Feasibility of Malaysian Business Environment - Case Study Example

Name: Course: Tutor: Date: Feasibility study on Malaysian business environment All businesses of all kinds have to carry out their activities in a particular environment. Due to its social nature, the business has to interact and integrate with its environment. The business ensures that it maintains a healthy relationship with its environment in order to achieve the main objectives of maximum returns and overall growth. The way in which the interaction occurs is the point at which the business meets the environment. At that particular point, the two shall be benefiting from each other through the interaction. This defines the interdependence relationship between the environment and the business. The always transforming environment, in which a particular business carries out its activities, creates the opportunity for the business to effectively expand, develop and acquire economic wealth. At the same time, the environment also has challenges in it that are exposed to the business. The original factor to be the considered is the mode in which the business impacts on the people and the environment through its activities of production or servicing. The mode should be essential as it functions to satisfy the consumers, shareholders, stakeholders and other parties involved. Through the development of core shareholder and stakeholder relationships among government entities, customer entities, environmental organizations and other parties, a business can expect and manage matters and concerns that might have not been easily identified resulting into major business oriented environmental challenges. Therefore, this calls for an extensive examination and analysis of both the internal and external business environmental factors. Business is exposed to problems of social consideration that is based on particular issues that relate to their activities and interactions with workers, consumers, stakeholders, suppliers etc. In addition, this type of consideration involves the health and safety protection of the public, preventing any harm to the natural business environment, creating and using ethical standards and practices. Other social consideration activities include; observing the cultural and social regulations, creating a balance between the publics’ interest and the business’s interest and also becoming a proactive entity (Chidi et. al.). Another essential consideration is the political environment as it directly affects the actual operations and effectiveness of the particular business. Political and controlling changes are usually influence of the social and economic factors and concerns. It is also a primary objective of the business to the consumers, shareholders, and stakeholders. In this case the economic considerations which most of the time focuses on the direct impact of the transactions involving goods and services, money flow and the relationship between parties involved. Consumers of the products or services of a business can be satisfied, either disappointed or have a neutral response. The economic considerations also involve the indirect effects of the economic business environment factors that include unidentified costs of transactions and the external effects brought about by the immediate community. In this context, the most essential economic queries often relate to environmental oriented effects. Usually, they are some of the diversified negative and unexpected results of products, operations and eve services. This shows that the business environment is the pattern of all the external and internal factors and influences that impact on the life of the business, its economic improvement and development. Relatively, since the improvement and development through conspicuous company and market positions are core to the mission and vision of the business, it is importantly relies on the business’s planners to be well informed of the business environmental factors and emerging trends of their characteristics with time. Naturally, the environmental factors and their effects are economic, social-cultural, technological, and political-legal. Since when developing a strategy a business needs to include future based actions in terms of the business environment, business professionals who create the strategy must be well informed of the environmental factors,. This especially the external environment is capable of significantly affecting the business and its future in general (Chidi et.al. 2011). In Malaysia, despite the fact that small businesses are significant contributors to the economy, they have not been attended to efficiently as the many scholars have been unfair by concentrating majorly on the larger businesses. Studies concerning manufacturing industries in Malaysia have shown that there is a significant negative relationship between poor entrepreneurship, ineffective human resource management and the general performance of the small businesses. On the other hand, the studies have also shown that there is a positive relationship between the utilization of market knowledge, technological know-how and the general performance of the small businesses. Actually, in Malaysia the utilization of market knowledge is an effective strategy towards the achievement of high business performance (Moorthy et.al. 2012). Malaysia as a country offering support to the small businesses in the country and is encouraging internationalization hence creating a better platform for entry of other small businesses. The country has political stability, improved physical infrastructure, and skilled, multicultural and diversified labor force. Presently, the country is competitive as it attracts investments from foreign businesses and is ranked among the top 20 trading countries in the whole world. Statistics show that the small medium enterprises in the country constitute up to 99 % of the total businesses. The percentage also consists of 1% active exporters. The exporters are distributed as follows: 57% manufacturing sector, 2% agriculture and 40% services. The service sector has a significant percentage and the Coffee Club could use this advantage also as an entry point. By 2005, the country had its export destinations as extensive as China, Hong Kong, USA, Europe and Japan. This shows that the country significantly depends on the small medium businesses and the international based trade (Senik et.al. 2010). Coffee club product One of the reasons why I the past many people did not consume coffee is that they considered it somehow harmful to their health. Currently, this is no longer a reason as result of the studies conducted on the negative and positive effects of coffee. Cancer and hypertension are some of the health risk effects that have been linked to coffee but not yet proved scientifically. In contrary, current studies have shown that coffee can be beneficial to consumers as it is more beneficial than hazardous with developed countries such as America having many consumers. Statistical responses from consumers reveal that consumption of coffee is more beneficial than negative. This is advantageous to coffee businesses around the world as their market is increasing since 2005. Presently, many people around the world accept coffee as they believe it has health benefits and that it is better (Franchise Direct 2012). Environmental factors The environment variation and strategy play a key role in the establishment of any firm/business. The change in strategy by any firm is based on environmental variation. In order for