International Management: Malaysian and Vietnam Markets Analysis – Free Essay Examples

International Management: Malaysian and Vietnam Markets Analysis

TNA’s main business is developing and innovating packaging equipment. Its products include distribution, weighing, identification and display strip solutions, just to mention a few. For the purpose of this paper, it is assumed that the business is considering the possibility of further international growth. In particular the business is considering opportunities in Malaysia and Vietnam.

This paper analyzes these two markets, with a ranking of both in terms of ease of doing business, and profits potential. To introduce the study, this work briefly discusses market trends and analysis, and reasons why the business would need them. The paper then gives a description of both countries, its demographics, culture, economy and growth potential. It also discusses the advantages and disadvantages of establishing a manufacturing facility in one of the target countries.

Malaysia’s economy promises vibrant growth, especially as the country ventures more into petroleum and tourism. The biggest challenge that TNA would face by venturing into this market is the country’s changing development priorities from manufacturing to tourism. Vietnam’s huge population offers TNA a vast market and adequate human resources. Challenges in this market include its negative image as a result of its criticism related to human rights, and a long history of war.

This work finally concludes that even though both these markets present TNA with enormous opportunities, Malaysia offers the company better short and long term advantages. Realizing that viable opportunities and a good market are not enough for a business to suceed, the paper recommends that TNA will need a strategic entry and marketing plan to realize its objectives in the market.

Introduction

TNA’s business is based on developing and innovating packaging equipment (TNA, 2011). When the company started, it spent the first few years installing machines for Smith, an Australian potato chips manufacturer. The company did not expand its operations to other countries until 1989, when it entered the U.K market and earned its first foreign income by consulting to Walker, now part of the PepsiCo.

The founder of the company, an engineer by profession, had many years experience working in a snack foods company. From Arnott’s, a biscuit manufacturer, he was well equipped with enough knowledge on food packaging. His work in the company involved developing packaging machines that incorporated the use of rotary continuous motion jaws. This technology allowed businesses at the time to double their packaging speeds and quality. At that time, development of packaging machines was still at a young stage, a situation that posed an enormous challenge to manufacturers.

The company offers solutions to more than 120 countries today. It employs more than 200 people as permanent employees and several others on a casual basis. Since its inception, the business has made more than 5,000 installations worldwide. To facilitate their global operations, the business has 24 offices located in different parts of the world. TNA products include distribution, weighing, identification and display strip solutions, just to mention a few (TNA, 2011).

Market analysis

A market analysis is aimed at helping businesses decide on the attractiveness of various markets that they want to venture in. The new business would need this to help it determine who the customers are in the market and what they want from the products. When doing a market research, areas of interest for a new company include existing marketing strategies and its expected sales revenues (Kahaner, 1997). When performing a market analysis, dimensions of interest in it include the size, cost of doing business, trends, success factors, challenges and viability, just to mention a few.

In markets where the company has done well such as Australia, the market for packaging products and services seems to be dominated by one or two companies. Using the Australian market as an example, the market is dominated by a few big companies with their products. The big companies’ market share in the packaging industry seems to be so high, making the small players disadvantages. The situation presents no opportunity for the small businesses since it means they have a small market to target and cover.

The industry’s cost structure is an important factor when evaluating a market and its viability. According to Dutka (2004), it is equally important when formulating strategies for the product to have a competitive advantage. Cost structures play a big role in a business’s indirect costs and consequently, profitability. A company may not be able to sell a certain product in a market whose cost structure is too high even though the product may have a very low production cost. The cost is dependent on the market share a business holds and the amount of sells (Dutka, 2004). For TNA, a big market share in the packaging industry at the moment may help it deal with the cost structures more appropriately.

Market trends

A market trend helps identify the direction in which a market will move over time. Market trends can be secondary or secular. The short term directions in a market, usually taking into account a few weeks or months, are given by secondary market trends (Kahaner, 1997, p. 7). The secular market trend is long term and will cover the product’s presence in the market for the next five to more than twenty five years. Changes taking place in a market are considered very important as they often come with new opportunities for businesses. They also come with threats which may work in favor of a company with better strategies because they can drive some of its competitors out. Market trends largely differ with the industry in question and other factors such the products, supply and demand.

Malaysian and Vietnam markets analysis

A market analysis of Malaysia and Vietnam is aimed at helping TNA make a well informed decision on which among them is a more viable and profitable market. Factors of interest include the cost of doing business, profitability, availability of labor, opportunities and challenges. A market size and activity can be evaluated on the basis of present or potential trade factors in a country. Relevant factors when analyzing a market include economical, political, environmental, cultural, social, demographic and cultural factors. Sources of data for a comprehensive market analysis include government statistics, customer surveys, non-governmental organizations research, trade associations’ data, financial data from financial bodies and stock markets, and many other sources depending with the reason for the analysis.

