marketUSD 5-14 BillionUSD 7 TrillionCurrent marketgrowth is > 35% perannumThat Means if 2012 isUSD 14 Billion:2013 = 53 billion2014 = 81 billion2015 = 124 billion2016 = 190 billion2017 = 292 billion2018 = 449 billion2019 = 690 billion2020 = 1.06 Trillion
  • 3. Current Global Halalawareness is estimated to be20% among the globalUmmah.This is going rapidlyHowever awareness abouthalal Cosmetics and personalcare is even less but growingrapidlyMatrade 2010
  • 4. Although Muslims make up 20% of the World’s population many are inpovertyMost countries are at different stages of developmentConsumer tastes and preferences actually differ widelySupply chains are typically “third world” in most countriesAlthough ONE Ummah, different aspiration, desires, customs, incomesThis is a niche market in many countries20% of the World’s Muslims are NOT concerned about Halal certification onpackaging
  • 5. Background• 2-3 million population withdifferent ethno-culturalbackground• Lagging along innational development• Lower educationdisposition• Predominantly ruralpopulation• Currently unable tobenefit from growingtourism industry• Ageing farmerpopulation• Limited knowledge ofpotential opportunitiesand matching skillsWhat are ourproblems athome?
  • 6. Farmers
  • 7. “Mindset Barriers”(Small Holders)• market passive• copy cat approach• ‘quick-fix approach’• poor exposure and perhaps resistance to newideas,• practice isolation,• market isolation• perception of agriculture as only a fallbackprofession• fixation on a single success.
  • 8. Lack of IdeasLack of education and skillsNarrow mindsetFeeling of powerlessness – lack ofaccess to marketsLack of resourcesLack of will
  • 9. The World has become a somewhatintegrated market over the last fewdecades through the phenomena knownas globalizationTraditional economicswould explain thisphenomena in terms ofspecialization, comparative and relative advantageSociologists would talk interms of the ‘cosmopolitanman’
  • 10. Success in the global market would depend upon……Competitive advantage grows fundamentally out of value afirm is able to create for its buyers that exceeds the firm’scosts of creating it. Value is what buyers are willing to pay,and superior value stems from… providing unique benefitsthat more than offset a higher price.According to Professor Michael E. Porter
  • 11. This presents three major issues:1. Is ‘Globalization’ more ‘reality’, than ‘myth’?and if so and we understand it’sdynamics2. What are the potential opportunities?and3. How do we exploit these potentialopportunities?
  • 12. ProductOpportunityGapSocialSocial and cultural trendsand drivers.Reviving historical trends.Influence of internationaltrends.Changing demographics.Styles, fashions & fads.EconomicStage of economicdevelopment.State of the economy.Level of disposable income.Macroeconomic, generalindustry conditions, financial&geographical environment.TechnologyCurrent state of the art andemerging technology.Re-evaluating and utilizingexisting technology in newareas.New knowledge.Invention.Government &RegulationGovernment needs &priorities.Restriction by Government.New laws & regulations andimpact on product marketsand supply chains.Trade liberalization.Our Inner SelfOur upbringing, domicile outlook, experiences,interests, skills & abilities, assumptions, beliefs,attitudes, perception, cognitive processes, patterningand biases, our inner psych and emotions, imagination,energy, and passion, etc.The way we interact and stimulated by theenvironment and make connectionsRandomness &UnexpectednessA random or unexpectedevent that creates anopportunityChanges in any ofthe factorsNewKnowledge orInformationInterrelated FactorsHunter (2012)Opportunity, Strategy &Entrepreneurship
  • 13. Restoring Competitive advantageMust move from this:To this:BrandingPromotionNew & efficienttechnologiesNovel newproducts
  • 14. Toyyibat & Halal• This day are (all) things good and pure made lawfulunto you. The food of the people of the Book islawful unto you and yours is lawful unto them. … Ifanyone rejects Faith, fruitless is his work, and in theHereafter he will be in the ranks of those who havelost (all spiritual good).Al-Ma’idah5:5
  • 15. • O you people! Eat of what is on earth, lawfuland good; and do not follow the footsteps ofthe evil one, for he is to you an avowedenemy.Al-Baqarah 2:168
  • 16. • From the land that is clean and good, by theWill of its Cherisher, springs up produce,(rich) after its kind; but from the land that isbad, springs up nothing but that which isniggardly: thus do we explain the Signs byvarious (symbols) to those who are grateful.Al-A’raf 7:58
  • 17. • O ye who believe! Eat of the good things thatWe have provided for you, and be grateful toGod, if it is Him ye worship.Al-Baqarah 2:172
  • 18. Heavy use of chemicals.Leading to declining yields.Cause of high input costs.Loss of cover protection.Leading to residuals in crops.Loss of humusLoss of trace elementsCompact (inhibit root growth)ErosionAccumulation of chemicalsCarrier of disease (the unrecognized problem)Contaminated waterPoor drainage - floodsCarry away top soilsGenerally afterthought –poor maintenanceThis has implications upon what we do andhow we do it
  • 19. “He hath subjected to you all thatthere is in the heavens and allthat there is in the earth: All isfrom Him. Verily, herein are signsfor those who reflect.”Al-Jathiyah 45:12
  • 20. The Muslim living as a minority in anon-Islamic society will have anumber of problems identifyingwhat items are halal and haram(forbidden in Islam), withoutproduct certification. For example,gelatine, lard and tallow can beeither in a halal or non-halal,depending upon their source andmethod of processing. Crosscontamination is a major problemin stores and particularlyrestaurants, where pork is alsoserved.
