Success Factors for SMEs in Malaysia

This assignment delves into the critical success factors influencing Small and Medium Enterprises (SMEs) in Malaysia. Students are required to analyze a range of scholarly articles provided, focusing on themes such as online entrepreneurship training adoption, business tourism, technology incubation, microenterprise management, intellectual capital, and entrepreneurial competencies. The goal is to synthesize insights from these studies to develop an understanding of the key factors contributing to SME success in the Malaysian context.

Running head: ENTREPRENEURSHIP 2
Entrepreneurship 2
Name of the Student:
Name of the University:
Author’s Note:

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Executive Summary
This report has been framed in order to have an idea about the development of the online
business in Malaysia. The introduction of online business in the country and how it has been
able to increase the level of profit for the new and existing online business entrepreneurs have
been explained. The report has given a literature review with the help of which the report has
been able to highlight the features and the factors explained by other researchers regarding
online business in Malaysia. The report has even expressed the key success factors that have
influenced the new entrepreneurs to undertaken online business in the country.

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Table of Contents
Introduction................................................................................................................................3
Literature Review.......................................................................................................................4
Report.........................................................................................................................................7
Malaysian Culture..................................................................................................................7
Key Success Factors...............................................................................................................8
Conclusion................................................................................................................................12
Reference List..........................................................................................................................13

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Introduction
The age of internet was introduced in the year 1995 in Malaysia. The extent of growth
in the internet host has risen around the year 1996 in Malaysia. According the first internet
survey that was undertaken in the year 1995, one out of the thousand citizens of Malaysia had
internet access. The rate has been growing ever since then and residents of Malaysia grew
their habit of using the internet for any kind of assistance (Munoz et al., 2015). The
popularity of internet is developing all over the country and it is a virtual place where
individuals can share their knowledge and ideas, establish communities, promote new ways
of undertaking a business and shaping the future in a democratic way. In the current time
period, internet is one of the world’s biggest shopping outlets that permit the organizations to
do their businesses with the amount of cost being low and even covering the worldwide
market.
Online business has been looked down upon as a potential business that has been
developing in the current market. The conventional boundaries are being replaced by a new
and innovative technology along with the mechanism and the media for buying services and
goods. The process of electronic payment provides with the benefit for the improvement of
the national and the global trading relationships (Zaglia et al., 2015). The online transactions
have the ability of providing benefit to the customers as well as to the companies as well.
This has led to the development of the online business sector in Malaysia and there have been
several entrepreneurs who have been able to earn millions by undertaking such businesses.
There has are several success factors that are existent in the online business sector in
Malaysia and therefore new investors are looking to undertake ventures in this sector in order
to earn more. Hence, this report is being constructed in order to have an idea about the key
success factors and even assess what other researchers have commented on the online
business in Malaysia.

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Literature Review
The literature review has been constructed in order to have an idea about what other
researchers have suggested and explained about the online business sector in Malaysia and
what are the factors that influence new investors to undertake ventures in this sector. The
reviews would provide a clear idea about the significant success factors and thereby would
provide a precise idea that would assist in completing this report in an effective manner.
Even though online business process have technical aspects, the management issues
needs to be explained in accordance to the transformations in the organizational processes
and the communication among the organizations and even within the company. The ability of
a company to manage and conceptualize the innovation process and to raise the learning
ability of their skilled employees and thereby become a source of competitive edge.
Furthermore, the enhancement in the organizational learning and the strategies related to the
knowledge management has been regarded as an efficient and effective process of fruitful
technological innovation (Hassan et al., 2017). The organizational learning is looked upon as
a dynamic mechanism based on the knowledge, which explains that movement among
various levels of action going from single to the group level and thereafter to the
organizational level and back again.
According to Amran et al., (2015), online business is inclusive of the transactions that
have been undertaken in the electronic markets, services give to the consumers, intra-
organizational relationships and the partnership with other businesses. Online business is
looked down upon as a wider economic aspect that is accountable for radical changes in the
business and surrounds the digital networks and communication model. Furthermore, online
businesses provides a worldwide platform where the firms and the individuals are able to
communicate, gather information, interact and collaborate. The web-based processes of the
online business addresses the competitive edge for the organizations and have gone through

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extensive level of organizational transformations. Subsequently, the organizations need to
construct a strategic plan for the information technology department in order to enhance the
capabilities of the online business companies. Halim et al., (2017) have suggested that the
success in the global market is dependent on the flexibility and agility of the business
frameworks. The dynamic characteristic of the market brings forth transformations in
accordance to the regulations, competitors and the suppliers. The organizations are able to
connect with their customers at a compensatory expense with a transformation in the
conventional aspect for a huge distribution and production in order to customise with
enhanced product development, pricing and delivery. Bohari et al., (2017) addressed that the
impact of the internet on the level of transactions among the consumers and the companies.
On the other hand, for the instance of transactions among the organizations, there have
several changes that have been taking place in the value chains that may lead to
rearrangement of the business activities with their business partners. The greatest potential of
the internet is seen in the generation of new and innovative business frameworks that may
generally lead to transformations in the status quo and generate new rules and regulations for
the competitive market in order to compete with these new frameworks and the organizations
must change their framework. According to Tehseen, & Ramayah (2015), several online
businesses have failed as they have taken a jump in the online internet based business without
looking into certain critical factors for the operational and strategic success. The answer in
accordance to the experts is to make use of the internet technologies in order to get gain
benefit for their business by looking into the strategic plans and options in a sustainable
process for the changes in the market. Ahmad et al., (2014) even address about the inter-
organizational relationships by looking into the concept of utilising expertise in the electronic
channels.