For business purposes, key parameters to focus on include the market size, income levels, purchasing power, demographics, sex and any other factor which may prove relevant in determining a country’s business potential. Available opportunities, risks and government regulations are also crucial in deciding the viability of doing business in a certain market. This paper will focus on Malaysian and Vietnam markets and their key parameters.

Malaysia

Background

Malaysia shares borders with Indonesia, Thailand and Brunei. The country’s foreign relations are based on peaceful co-existence with everyone and neutrality. “Malaysia is a participating member of the United Nations, the Developing 8 countries, the Non-Aligned Movement and the Asia-Pacific Economic Cooperation” (Central Intelligence Agency, 2011).

The country’s climate presents a good environment for farming activities and a comfortable place to live in. Its biodiversity makes it a home to a big percentage of mammalian, avian, reptilian, amphibians, fish, flower and other crops species. Dense forests cover a large percentage of the country’s land and they are home to many species. Due to its good weather and biodiversity, it is a favorite destination for many tourists.

Environmental overview

Economy

Malaysia is among the new industrialized nations and market economies. The Malaysian government has a significant influence on the country’s economic activities. Most macroeconomic plans are driven and implemented by the government. In the recent years, the country has had one of the best economic growths in Asia. In 2007, the country recorded the biggest growth to become the largest economy in Southeast Asia. Its economy is ranked 30th in the world by purchasing power parity (Central Intelligence Agency, 2011). The country is ranked 21st in the world on ease of doing business and 113 on the ease of starting a business (International Finance Corporation, 2011).

“In 2010, Malaysia had a GDP per capita of US$ 14,700 and an official exchange rates GDP of US$219.6 billion” (Central Intelligence Agency, 2011). In the 1970s and before, the country was mostly dependent on agriculture to sustain its economy. In the 1980s, its industrial sector began to experience growth and development. The development was supported by high levels of investment from both the government and foreign investors. The Strait of Malacca shipping route has a major influence in the country’s economy and has helped boost manufacturing (Razak, 2007). The author further explains that it has facilitated easy exportation of natural and agricultural products, especially petroleum.

One of the market’s biggest strengths is affordable labor force. The agricultural industry makes the biggest contribution to the GDP followed by the industrial sectors and tourism. The country’s external trade stood at $219 billion in 2010 and its share of world investments stood at 20.1% (Central Intelligence Agency, 2011, p. 1). Malaysia mainly exports petroleum, wood, palm oil, textiles, rubber and leather. Its main imports include fertilizer, gems, plastics and industrial chemicals. The country’s telecommunications industry is considered to be growing at an impressive rate, while the automobile industry is less developed and the country mainly relies on imports. Despite, the impressive trend in most of its economic sectors, Malaysia is faced with major social-economic challenges. More than 3.6% of Malaysians still earn less than $1/day, putting them below the poverty line (Central Intelligence Agency, 2011). The gap between the rich and the poor continues to grow and malnutrition is a major challenge. The country also hosts a big number of refugees, approximated to be more than 150,000 (Central Intelligence Agency, 2011).

Political-legal factors

Malaysia has a multiparty system with national and regional parties respectively. The country’s head of the state, Yang di-Pertuan Agong or King is serving for a five-year term. House of representative members are elected for five-year term. A number of the senators are elected by the state assemblies while others are appointed based on the prime ministers recommendations.

Malaysia has a strong judiciary system consisting of the Supreme Court, the high court and trial courts. The country’s foreign relations are cordial with most nations. It has strategic relations with China and Russia, a factor considered key to the country’s defense mechanisms. In recent times, it has played a key role in promoting regional security and fostering economic development (New Zealand Ministry of Foreign Affairs and Trade, 2008).

Parliament and law-making

Malaysia’s division of power is between the three arms of government- executive, judiciary and legislative, allow checks and balances that ensure enough considerations are made before decisions are made. Education, infrastructure, finances and other sectors of the economy are managed both at the national level and regional levels. Business laws are drafted and implemented by the legislative arm of the government, but they have to receive consent from the head of the state.

