Small and Medium Enterprises as the Backbone of any Economy

The foundation of any economy is small and medium-sized businesses. This is because they need a huge workforce to run their businesses, which aids the government in lowering unemployment. Additionally, it makes a sizable contribution to the GDP of several countries. The organization has developed a variety of initiatives to expand into other markets and strengthen its position there. The product that this business plans to introduce in Malaysia is analyzed in this research. Additionally, it analyses any potential environmental influences on the expansion of the selected product in Malaysia.  

INTERNATIONAL
BUSINESS MANAGEMENT

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Contents
INTRODUCTION.................................................................................................................................1
Product that company want to expand...................................................................................................1
Environmental factors affecting the business in Malaysia.....................................................................2
External opportunities and threats.........................................................................................................4
Recommendations.................................................................................................................................6
CONCLUSION.....................................................................................................................................7
REFERENCES......................................................................................................................................8

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INTRODUCTION
Small and Medium enterprises are the backbone of any economy. This is because they
require large amount of workforce for their operations hence helps the government in
reducing the unemployment. It is also a significant contributor to the GDP of different
nations. In order to expand in different markets, company has made different types of plans
so as to improve their position in the market (KiatGan & Almsafir, 2013). For this first they
will have to identify the suitable market. Second, it is essential that companies analyses the
external environment at that place so as to find out the opportunities and threat present in the
expansion. This is extremely essential as the SME do not have large amount of financial
resources to invest and any failure could result in heavy losses for the company. Bronze
Snake is one of the leading SMEs in Australia and it is planning to expand in Malaysia. This
report analyses the product that this company wants to launch in Malaysia. It also analyses
the environmental factors that might effect on the chosen product expansion in Malaysia. At
last recommendations related to the product has been provided.
Product that company want to expand
Bronze Snake is one the emerging fashion retailers in Australia hence they aiming to make
their name in the Malaysian market. Malaysia is one of those countries that are emerging in
the South-East Asian region and is one of the best markets for expansion. The fashion items
delivered by the company are of higher quality. Along with this company offers products that
are available in different price range (Bronze Snake, 2018). Their main focus is towards the
youngsters who are in large numbers within Malaysia. Their products are designed with
different types of fabrics and hence offer trendy wears to its customers. Bronze snake has
both men and women collection offering trendy dresses. They are doing innovations in the
design so as to attract people from every segment of the society. On the other hand the choice
of the customers in Malaysia has also changed and hence the people are demanding for the
dresses that look trendy and are of high quality. Their products are available at lower cost and
offers same value when compared with products of bigger brand name. Since fashion
industry demands changes at much faster rate when compared with other industries hence
they need to make changes in their product regularly so as to remain in competition with
bigger brands.

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The rules and regulations related to garment industry has changed significantly in Malaysia.
The government policies are attracting both fashion retailers and the cloth manufacturers.
Malaysia is a $44 billion market and hence acts an important player in the South-East Region.
Recent changes in the Malaysian political momentum have resulted in the confidence booster
for both external investors and the domestic customers (Salikin, Ab Wahab & Muhammad,
2014). Along with this, another crucial fact is that fashion industry of Malaysia is having
lesser competition when compared with other South-East Asian nations. Previously fashion in
Malaysia is influenced by historical fusion of Chinese, Indian, Malay and other indigenous
cultures but in recent years the society’s affinity towards western fashion has increased. The
growth rate of the fashion industry in Malaysia is expected to experience a growth rate of
12.1%. Alone the apparel industry is expected to grow at a pace of 11.3% (Statista, 2018).
This is further boosted by the increasing tourism market in Malaysia as it is attracting
fashionable clothes in the country.
Environmental factors affecting the business in Malaysia
Malaysia is a developing nation and hence there is significant change in the environmental
factors that are affecting the business of the companies in the fashion industry. It is found that
country has a population that consists of people from different cultural and economic
backgrounds. In order to understand the external environment, the factors that need to be
analysed are:
 Political: The political environment within Malaysia is changing at much faster rate
especially after the introduction of technology in the government working. They have
fastened the process through which new investments could be made (Kasiran,
Mohamad & Chin, 2016). Censorship or prohibition was imposed by the government
previously on different types of events such as performance of international artist such
as Lady Gaga, Kesha and Beyonce. Situation has changed in the last few years and
this acts as a booster for the apparel industry in the country. Government has also
promoted the fashion that is from the local areas and outside the world. The new trade
relations between Malaysia and Australia have improved the chances of investment
across both the nations.
 Economic: For the growth of the apparel industry, it is essential that country’s
economic condition remains stable. Malaysia being an emerging economy is
promoting fashion industry. There is continuous growth that can be noticed by that