a business to have a competitive advantage over others changes in strategy has proven to be vital. According to studies environmental factors played a role in product promotion, distribution, design and market strategies respectively. The market orientation and new product launches largely depend on environmental factors. The strategic planning of product promotion is the most crucial if any success is to obtain achievement by the firm. Maintenance of competitive advantage is vital for survival of firms in the market. The orientation of the market and business environment is the factors that determine success for a firm in any environment. Business performance, new product development, and firm’s profitability margin are dependent on relationship between the firm and the environment around it. Customer satisfaction, revenue from sales, product performance just to name a few is also key factors in the development of competitive advantage over rival firms (Adis and Razli, 2009). External factors Internationalization of SMEs is the current external factor affecting such firms. According to expert analysis the external factors affecting these firms can be divided into four categories; political, economic, technological and society. An extensive understanding of these factors is important for any SME s wishing to operate in an environment. Internalization has reduced profit margins in many firms due to lack of a deeper understanding of the environment and factors surrounding it (Senik et.al. 2010) Cultural factors Studies done previously have shown that culture plays a role in the failure or success of a new product launch. There are three factors that determine the product performance, support by organization to market a product in a market with a different orientation. Field interviews is the second factor, cultural context in terms of personal interviews gives the firms an engagement to the society it is wishing to operate on. Market information is crucial to success of firms; the culture will determine what methods of promotions are to be used. Cultural beliefs are also the most essential tools in marketing as clear understanding can enable firms to give their consumers what they wish to have without fear of failure as they already know what they want. The third factor is behavioral orientation of the firm, the organizational culture and climate around it is important for perfect performance of a product, as forces need to be drawn together in order for success to be achieved. Legal factors Legal factors have an effect on the operation of a firm, the formal procedures followed in registration of companies is beneficial to employees and the company. The legality of a firm enables employees to be sure of whom they are dealing with and job security is assured. An outline of founders can be done by legal entities as they can pool resources together and form a company through partnership and according to partnership act of the respective country. Formal registration of companies gives them the accessibility to several services ranging from banks to courts. Markets can be achieved as the firms are known by their name but not according to the owners. A legal entity in this sense is where the company can sue or be sued by an individual, group or other companies. Employee protection act is described in the law and the companies cannot mistreat their employees without expecting any action to be taken against them. Formal registration is beneficial to owners as the company has limited liability, where the extent of liability can only reach the company investments and not heir personal assets as in the case of sole proprietorship. Upon claims or bankruptcy the owners are not put at risk in terms of property posed but the company will pay to the extent it can. Legal factors are seen by many entrepreneurs as stumbling block in entry to a new market, but due to current trends in business the legal frame work has undergone changes. Registration process are made easy by countries in the world to encourage more entrepreneurs to invest in their country’s as well as increased revenue to subject country (The World Bank 2012). Malaysia has been on the rise in terms of position worldwide, the rise in registration of macroeconomic institutions and the establishment of many firms in the country. Marketing efficiency has improved to a greater extent this contributes to the overall position of the country in the world ranking investment wise. Malaysian financial sector is developed and up to date competing with the best in the world e.g. Singapore and Hong Kong. The advanced financial sector increases efficiency in the industrial and business sector respectively as the market base increases as well as the consumer encouraged use to easy payment methods. Malaysian macroeconomic grade stands at 29th position according to recent rankings; this can be attributed to the efforts and emphasis on setting of new companies and easy legal framework. Innovation and creativity are two major factors that the Malaysian authorities consider important in driving the economy. Technologically Malaysia is not at par with the developed nations but emphasis is being put on the same to improve the situation. Education in Malaysia is ranked 44th in the world which makes it give more room to technological and educational advances if any progress is to be achieved .higher education and access to higher learning is 69 percent ,but the government is improving the same to a better level for businesses to thrive in the country. Enrollment in these institutions is improving as well as the tertiary and secondary schools. Conclusion In Malaysia any small businesses planning to enter the market must have enough work experience, proactively apply the latest technologies & programs since the country values IT, consider effective human resource management (due to the multicultural) & utilization of the integrated market knowledge. The particular business should also be on know of the challenges that they are likely to face and create measures to counter them. They should also have effective waste management and consider registering the business to become legal as authorities in the country conduct environmental impact assessments and registration assessments form time to time. Finally, the core of doing successful business in Malaysia is good consumer relations, skilled personnel, proper planning, high quality, and flexibility. Works Cited Adis, A, A., and Razli Izyanti. “Factors Affecting New Product Development in Malaysian Manufacturing Industry.”International Bulletin of Business Administration 4 (2009). Chidi, O., T, Babatunde, O, O and Titus Okwu. “External and Internal Environments of Businesses in Nigeria: An Appraisal.” International Bulletin of Business Administration 12 (2011). Franchise Direct. “Coffee Franchise-Swot Analysis.” 23 September 2012 http://www.franchisedirect.com/coffeefranchises/coffeefranchisesswotanalysisbusinessr portiv/ 4/221 Moorthy, M., K., Tan, A., Choo, C., Wei, C., S., Ping, J, T, Y, and Leong Tan. “A Study on Factors Affecting the Performance of SMEs in Malaysia.” International Journal of Academic Research in Business and Social Sciences 2. (2012). Senik, Z, C., Isa, R, M., Scott-ladd, B., and Entrain Lanny. “Influential Factors for SME Internationalization: Evidence from Malaysia.” Int. Journal of Economics and Management 4 (2010). The World Bank. “Economy profile: Malaysia.” 23 September 2012 http://www.doingbusiness.org/~/media/fpdkm/doing%20business/documents/profiles/co ntry/mys.pdf Read More