Sociocultural overview

Demographic factors

Malaysia has a diverse culture. “Malays make up 50.4% of the population, 11% are bumiputra, and 7.1% with a Chinese descent” (Central Intelligence Agency, 2011). As at July last year, the country had 28, 728, 607 people (Central Intelligence Agency, 2011). National literacy levels stand at 88.7% (92% for females and 85.4% for men). Major cities include Kuala Lumpur and Klang with 1.493 million and 1.071 million people respectively. The ratio of men to women on the country is 1.069 males/female at birth (Central Intelligence Agency, 2011).

Despite the fact that the country enjoys a modern and a diverse healthcare system, good health is a challenge for many Malays, especially the refugees and children. Due to high-poverty levels among refugees and a small percentage of the citizens, malnutrition is common among children, who then grow up with a weak immunity. Pollution and water contamination in refugee camps are significant concerns and the World Health Organization estimates that they cause the death of a significant number of people in Malaysia each year.

Cultural factors

The country’s culture is diverse and marked with pluralism. Substantial influence is from the Indian and Chinese communities. 74% of Malays speak a Malaysian language known as Bahasa Malaysia (Central Intelligence Agency, 2011). The remaining percentage speaks languages with a foreign origin such as Indian and Chinese.60.5% of the population practices Islam, 20% practice Buddhism and 9% are Christians (Central Intelligence Agency, 2011 ). Other religions in Malaysia include Hindu and other traditional religions. The country’s architecture represents its diverse culture with a blend of ancient and modern designs.

Market characteristics and opportunities

The country’s business opportunities arise from a sustained process of liberalization, which has been going on since 1991.In the last ten years, the country’s GDP has been on the rise except for 2009 due to the financial global crisis (Central Intelligence Agency, 2011). The country’s openness to foreign trade in recent years also offers opportunities for investors and offers a more liberalized market. International competitiveness and globalization has stimulated Malaysia’s market growth, leading to a strong balance of payments and a healthy build up of economical reserves. All these factors present investors with opportunities to be part of such a rapidly growing market.

Major sectors/industries

The service industry makes the biggest contribution to the GDP, accounting for 49.3%. The agricultural and industrial sectors account for 9.1% and 41.6% respectively (Central Intelligence Agency, 2011). “Major industries include petroleum, palm oil processing, rubber, medical technology and agricultural processing” (Central Intelligence Agency, 2011). Rubber, Palm trees, oilseed, and wheat are the main agricultural products although the country also does well in tea, potatoes and sugarcane among many other products produced on a small-scale level. The country is today focusing its efforts on tourism to make it the biggest drive of their economy.

Basic business customs

Business laws in Malaysia are guided by the Companies Act, 1956. The legislation allows the Central Bank of Malaysia to regulate and monitor the functioning of businesses in the country (International Finance Corporation, 2011). As an entrepreneur, one is required to practice business ethics such as honesty and integrity. To start and run a business in the country, one must have legitimate interests and operate within the country’s laws. Proper standards of accounting are also a must and so is proper and regular auditing.

Foe one to invest in the country, it is paramount that all the necessary business licenses are acquired. Most of the licenses are processed and given through the ministry of commerce and industry, the central board of excise, customs and different municipal offices. Like most countries, security and environmental issues are a major concern. For this reason, businesses transactions must not pose any threats to the national security or the environment. Some of the basic requirements for a business in the country include a tax account number, digital signature certificate and the registration fee. Business ethics such as being honest and treating customers well apply.

Foreign investments

There are multinational corporations from over 40 different countries investing in Malaysia’s manufacturing industry. The country’s laws require that foreign investors comply with the stipulated business policies and guidelines. For any business in high technology manufacturing, telecommunications, energy, information technology and other business in a strategic industry, it is mandatory to obtain a license from the government.

All investors are required to get approval from the Foreign Investment Committee (UHY Diong, 2009a). All transaction involving foreign currencies or exchange is done under the given regulations by the Central Bank of Malaysia. To motivate investors, the country offers tax incentives to investors in the manufacturing, agricultural, tourism, training, transport, research and communication industries (UHY Diong, 2009a).

Benefits and challenges of investing in Malaysia

Benefits

Malaysia’s petroleum industry is growing at fast rate. The industry’s revenues allow the country an opportunity to invest in high capital projects. The results have been a vibrant business environment that make the market’s cost structures more friendly. This combined with Islamic banking attracts big investors in the Arab region with large amounts of capital to pump into the market. A company such as TNA would benefit from such a business environment and would be in a position to market its products in other Islamic markets.

Malaysia is an exporter of rubber, tin and palm oil. The export business offer packaging industries such as TNT large volumes of business. A well reputable and global company like TNA has the advantage of quality and being conversant with global packaging requirements. Most of the food consumed in Malaysia is imported. Importers get it in bulk and package it in small quantities that suit the markets. By marketing themselves adequately, TNA will be in a position to offer their services to the now big industry in Malaysia.