  • 21. Halal, but is it Toyyibaan?
  • 22. Its all about value (both industrial and consumer products)
  • 23. USAAsian InfluenceSesame, wasabi, ginger,noodle and AsiancabbageIndian InfluenceFruit, spice and toastednuts, chutney, quincepear, roasted coriander,pistaschio,almond &walnutBlue and goat cheeseMexicoTarmarind, squashflowers, huitlacoche(corn mushroom),portobello mushroom,duck meatNorth AmericaCuisines with most potential for growthMediterranean influenceIndian influenceMiddle East influenceSlow FoodEuropeFusion styleThai, Indonesian, Vietnamese influencesContemporary cuisineMediterranean influenceExotic combinationsSouth AmericaFusion styleThai/ChineseWestern/ChineseIndonesian/ThaiAmerican/MediterraneanItalianFrenchAsia/Pacific
  • 24. Heaven Strategy (Dan Hill 2010)Emotional ResponseResponseRateNegative PositiveLowHighMorenegative/highresponseMorepositive/lowerresponseMorenegative/lowerresponseMorepositive/higher response
  • 25. TawhidAl-Iman Syar’iah Ad-DinFard’ainFard’ KifayahAl-IlmAl-AmalShu’raAdabHalal ToyyibaanMusharakah Ibadah Al-Ta’awunAl-Fasad Amanah Al-Fatah UmmahIslam is ready tocompete
  • 26. SeekInnovationthroughnovelmeans
  • 27. Microwave Oven Pressure CookerChemicals & Spoons, etc. Glassware
  • 28. Tissue Culture
  • 29. • Minimise Production scale to account for initial lowsales/production quantities and lower capital investment• Mobile GMP Facility• Simplified Technology
  • 30. The Burger Syndrome
  • 31. Needed:IntegratedCompetitiveAdvantage
  • 32. Its about communityempowerment
  • 33. Southern ThailandMalaysiaBruneiIndonesiaCompetitive Advantage ThroughDifferentiationMaximises Benefit from Location as amarketing advantageRelatively low competitive marketsegmentMaximises benefits of large localbiodiversityLocal culture is utilised as branding
  • 34. Source of OpportunityVision&ObjectivesNetworksKeyStakeholdersKeyActivitiesKeyResourcesKeyCapabilitiesTechnologyThemesCustomerengagementChannelsCostStructureValuePropositionsRevenueStreamsStrategies
  • 35. Haram(Those things prohibited byAllah in the Al Qu’ran)HACCPGMPSustainableenvironment, community& businessCommunityBenefitToyyibaanCleanHealthyNon-exploitiveTraceableSupplyChainEthicalThe Halal/Toyyib supply chain is another example ofintegrated competitive advantage:Non-Muslim concepts of ethics, sustainability, and goodness are merging with Islamicconcepts
  • 36. Halal & ToyyibaanLook at non traditional marketsCleanHealthyNon ExploitiveNo Najis/HaramSustainableCommunityBenefitToyyibaanSee Halal as only part of a whole system of productionHalal does notnecessarily meanFoodsLook at productother than foods
  • 37. GDP % share of GDPrank country country pop % GDP World Islam1 Indonesia 866 88.0 761.7 1.3 13.92 Turkey 572 99.8 570.9 0.9 10.43 Iran 562 98.0 550.4 0.9 10.14 India 3,611 13.4 483.9 0.8 8.95 Pakistan 393 97.0 381.6 0.6 7.06 Saudi Arabia 338 100.0 338.0 0.6 6.27 Egypt 304 90.0 273.2 0.4 5.08 Bangladesh 304 83.0 252.6 0.4 4.69 Algeria 233 99.0 230.9 0.4 4.210 Russia 1,589 12.5 198.6 0.3 3.611 Malaysia 290 55.0 159.6 0.3 2.912 Morocco 138 98.7 136.5 0.2 2.513 France 1,816 7.5 136.2 0.2 2.514 China 8,859 1.5 132.9 0.2 2.415 US 12,360 1.0 123.6 0.2 2.316 UAE 111 96.0 106.8 0.2 2.0MuslimThe top Islamic economies
  • 38. rank Country GDP pop GDP1 US 12,360 1.0 123.62 China 8,859 1.5 132.93 Japan 4,018 0.0 1.64 India 3,611 13.4 483.95 Germany 2,504 3.7 92.66 UK 1,830 2.7 49.47 France 1,816 7.5 136.28 Italy 1,698 1.5 25.59 Russia 1,589 12.5 198.610 Brazil 1,556 0.1 1.611 Canada 1,114 1.9 21.212 Mexico 1,067 0.1 1.113 Spain 1,029 1.5 15.414 Korea, South 965 0.2 1.915 Indonesia 866 88.0 761.716 Australia 640 1.5 9.6Muslim %Muslim share of population and GDP in major economies
