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Value Chain Analysis

1. Supply chain management

Thai ingredients are used for the manufacture of Yakult (Thailand). Consists of

cultured Lactobacillus casei Shirota strain, skim milk powder, sugar, flavours and water. There

are no artificial colours and flavours in Yakult. A 'just-in-time' system of production is followed,

which means Yakult is manufactured on demand to ensure the product is always delivered with a

full shelf-life. Yacult (Thailand) is manufacturing its entire product line in one size, one type ofpackaging, and one flavor at a fully utilized plant located behind Kasetsart University, Bangkok,

Thailand.

2. Operation

Polystyrene bottles are packed in groups of five in polyethylene wrap and then packaged into a

slab for distribution (a slab consists of ten five-packs, that is 50 bottles). The polystyrene bottles

are made from a food grade plastic and are a number six on the Plastic Identification Code. The

bottles are sealed using a foil lid, which is not resealable to ensure that the product is consumed

upon opening. This minimises any risk of contamination once opened.

3. Distribution

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Yacult (Thailand) relies heavily on over 3,000 Yacult Ladies, who use motorcycles or bicycles

to deliver 2.3 million bottles of Yacult to the Thai consumers each day with no inventory in stock

or account receivables. These Yacult Ladies currently receives 25 Satang (1/4 Baht) for each

bottle of Yacult they sell at 6 baht to the consumers. Since 1975, Yacult (Thailand) has never

changed its production base, packaging, or distribution method.

4. Sales and Marketing

Based on the idea that unbalanced diet, stress, natural ageing and some medications, especially

antibiotics, can cause an upset in the balance of beneficial bacteria in the intestines. It is

recommended that the product be consumed on a daily basis for maximum benefits.

Advertising is carried out through Yakult ladies where these ladies market the products through

door to door selling.

5. Service

The Yakult Information Service (YIS) plays an integral role in the promotion of the product

through its education service. Staff includes a fully qualified microbiologist, nutritionists

and teachers.

The YIS offers a range of free activities, resources and educational services to healthprofessionals, community groups, consumers and educational establishments.

6. Profit margin

Profit margin represents the percentage of revenue that a company keeps as profit after

accounting for fixed and variable costs. It is calculated by dividing net income by revenue.

Yakult Honsha Co Ltd Gross Profit Margin Quarterly of September 2012 is 4.25%.