Tourism is a crucial industry in Malaysia. The country has been receiving more than 20 million tourists each year since 2007 (Malaysia, 2011). As the country puts in more resources to promote itself, this number is expected to go up. Such a large number of visitors offers local and foreign investors an opportunity to market themselves to other regions across the globe. For TNA, Malaysia would be a strategic market for it to establish a clientele from other parts of the world.

Another significant benefit of investing in Malaysia is the country’s business influence in other regions globally. As a founding member of the Association of Southeast Asian Nations, the country enjoys an admirable influence in the member countries. It is also a founding member of the Organization of the Islamic Conference.

Challenges

The country suffers high levels of inequality among ethnic groups. The Chinese are the bigger majority in the nations’ market capitalization. This is despite the fact that they account for less than a third of the country’s population. Ethnic imbalances have caused a high level of resentment for foreign investors by the locals. Employees and brand loyalty is therefore more difficult to achieve for foreign investors.

The country is slowly shifting its developmental priorities. It is moving away from industrialization and manufacturing to promote tourism. As these happens, other foreign investors in the manufacturing industry might opt to leave. The results will be a reduced clientele for TNA to target and less local manufacturing and packaging activity.

Vietnam Background

Vietnam borders with China, Cambodia and Laos. The country has more than 89 million people, putting it at position 13 in the list of the most populous countries in the world (Central Intelligence Agency, 2011). The country has well established diplomatic relations with most of its neighboring and other global nations. Its resolution to join the World Trade Organization in 2007 has played a major role in boosting the country’s economic development. Its business laws and regulations allow it to monitor foreign investment and be fully involved in the county’s major economic establishments. The big population serves as an advantage for the developers who are able to access affordable and readily available labor.

Environmental overview

Economy

In the last 30 years, Vietnam has been trying to recover from the ravages of war that rocked the country many years before that (UHY Diong, 2009b). In the last decade, Vietnam’s growth has continued above 6%. “In the mid 2000s, the country’s economy grew to 7.5% and was ranked the second-fastest growing economy at the time” (UHY Diong, 2009b, pg. 5). Since then, the country has been on an upward trend, increasing its investments by three times, and domestic savings by four times. Its two-way trade is also considered the best in Asia, beating the big economies such as China and India.

According to Central Intelligence Agency (2011, p. 1) “Vietnam’s unemployment rate is among the lowest in the world at 2.9%”. The country’s GDP now is the third largest in Asia. In recent times, the government has constantly reiterated their commitment towards international integration and economic liberalization. The ministry of planning and investment were able to meet their 9% GDP growth target starting 2008 (UHY Diong, 2009b). Its exports to the US and Europe have more than tripled since 2006 after accession to the World Trade Organization.

Government and politics

Vietnam is a single-party state, the Communist Party of Vietnam. The president serves as the head of state, while the prime minister serves as the head of government. “The country’s judicial system is made up of the Supreme People’s Court of Vietnam, the provincial municipal courts and the local courts” (The World Bank, 2011, p. 1). The military courts play a significant role in the country’s judiciary system. They are entrusted with a responsibility of addressing any matters that touch on Vietnam’s security.

In its recent history, Vietnam’s army and military have played a major role in developing the nation’s economy. As a result of the country’s history, establishing its national defense and ensuring security has been a crucial factor in marketing the nation as an investment destination. The country has and still uses its military to develop its major economic sectors such as agriculture, fisheries, industrial developments and the communication industry. It is for this reason that the country has among the biggest army in the world with over half a million men and women in the forces.

Vietnam’s international relations play a major role in ensuring its security. “The country has in its history practiced effective and flexible foreign policy to other countries, especially China as a neighboring country” (Voung, 2010, p. 12). The country still suffers high levels of criticism due to what the US department of defense describes as “poor” human rights record. Different reports by international observers suggest that the country needs to allow more freedom of press, assembly and association. These factors put the nation in disagreeing position with many western countries.

Social-cultural overview

Demographics and culture

As at July 2011, Vietnam had more than 90 million people (Central Intelligence Agency, 2011). The country is multi-ethnic with over 54 ethnic groups throughout the nation. A considerable part of its population is comprised of foreigners such as the Chinese. Vietnam’s official language is Vietnamese, even though more people continue to adopt English. Other languages spoken by minority groups include Tay, Chinese and Nung, among others (Central Intelligence Agency, 2011).