  • 39. Recent reports indicate thathalal sales in the US areincreasing around 80% peryear, where a number ofnew retail outlets specializingin halal products are openingup. A&P, Loblaws, FoodBasicsand Wal Mart are allocatingspace for halal products intheir stores
  • 40. EU is approximately 30% of the World Market for foodIt has great regulatory influence on the rest of the WorldRisk AssessmentHazard IdentificationHazard CharacterizationExposure AssessmentRisk CharacteristicsRisk ManagementRisk EvaluationOption AssessmentOption ImplementationMonitoring and ReviewRisk CommunicationImprove quality of consumer informationTo facilitate healthier food choiceDeclaration of GMO MaterialsNutritional InformationEliminate MisinformationScientifically SubstantiateClaims
  • 41. GeneralProvisionsPersonnel &FacilitiesSeeds &PropagationMaterialsCultivation, Soil& Fertilisation,IrrigationHarvestPrimaryProcessingPackagingStorage &TransportEquipmentDocumentationSelfInspectionQualityAssuranceEurepGAP
  • 42. Although widely respected internationallyThe present Halal Certification is only relatedto ingredients and processing environment
  • 43. New infrastructure is not enough toMove the region to a new paradigm inAgribusinessInfrastructure is easily replicated
  • 44. Healthy foodArguably the fastest growing sector of the foodmarket.Ethnic FoodsEthical & EnvironmentalSafety IssuesMad Cow Disease and Avian FluHalal food Assuranceauditing to verify halal compliance from thefarm to the plateIslam is a way of life basedon modesty, justice andreligious practices, whichCreates a unique set ofProduct and service needs
  • 45. We havealready beenhighlyinnovative
  • 46. EssentialOilProductionTradingFlavour&FragranceCompoundingEndProductManufactureWholesalerRetailerConsumer1.0 1.6 2-3.0 (6-9) 2-2.5 (18-24)Relativeand (Absolute) ValueAdded ThroughChain1.1-1.2 (19.8-28.8)1.2-1.4(23.76-40.32)TheEssential Oil ValueChain (Flavour& FragranceIndustry)
  • 47. $ Cost$ ReturnDegreeofProcessingFinal Product FormSelection ofCropTrialsPropagationLandPreparationPlanting,Maintenance &IrrigationHarvesting &ExtractionProductDevelopmentFinal ProductCrop &ProjectFailureNoReturnCompost&MulchBiofuelAnimalFeedCrudeEssentialOilOrganicAgro-productCosmetic&AromatherapyNutriceuticalPharmaceuticalConceptual Value Added ProcessingOptions with Revenue and CostImplications
  • 48. Finding New Business Models
  • 49. Systems AgricultureAgricultural professionalstance that emphasizesfarming as a social practicethat uses technologyParticipatory ActionResearchEmphasis on co-learningthrough farmer andcommunity participatoryresearch and empowermentprogramsTraditional AcademicBased ResearchBased on developingtechnology and principals,models and possiblepracticesFarming SystemsResearchOn-farm technical problemdiagnosis and adaptiveresearchShift fromtheoretical andtechnical tocommunitycollaboration andproblem specificresearchGeneral LocalTechnicalSocialDomain FocusDisciplineOrientation
  • 50. Opportunities are a product of our mind andthese visions can become the design of ourfuture with skilful and creative utilisation ofscattered existing and forgotten resources tocreate great unimagined synergies. This isthe true power of creativity that God hasgiven humankind.
  • 51. Overseas Halal Food Product
  • 52. Overseas Halal Food Product
  • 53. How Quickly can aTurn into a redocean strategy?
  • 54. Thank You