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currently, it is a low income country and by 2020, it is going to become a high-income
state (Umrani, Johl & Ibrahim, 2015). It is one of the exporter nations of oil and gas
whose demand is going to increase in the future hence it has benefited from the
increasing oil prices. The increase in the per capita income has attracted towards
fashionable cultures. This economic improvement in the nation is going to benefit the
countries from the fashion industry. Malaysia’s exposure towards the risk
environment especially in financial terms has restricted investors to make investments
within the country. The external investors have an opportunity to make their impact in
the industry. This is the reason why the company has received more than USD 9
billion investment being the highest in the region since 2010.
 Social: This factor has a negative effect on the investment idea of Bronze Snake. This
is because it is basically a Muslim dominated nation where the people are more
towards their traditions and they do easily accept the external fashion. This would be
a challenge for the company at the later stage of the expansion (Chong, 2012). In the
initial stage they are just planning to invest in the cities like Kuala Lumpur. This city
has changed drastically in terms of clothing and lifestyle. It is one of the populous
cities in Malaysia having major parts of the population as young age people. Young
people are considered to be their most important target segment.
 Technological: Cities such as Kuala Lumpur is developing in terms of technology but
most part of the country is still not very much advanced in the technological terms.
This is not good for the company’s expansion policy as this company is largely
dependent on the internet mediums for its sale (Moorthy, Tan, Choo, Wei, Ping &
Leong, 2012). But, the positive part of the country’s internet infrastructure is that it is
expanding and there is significant increase in the numbers of people who have now
got connected with the advanced technologies such as mobile technology.
 Legal: The legalities in the nation have changed drastically which is having direct
impact on the operations of the apparel companies as well as it is also having impact
on the import laws within the country. On the other hand the consumer related laws
are still weaker which could help the company to establish themselves with even
average quality clothes (Rose, Deros, Rahman & Nordin, 2011). Company will have
to formulate their policies in such a manner that it complies with all the laws and
regulations made within the country.
 Environment: Malaysia is having a very beautiful natural environment hence the
country has been very strict against the corporate exploitation of the nature resources

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and waste management. Apparel companies like Bronze Snake will have to make sure
that they have an effective waste management plan for ensuring that no problems
related to the waste disposal occurs (Ng & Kee, 2012). They will have to work on
green supply chain management system for which they will have to take the help of
their suppliers.
 Competition: The competition in the apparel industry of Malaysia is bit less when
compared with the nation such as their parent nation Australia. It acts as an
opportunity for the company where they will have their own market share to capture.
But, on the other hand they will have to face competition from the sellers of
traditional and ethnic clothes (Gunto & Alias, 2014). People have options in the
online retail hence they will have to make sure that they have an effective online
strategy to sell their products. But the industry is making a positive shift hence more
companies are expected to invest in the Malaysia hence it has become essential for
Bronze Snake to establish themselves as early as possible.
 Suppliers: Number of raw material suppliers in the industry has increased
considerably. This is having effect on the operations of apparel brands (Mahroeian,
2012). They have got options to choose from. This increase in the numbers of
suppliers especially the farmers will help them in reducing the prices as per their
demands.
External opportunities and threats
Before making an investment, it is essential that company finds the opportunities and the
threats that could have impact on their plan of expansion and their venture. There are
different types of threats and opportunities in the apparel industry of Malaysia hence need to
be analysed in an appropriate manner. Some of the factors that are acting an opportunity for
the clothing industry are:
 Increased suppliers numbers: This is giving boost to the companies that is having low
priced model for the clothes. Internal consumption of raw materials has increased
which is a positive sign for the industry (Ng, 2012). This venture can get raw
materials from the local suppliers easily hence reducing the prices will not be a
concern for the company.
 Increasing GDP: It is one of the biggest GDP in the region and has received high
amount of invest in the past few years hence the market shows the positive trend