More than 86% of the people of Vietnam practice Buddhism. A big percentage of these people practice mixed Buddhism. 8% of the population ascribes to Christianity, majority of these being Roman Catholics. The rest of the population ascribes to other smaller religions such as Hinduism, Islam and Baha’ism (Central Intelligence Agency, 2011). The country has an extensive network of education facilities. The national literacy level is among the best in the world at more than 90.4% (The World Bank, 2011). The quality of healthy is regarded as good even though malnutrition among children is a major challenge. Life expectancy stands at 72 for women and 75 for men.

Market characteristics and opportunities

Vietnam’s business opportunities arise from a sustained process of stabilization, especially as the country struggles to recover from a history filled with war. In the few years, the country’s GDP has been impressive as other countries develop faith in the region. Investors openness to investing in the country in recent years also offers opportunities for new investors, and offers a more liberalized market. International competitiveness and globalization has stimulated Vietnam’s market growth, leading a healthy build up of economical reserves, increased foreign investments and a strong balance of payments (Central Intelligence Agency, 2011).

Basic business customs

Business laws in Vietnam are guided by the Law on Investment or simply LOI (UHY Diong, 2009b). The legislation governs both direct and indirect investments in the region. They also allow the Central Bank of Vietnam to regulate and monitor the functioning of businesses in the country. Like many other countries, every local and foreign investor in the region is expected to practice business ethics such as honesty and integrity. To start and run a business in the country, one must have legitimate interests and operate within the country’s laws. Proper standards of accounting are also a must and so is proper and regular auditing (UHY Diong, 2009b). The country is especially strict on any investor who ventures into any industry that may affect security such as nuclear energy.

Most of the licenses in Vietnam are processed and given through the ministry of commerce and industry, who operate under laws passed by the National Assembly. “Business laws are all outlined in the Law of Enterprise 2005” (UHY Diong, 2009b)Other authorities responsible for business licensing include the central board of excise, customs and different municipal offices. Like most countries, security and environmental issues are a major concern. For this reason, businesses transactions must not pose any threats to the national security or the environment, and especially security for Vietnam. Some of the basic requirements for a business in the country include a business license, tax account number, a security clearance certificate and the registration fee. Business ethics such as being honest and treating employees well apply.

Special marketing customs and issues

A large population in Vietnam is made up of average income earners and population is well distributed among rural and urban areas. This poses a major challenge for marketing, especially for products aimed for the mass market. However, the country’s telecommunication industry has seen a radical growth in recent years, allowing marketers to reach a large number of people through mobile devices. Traditional advertising such as radio and television are still the most common modes of marketing for many businesses in the region. Billboards and banners are still common especially for those businesses trying to reach rural markets.

The younger generation is slowly changing the trend by embarrassing modern methods of communication such as mobile phones and social networks. This has given business a better platform to reach bigger masses at a cheaper cost. As the telecommunication industry grows, the number of people using the internet is also on the rise. More than ten million people in the country today own a mobile phone. Companies are therefore utilizing short messages, internet videos and other forms of advertising possible through mobile phones to reach consumers.

Foreign investments

“Foreign investment agency figures show that Vietnam’s newly pledged and expanded FDI capital stood at US$ 12 billion in 2006 and US$21.3 billion in 2007” (International Business Publications USA, 2007, p. 14 and UHY Diong, 2009, p. 4). The Law on enterprises 2005 outlines what is expected of foreign investors. It also gives the guidelines under which the government has to operate under when making any foreign investments.

The Law of Enterprises 2005 is easily accessible to all foreign investors to allow openness and ease when one is opening a business in the country. “According to the law, every foreign investor has to submit all the business registration documents as prescribed by the law to an authorized business registration body” (UHY Diong, 2009, p. 13). The approval of the prime minister is required for investors in any industry considered strategic to the nation’s development.

Benefits and challenges of investing in Vietnam

Benefits

The Vietnam market offers enormous opportunities for any foreign investors. The biggest advantage of the market is the country’s labor force as a result of a huge population. The country has more than 80 million people, 65% of who are over the legal working age (Central Intelligence Agency, 2011). The country’s unemployment levels are as low as 2%, meaning that a majority of the people are well experienced in different jobs (Central Intelligence Agency, 2011).

The people of Vietnam are among the most literate people in the world. The literacy levels today stand at over 90% (Central Intelligence Agency, 2011). For any investor such as TNA, this trend makes it easy to access professional labor, as well as employees in any other level of the business. High literacy levels make it easy for a new investor such as TNA to recruit and train its employees.

