Nestle Malaysia Background

We had decided to do some research on Nestlé Company since it is the well-known

world’s biggest food and drinks company. Nestle Malaysia was established in 1912 as the
Anglo-Swiss Condensed Milk Company in Penang and Nestle has been supporting
Malaysians through the quality products and the standing of the brands, while keeping up
Halal greatness and reliability. This is in accordance with our purpose of opening the power
of food to improve personal satisfaction for everybody, today and for the future generations
to come. Due to the win warm praise from customers, Nestle’s business development and
expansion rapidly took an action to Kuala Lumpur necessary in 1939 and there came a led for
expanded employment opportunities in 1957. Therefore, Nestle Malaysia started Culinary
Product Division creating exciting culinary arrangement under the well-loved MAGGI brand
name and this prompted the establishment of Nestle first manufacturing office in Malaysia.
Today, Nestle Malaysia had producing more than 500 Halal guaranteed products, 6 industrial
facilities have been operated and they had employed in excess of 5,000 employees
nationwide. An enormous number of Nestle key brands include Malaysian top picks such as
Milo, Maggi, Nescafe, and Kit Kat have now become a part of Malaysian families for
generations. With this, they become the global favourites brand as well as leader in Nutrition,
Health, and Wellness Company. Nestle Malaysia are strongly dedicated to offering the
exceptionally in taste, quality, and nutrition of products as they are having been available in
the country and in the hearts of Malaysians for more than a century.

Nestle KitKat

One of the main products made by the company is the KitKat chocolate. To make it in
simple word, KitKats are layered wafers covered in tempered chocolate that contained in one
single wrapper and consummately snaps into two to four shareable pieces. KitKat is the part
of the Nestlé’s scope of confectionery products. It enjoyed by both youthful and old as a light
refreshment or snacks and become the top-ranking chocolate brand in Malaysia. Nestlé
KitKat is the initial worldwide confectionary brand to be produced by using 100%
sustainable cocoa sourced from the Nestlé Cocoa Plan. Now, with their increasing popularity
and favourable by major merchants, they even exported their KitKat chocolate to 14 countries
in Asia. There is a slogan of this product, "Have a break, have a KitKat" portrays the
enjoyment of the chocolate-covered wafers that helps you to have a rest whenever one faces
difficulty in their work and therefore KitKat is the best option. KitKat Chocolatery is offering
items with special premium flavours, digitally shareable, personalized, and customized,
which comprises KitKat rubies, KitKat Green Tea, KitKat Chunky Cookies and Cream,
KitKat Chunky Hazelnut and more. KitKat is 100% Halal and manufactured locally at
Nestlé’s Halal-certified office in Chembong, Negeri Sembilan.

Manufacturing Process

The manufacturing process is the most critical step in making a delicious and crunchy
KitKat chocolate. At first, we need to prepare some ingredients comprises milk compound,
chocolate compound, few chocolate wafers, sugar, and wheat flour. To melt the chocolates
compound effortlessly, we will use the double boiler method which can heat the chocolate
slowly and lessen the chance of overheating the chocolate or resulting in fat bloom. Hence,
sugar will be added, and the chocolates must be cut generally and placed in a big pan. Then,
stir the chocolate to make them melt at the same time we must ensure the pan on a stand kept
in a deep skillet filled with water and heat until the chocolate is liquefied. Next, for the
wafers, we are going to use home-made wafers mix with the wafers purchased from the store.
Thus, we will use wheat flour to create the thin and crispy homemade wafers. Then, pour the
chocolate into KitKat moulds half the way simultaneously give a tap to spread the chocolate
out. After that, pour again the chocolate on the top of wafers to cover it and let the chocolate
spread out pleasantly over wafers and cover them completely. Last, put the mould into the
refrigerator for at least 5 to 6 minutes. After 5 to 6 minutes, take it out from the refrigerator
and just flip out all the concreting chocolates. Packaging process is also needed by placing
the chocolate into the packaging bag. We must take note that the chocolate must store in a
cool place and not allowed to keep them under the fan as water droplets will form.

Types of Cost Incurred

To be able to find out what an organization had spent on the formation or production
of goods and services, it is essential to understand the types of cost incurs and from where
they occur. In this case, material cost arises as it is required to produce or manufacture a
product. To produce a nestle KitKat chocolate, milk compound, chocolate compound, wafer,
sugar, and wheat flour are needed and categorised as direct material cost as all these
ingredients are indispensable to manufacture the finished product. Packaging costs are also
incurred, and the amount is referring the quantity of packaging bag used to pack the
chocolate. All those material and packaging are gotten from Shopee. Human resource is the
main factor of production to convert the materials into finished goods. Hence, labour cost
arises. There are also indirect costs incurred when we produce the KitKat chocolate which is
the manufacturing overhead cost include pan and mould. When we conduct a day-to-day
business, there must be some operating costs to support the running of the business. In this
situation, utilities comprise water cost and electric cost are required in order to produce the
targeted amount of KitKat chocolate. When we categorize the cost based on behaviour or
volume, direct material, packaging cost, labour cost and operating cost are considered as
variable cost. Therefore, by adding up all those costs, we can know the variable cost of
making a KitKat chocolate. Fixed costs such as rental and advertisement also incurred in this
production.