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towards investment and the failure rates have been relatively low (Anwar & Sun,
2011). They can easily get partners for investments which can be beneficial for the
company in the long run.
 Changing mind-set: In terms of people perception about the fashion large numbers of
changes can be noticed. People of the country especially in the city areas have
changed their perception about the western culture (Koe & Majid, 2013). The
influence of the western culture on the mind-set of the people has given Bronze Snake
an opportunity to expand in this country.
 Emerging cities: There are large numbers of development projects going on in the
country. These development projects have led to emergence of advanced cities. These
metropolitan cities have people from different parts of the world and from different
cultural backgrounds (Ahmad, Wilson & Kummerow, 2011). It acts as an opportunity
as company could sell their clothes in this region.
 Target market: This Country has huge amount of people of young age. These people
are the major target market of Bronze Snake. On the other hand its per capita income
also suits the types of product that it sales and the purchasing power of the people.
 Low investment cost: The cost of investment is on the lower side. The skilled and
qualified labourers are easily available in the city. Labour cost is on the lower side
hence they can easily reduce the overall cost of operations. In the time to come this
will be most essential aspect in the success of the business. Government has launched
skill development program which will have effect on the overall workforce present in
the country (Ahmad, Abu Bakar, Faziharudean & Mohamad Zaki, 2015). The value of
the Malaysian currency is dropping against the dollar hence the cost of investment
will be further on the lower side.
There are certain factors that are adding as a threat to the company. Some of these factors are
as follows:
 Financial risk: Due to the slowdown in the world economy especially in the American
and European region has made the environment of Malaysia unstable. Since it is still
considered to be the market with low income hence the stability in the market can get
disturbed. As the Bronze Snake has limited amount of resources hence must a proper
business plan.

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 Corruption: The level of corruption is on the higher side hence the investment is not
easy to make as the company will have to waste lot of money on the bureaucracy.
Getting permissions in business is not easy to get.
 Higher attachment towards their culture: People of Malaysia has a strong affinity
towards the cultural values and ethics of their own. This is having influence on the
purchasing behaviour of the people (Isa, Aziz & Razak, 2011). Company will have to
make long term plans for marketing their products effectively. This is crucial for
changing the purchasing behaviour of the people.
 Absence of differentiated product: Since apparel industry has least chances of making
differentiated products as the designs are almost similar in all the countries. This lack
of differentiation might not give company with an opportunity to increase their market
base.
 Average technology infrastructure: The technological infrastructure within the
country is on the lower side when compared with the countries like Australia. This
will increase the operational problems for the company as Bronze Snake is suitable in
doing business through online mediums (Mokhtar, Yusoff & Ahmad, 2014). There are
people from the local and industrial areas.
Recommendations
In order to expand in Malaysia there are certain things that needs to be taken care of. First is
the fact that it is not technologically as Australia is hence it is crucial that company focuses
on the cities like Kuala Lumpur in the starting phase. More brick and mortar kind of set up
will be needed by the firm so as to establish the name of the company in the market as
Malaysian market is still more into such kind of business. Apart from this, company needs to
find suitable partners in the country which will help them to understand the complexities
present in the country. The partnership will also be required in terms of suppliers so as to
ensure that high quality local raw materials could be available to the firm. It is also
recommended that company use different modes of sales promotions but the special focus
should be on the mobile based app marketing (Rabimov, 2018). This is because it will help
the company to reach directly to the customers and hence could easily do personalised
marketing. It is also recommended that company brings nation’s culture touch in their
products as well as in their business model. Company should maintain their low pricing
strategy as the market still prefers the products that are having lower or average price range.

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CONCLUSION
From the above based report it can be concluded that SMEs are the backbone of any
economy. Bronze snake is similar kind of company that aims to expand its business in
Malaysia as they are performing well in Australia. Since the company more relies on their
online business hence they might face certain problems as the technological advancements
are weaker in Malaysia when compared with Australia. Political, economic and
environmental factors are favouring the apparel industry while social factor is not supporting
its expansion. Increased suppliers numbers, Increasing GDP, Changing mind-set, Emerging
cities and Low investment cost are some of the factors that are working as an opportunity for
the company. On the other hand financial risk, Corruption, Higher attachment towards their
culture, Absence of differentiated product and Average technology infrastructure acts as a
threat in their venture plan.

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REFERENCES
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Anwar, S., & Sun, S. (2011). Financial development, foreign investment and economic
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Koe, W. L., & Majid, I. A. (2013). Sustainable entrepreneurship among small and medium
enterprises (SMEs) in Malaysia. International Journal, 2(4), 286-290.

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