The country’s manufacturing industry accounts for 40% of the country’s GDP (Central Intelligence Agency, 2011). Consumer products make a big percentage of the industry. The industry makes the packaging industry in the country among the most vibrant in the Asian region. This will definitely present an incredible opportunity for TNA. Its strategic location in the Asian region makes it strategic for any business that wishes to diversify its markets to other Asian markets. Another significant benefit is the ease of access for business rules and regulations.

Challenges

Though the country offers immense opportunities for TNA, it also presents challenges for any foreign investor. Its struggle with human rights puts it on a global spotlight often. Vietnam is under constant pressure from the west and especially the US, to allow more freedom to its citizens. The country’s negative image on such issues may impact a business negatively.

The country has a long history of war, the most famous being the Vietnam war. Even though it has worked to put this in the past and clear the country’s image, investors may have a hard time importing expatriates and exporting their goods and services to other countries. The war period still influence the nation’s politics and decisions, especially regarding foreign policies.

Another significant challenge that TNA would face by investing in Vietnam is high level of competition. Vietnam’s location makes it easier for businesses to access cheaper goods and services from its neighboring country, China. Locally, the business will face stiff competition from Vietnam Packaging Corporation, an export packaging company owned by the government. The government’s interest in the company may influence their decisions on the industry to favor its operations. Products from China will also pose as a challenge to TNA, especially when it comes to pricing their goods and services.

Comparing the markets

Malaysia Vietnam
Economy
  • Purchasing power parity is $416.7 billion. Its is ranked position 30 in the world
  • GDP growth rate is 7.2%. Its GDP is the 23rdfastest growing in the world
  • Its industrial sector accounts for 41.6% of the economy
  • The country’s labor force is estimated to be 12.2 million people. Compared to the rest of the world, it is position 42
  • Inflation rate is at 1.7% and banks’ lending rates average to 6.27%
  • Purchasing power parity stands at $278.1 billion. It is ranked position 42 in the world
  • GDP growth rate is 6.8% ranking it 31stin the world
  • The industrial sector accounts for 41.1% of the total income
  • Vietnam’s labor force is 46.21, making it position 13 of countries with the best labor force
  • Inflation rates stands at 11.8%, while lending rates are at 15.78%.
Security
  • There are over 30,000 refugees
  • The country is a destination and a transit destination for children and women trafficked for labor
  • The country is a minor producer of opium and transit point for heroin
  • The issue of human rights continue to haunt the country
  • A history of war makes it an easily volatile region
People
  • People aged between 15-64 years of age make up for 65.4%
  • The urban population is 7.2%
  • The official language is Bahasa. English is a second language for a big population
  • Literacy levels stand at 88.7%
  • Its the 14thmost populous country in the world with over 90 million people
  • 69.3 of the population is aged between the age of 15-64 years old, offering a bigger advantage in the labor market
  • The urban population is only 30%
  • Vietnamese is the official language and English is a second language for a large population
  • Literacy levels stand at 90.3%
Setting up a business
  • Register with Companies Commission of Malaysia
  • Get company incorporation documents
  • Obtain a company seal in 3 days
  • Register with Income Tax Department
  • Have an employment provident Fund
  • It takes approximately 17days to get all the registration
  • Obtain a business registration certificate
  • Register a sea-sample with the police
  • Publish announcement in daily newspapers
  • Register with municipal tax department
  • Register with local labor office
  • Register employees with social insurance fund
  • Register for trade union with the country
  • The process takes 45-55 days

Short and long term benefits of investing in Malaysia

Short term benefits

  • The business will save on the cost of labor since it is readily available. A large population of young and educated people offers investors a productive team of employees.
  • Continuous economic growth makes it easier for a new business to enhance its resilience
  • The government policies support the business environment
  • TNA will save from the country’s tax incentives for manufacturing projects. “Supportive income taxes were made possible through the Promotion of Investment Act 1986 and the Income Tax Act 1967” (Iskandar Malaysia, 2011).

Long term benefits

  • The country has a Human Resource Development Fund (HRDF) which encourages skills upgrading in the manufacturing sector. “Employers who contribute to the fund are eligible to apply for grants to defray or subsidize the costs incurred in training and retraining their workforce” (Iskandar Malaysia, 2011).
  • Minimal trade disputes in Malaysia makes it easier for investors to enjoy harmonious relationships with their employees
  • Efficient seaports and road networks will be beneficial for TNA if it chooses to launch its products in the neighboring countries’ markets
  • The country’s high-tech telecommunications network promises high quality technology options in future

Short and long term benefits of investing in Vietnam

Short term

  • “The economy is expected to grow by 6.8% in 2011 and 7.8% in 2012” (Euromonitor International, 2011b)
  • A young and affluent population offer TNA a large workforce
  • Vietnam’s big population offers businesses an under-served consumer market. This creates a bigger demand for packaging solutions, a situation that TNA will benefit from.