Estimated Production Cost and Selling Price

Cost of production refers to the total amount needed to produce a particular quantity
of output. With the aim of estimate the production price, we must start from determine the
fixed cost follow by make an estimation of variable cost. Thus, before starting the business,
we had determined that we will need to rent a place to manufacture the KitKat and
advertisement also plays an important role to increase our sales and assist us to expand our
products to the market. With this, the estimation of the fixed cost will be RM1500. Besides,
we also found that make a KitKat chocolate will require ingredient, packaging, labour,
production overhead and utilities. Hence, the estimation for those variable cost will be RM20
per unit. By using the formula, Fixed Cost (FC) + Variable cost (VC) divide the number of
items produced, we can find out the production price per unit. In this scenario, if we want to
produce 500units of KitKat chocolate, the calculation of production price will be RM1500+
(RM20 x 500) / 500 = RM23 per unit. To determine the selling price of each unit of KitKat
chocolate, we should rely upon how much the vender will acknowledge, how much
purchasers are willing to pay, and how competitive the cost is in contrast with different
organizations in the market. According to our research on the market price of a pack of
KitKat chocolate, the selling price is in the range of RM23-RM30 for 24 pieces in one pack.
Therefore, we must sell at this range of market price, and we estimate to mark up 20% which
will get the selling price of RM27.60.
Nestle Chocolate Ice Cream

One of the main products manufactured by Nestle Malaysia is ice cream. Ice Cream at
Nestlé implies creating mystical happiness for the customers can have a positive outlook on.
The pleasurable taste and sensation of ice cream combined with healthy natural ingredients
such as milk, fruit and nuts which makes ice cream as an ideal part of a balanced, enjoyable
diet. Nestle’s scope of ice cream products make certain to delight with alternatives for each
preference from all natural low, sugar free and lactose free. There was a powerful slogan by
Nestle, “regardless of whether it’s a treat for you, a family gathering or special celebration,
Nestle Ice Cream makes it magic”. The main products that we will be focus on Nestle
Chocolate Ice Cream Blue Tabs which have mouth-watering chocolate flavour and accessible
in 1.5L tubs. To draw in more customers to purchase this product, Nestle Malaysia has
created a marketing strategy which an incredible motto, “Consistently remembered that
sharing is caring. Share special moments with your family over scoops of ice cream”.

Manufacturing Process
The manufacturing process of making a chocolate ice cream is simple and easy, only
3 steps and you can enjoy a mouth-watering chocolate ice cream. The ingredients of making a
1.5L tubs chocolate ice cream includes 400ml of whipping cream, 390ml of condense milk,
200g of cocoa powder and 4ml of vanilla flavours. First and foremost, we have to combine
sweetened condensed milk, cocoa powder and vanilla extract and stir together in a medium
bowl until all ingredient completing mixed together and hence, set aside. Furthermore, pour
the whipping cream into the bowl of the ice cream mixer, therefore whip the heavy cream
until it turns stiff peaks form yet to be over beat. Last but not least, fold the sweetened milk
mixture into the whipped cream and pour into a 2- quart container, hence, cover and freezer
for at least 6 hours or overnight. Therefore, take out the chocolate ice cream from the freezer
and package it into a 1.5L blue tabs and a mouth-watering chocolate ice cream is ready to
serve.

Types of Cost Incurred

Without a doubt, to produce a product might incurred varies types of cost such as
variable cost, fixed cost and so on. Not excepting to making a chocolate ice cream, there have
plenty types of cost incurred in making a chocolate ice cream. First and foremost, the most
important cost that incurred in making a chocolate ice cream is direct material cost, also
known as the ingredient cost. To product a chocolate ice cream, the ingredient required is
whipping cream, condense milk, cocoa powder and vanilla flavours extracts as all these
ingredients are indispensable to manufacture the finished product. Furthermore, labour cost
might also arise in making a chocolate ice cream as the company might employs few labours
to convert the ingredients to finished products. Generally, to make an ice cream might require
an ice cream mixer, hence, a production overhead cost arises. Apart from that, the company
must purchase the blue tabs plastic box where the customers familiar with. The amount of
packaging cost is according to the quantities of the blue tab’s plastic box needed. In addition,
to produce chocolate ice cream might also need the supply of electricity and water, hence
utilities cost such as electrical bill and water bill might also arises. Moreover, the company
have rented a factory to produces chocolate ice cream, hence rental cost arises. Lastly, in
order to attract more customers to purchases the products, the company has made an
advertisement, hence advertising cost arises. To conclude with, direct material cost, direct
labour cost, packaging cost and operation cost such as utilities can be categorized as variable
cost, due to the cost is referring to be quantity of the product produced. Meanwhile, rental
cost and advertising cost can be categorized as fixed cost, due to the quantity of the product
produced does not affect the cost that need to be paid.

Estimated Production Cost and Selling Price

After the company summaries the types of cost incurred in producing chocolate ice
cream, the company might need to estimate both production cost and selling price to avoid
the company encounter loss. Therefore, before a particular products or services introduce to
the market, it is significant to determine the total cost incurred in producing chocolate ice
cream. In the aspect of fixed cost, the company need to rent a factory in order to produce
chocolate ice cream. Meanwhile, the company has made an advertisement to promote the
product. Therefore, the estimation of the fixed cost will be RM150. In the aspect of variable
cost, the company must determine the material cost, packaging cost, labour cost and utilities
which according to the quantities of the products produced. Therefore, the estimation of the
variable cost will be RM10 per unit. In order to figure out the total production cost per unit,
the company has to sum up the total fixed cost and variable cost divide the number of
products produced. In this situation, we estimated to produce 2000 units of 1.5L blue tabs
chocolate ice cream, hence, the calculation of production cost will be RM1500+(RM10
x3000)/3000 = RM10.5 per unit. In order to determine the selling price of each tab of
chocolate ice cream, the company may do some research on the market price, competitor
price and how much does customers will purchase this product. According to our research on
the market price of 1.5L blue tabs chocolate ice cream, the range of the selling price from
RM9 to RM13. Therefore, the company must sell within the range of market selling price and
the estimated selling price can mark-up 15% which sell at RM12.10 to gain profit for the
company.