Long term

  • Vietnam plans to privatize major large state enterprises. This will make the market more liberal, fair and easy to compete in
  • The country’s strategic location makes it easier for TNA to expand its business operations in Asia.
  • Being one of the emerging economies, the country’s business environment presents numerous business opportunities for TNA.

Factors to consider in new markets

Market entry plan

In order for a new company to successfully enter into a new market, it must be able to chose a mode that is already working in the market. In this case, the strategy will include partnering with a business that is already established or hiring an expert that is very familiar with the new market. A well established marketing channel not only helps a manufacturer reach the markets, but also receive timely feedback from the market.

Logistics management

The operational techniques to be used in any new venture’s logistics management should be aimed at sustaining quality in the company. Using such techniques is intended at attaining better quality and keeping it monitored at all times. Quality assurance should be a big part of the product’s success, largely because of the market share that the business expects to command in different markets and the loyalty that it will aim at achieving. Another important factor for the TNA company’s quality assurance should be a factual approach to decision making.

Marketing strategy

In order to achieve the marketing objectives, TNA’s products must be packaged in a combination of local and international brands but ensure that it remains a flagship brand in all the markets that it ventures into. The business must implement measures that ensure it gains a broader position in the packaging industry. Moreover, such a position creates the much desired platform from which the business can further increase its range of products.

Promotion

Any element important for a firm to achieve its business objectives is considered a considerable factor during marketing. The company with the best economies of scale is able to do much better than its competitors in any market and so will a company with technological resources which best suit the market. They include access to resources such as communication services and a company’s ability to achieve economies of scale.A proper marketing strategy must ensure that a company’s product is felt in the market, not just when it is new but in the many years that follow.

Pricing and profitability strategy

According to Black (2011) a market’s profitability is influenced by several factors and forces. Among these factors include entry barriers, supplier power, buyer power and the market size. It helps to identify a market’s potential and the benefits a business will enjoy by entering the market. Any business with intentions of launching a new product to a market must ensure that their pricing is based in a very deep understanding of the market such as consumer wealth and spending powers.

Finance and Operation plan

Proper financial strategies in a business will determine how well the other implementation strategies work (Black, 2011). Good financial planning standards require comparable financial statements that allow the organization and analysts compare what is going on in their organization with performances by other organizations in the same industry. Several indicators have been set to help compare between different companies in the industries. Comparison makes it possible to point out areas of error in the new product. Proper financial reporting standards demand that financial strategies should reveal a proper approach to the future which should involve examining the current and anticipated factors. t.

Success measures

TNA can measure their success by a further increase in sells and profitability. Another measure of success will be growth in the company’s cash flow. A further increase would be expected if the industry established its business in the best market among the two options. When a business launches into new markets, the most relevant measures of access are its profitability in the new market and how well its customer are satisfied in the market. Customer satisfaction is a significant measure of the company’s success. Venturing into a new market means new employees and their satisfaction is of significance when measuring a company’s success and consistency.

Conclusion

Every business intending to venture into a new market will require a market analysis to determining its attractiveness, opportunities and threats. Market trends on the other hand helps identify the direction in which market wills move over time. In order to venture into any of the markets, TNA would need to understand present opportunities and threats in it, as well as changes that might affect its operations. The company would require a comprehensive analysis that takes into account all the markets parameters such as labor, cost structures, supply chains and demand trends.

For Malaysia, the petroleum industry is growing at fast rate. The industry’s revenues allow the country an opportunity to invest in high-capital projects (UHY Diong, 2009a). Currently, the country’s focus has shifted to tourism,a factor that will allow TNA to promote itself to foreign countries by interacting with a large number of foreigners. The high levels of literacy will offer the business readily available labor. A vibrant business environment makes the Malaysian market’s cost structures more friendly. Other significant benefits of investing in Malaysia include friendly government policies that support a healthy business environment. Policies allowing tax incentives for the manufacturing industry will offer financial benefits to TNA by allowing savings. Long term benefits in the Malaysian market include the country’s support for skill development, especially through the Human Resource Development Fund (HRDF), a well established transport network.

Like every other market, challenges are inevitable. Foreigners have a bigger representation in the economic sector than the locals. This makes it hard to develop a good relationship with the locals. The country is slowly shifting its developmental priorities and moving away from industrialization and manufacturing to promote tourism. The level of government support for manufacturing may as a result reduce with time.

Like Malaysia, Vietnam also offers tremendous opportunities for any foreign investors. The country is listed among those with the highest literacy levels in the world and for any investor such as TNA, this trend makes it easy to access professional labor, as well as employees in any other level of the business. As a result, accessibility of labor ad training is easy. The country’s manufacturing industry accounts for 40% of the country’s GDP, making the packaging industry in the country among the most vibrant in the Asian region. Challenges include the fact that it still struggle with heavy accusations for abusing human rights causing a negative image. The country also has a long history of war, making its hard for investors to import expatriates and export their goods and services to other countries.

Comparing the two countries, Malaysia offers better short and long term benefits for TNA. It takes less time to register a business, has less business registration processes and offers more political stability. Malaysia has a smaller inflation rate and its GDP growth rate is higher than that of Vietnam. The country’s continuous economic growth makes it easier for a new business to enhance its resilience. Its economic environment is more conducive for a business trying to establish itself such as TNA. Professional labor is easily available and training is less costly as a result of a high literacy level. Tax incentives will also offer TNA a good opportunity to save the much needed money when a business is starting. For long term benefits, Vietnam’s Human Resource Development Fund (HRDF) makes it possible for a business to develop a professional team through training one of its most treasured asset. A well developed transport system offers a network for TNA to trade in the neighboring countries as well. The fast developing tourism industry in the country will also expose TNA to more foreign investors and traders. It is therefore a better country to invest in than Malaysia.

Recommendations

A strategic market entry plan will be paramount if the business is to achieve any success. For TNA, the strategy could include a partnership or consultancy with the most experienced professionals in the market. The business will also need a strong and well developed marketing channel, one that will offer it the much needed avenue to reach the consumers. To achieve brand success, TNA must consider several elements in its products such as how they are packaged, relevance, cost effectiveness and quality. The business must implement measures that ensure it gains bigger market share in the packaging industry. A top or secondary position in the market helps a business deliver a high target in marketing, as is evident in markets where it is doing well such as Australia.

Continual improvement should be a big part of the business’s culture. It is one of the focuses in the industry’s modern research projects. The company should seek to continually improve its products’ quality and ensure this is done at a cost that allows it more financial benefits in the market. Being in such a competitive industry, customer satisfaction should be on top of the business’ priorities.

To determine their level of success in the new market, TNA can use sells increments and profitability as a measure. It is estimated that the packaging industry has potential to grow its revenues by over 3% every year in the global market, growth that could be made possible through the introduction of new products such as those friendly to the environmentally (Economy Watch, 2011). Another possible measure of success when a business is venturing into new markets is its cash flow. Customer and employee satisfaction are yet other significant measure of the company’s success.

While success in new markets requires strategic planning, funds and many other factors, the market’s environment and conditions determine how far an investor can go. Making a decision on two conducive markets such as Vietnam and Malaysia therefore, requires a considerable amount of research and a well-informed decision making process. Factors analyzed in this paper such as political-legal, economic and social-economic parameters must be critically considered to determine whether they provide a good environment for new investments.

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Cite this paper

Reference

UniPapers. (2022, January 10). International Management: Malaysian and Vietnam Markets Analysis. Retrieved from https://unipapers.org/free-essay-examples/international-management-malaysian-and-vietnam-markets-analysis/

Work Cited

"International Management: Malaysian and Vietnam Markets Analysis." UniPapers, 10 Jan. 2022, unipapers.org/free-essay-examples/international-management-malaysian-and-vietnam-markets-analysis/.

1. UniPapers. "International Management: Malaysian and Vietnam Markets Analysis." January 10, 2022. https://unipapers.org/free-essay-examples/international-management-malaysian-and-vietnam-markets-analysis/.


Bibliography


UniPapers. "International Management: Malaysian and Vietnam Markets Analysis." January 10, 2022. https://unipapers.org/free-essay-examples/international-management-malaysian-and-vietnam-markets-analysis/.

References

UniPapers. 2022. "International Management: Malaysian and Vietnam Markets Analysis." January 10, 2022. https://unipapers.org/free-essay-examples/international-management-malaysian-and-vietnam-markets-analysis/.

Reference

UniPapers. (2022, January 10). International Management: Malaysian and Vietnam Markets Analysis. https://unipapers.org/free-essay-examples/international-management-malaysian-and-vietnam-markets-analysis/

References

UniPapers. (2022) 'International Management: Malaysian and Vietnam Markets Analysis'. 10 January.