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The success of online business incorporation addresses the effect on online business
implication on the performance of a company in accordance to the downstream markets that
aids the companies to magnify their sales channels and improve the level of customer
relationships. The online business can enhance the efficiency of the business and the
employee productivity within the company when the resources that are complementary are
existent. The extensive level of connectivity and interactivity of the internet upstream can
lower the cost of transaction and thereby facilitates the coordination of the organizations with
the business partners.
Krishnan, & Hussin (2017) have addressed that market intelligence and internal
ability evaluation envisioning the aggregate value to the consumers represent the initial step
towards discovering the opportunities related to the online business without underrating the
risks. Ajagbe, & Ismail (2014) have debated that if the company makes the correct choices,
the internet can provide the consumers with innovative services by making one to one market
practicable, assisting the process of communication and adding value towards the brand
image. Yee-Loong Chong et al., (2014) cites that online business contributes to generate a
closer and more interactive relation with the consumers.
In Malaysia, the online businesses is in their primary stage. The companies requires a
guidance like trainings, seminars with the help of internet and partnership the venture in the
online businesses in accordance to penetration of the market, return on investment,
technological skills, technology and individual’s mind-set in adopting online business. The
enhancement of information and communication technology has a vital role in the plans for
the government towards the economy (Amato et al., 2017). The government has looked to
place themselves in Malaysia as a global and regional information and communication
technology and hub for multimedia by giving out breaks in order to attract various
multinational companies and raise the competitiveness of the organizations with the help of

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Multimedia Super Corridor. In the current time period, Malaysia has announced their plans to
improve their online businesses by motivating and encouraging new investors to undertake
ventures with the help of which online business can be increased and the country would be
able to make use of this new market in an extensive manner. The critical success factors are
the main issues with the help of which new ventures can be undertaken in the online business
sector in Malaysia. The literature review has assisted in constructing a report in which the key
success factors that have an influence on the introduction of new ventures in the online
business sector.
Report
The online business has been developing in Malaysia from the year 1995 and there
have been several factors that have led to the development of the country in such a manner
that in the current period the citizens of the country are more likely to purchase products
online rather than from offline shops. There have been several new online industries that have
been generating in the country and this has led to the rise in the economy of the country as
well. The key success factors that have been taken into consideration will be explained in
order to have an understanding of the same and thereby understand how new ventures are
being introduced in the online business in Malaysia.
Malaysian Culture
The business environment is culturally variant in Malaysia. In United States, the
shops are not a block away from the houses unlike the shops that are seen in Malaysia. The
business hours of the shops that are operational in Malaysia are distinctively higher than the
ones that are operating in Western countries. The attitude of the consumers as well as the
behaviour have a big impact on undertaking decisions to purchase from the internet (Osman,
& Ngah 2016). In the current time period, the attitude of the customers have been changing

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and the incorporation of innovative tools like smartphones and other electronic devices have
influenced the consumers to purchase the products online (Hazudin et al., 2015). This saves
the time of the consumers of going to various shops and purchasing products as they can
purchase a variety of products from one portal. The main success factors for new ventures in
online business in Malaysia have been explained.
Key Success Factors
There are several factors that have an influence on the new investors undertaking
ventures on online business in Malaysia. It is seen that Malaysia is a developing country and
the nation has a large number of consumers. This creates a demand for the new entrepreneurs
to enter the market and capture the market share that would be useful in increasing the level
of profit and thereby maintain their competitive edge (Ong et al., 2017). The online market of
Malaysia is relatively new and therefore has the scope for new investors to undertake
ventures in order to meet the demands that are existent in the market from the perspective of
the consumers.
The advent of time has led to the introduction of new and improved technologies and
there have been several tools and software that has been useful for the development online
business transactions and businesses (Ng, & Kee 2015). The development of secured
payment gateways for the purpose of undertaking secured transactions have motivated the
consumers from purchasing the products that would be useful for them. This saves their time
and effort as well. The development of information technology has led to better networks
with the help of which the consumers can access the various online business portals in order
to choose from the various services and products that are offered by the companies and
thereby satisfy their wants and desires (Gozali et al., 2015). Security has been one of the key
issues in the online businesses and therefore the incorporation of the innovative tools and

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techniques have been able to mitigate these issues and thereby motivating new investors to
undertake ventures in this sector.
The encouragement given by the various parties and the government is a key driving
factor that promotes the online business in Malaysia. It is anticipated that these drivers would
be helpful in promoting the utilisation of the local websites that are being constructed. The
involvement of the private sector is one of the key factors with the help of which new
ventures are being undertaken in this kind of business. During the initiation of the online
business in Malaysia, the amount of business that was available was relatively low and with
the advent of time there has been a rise in the amount of business as demand for the
customers for products and services through online businesses have increased (Isabelle, &
Westerlund 2016). The private sector has the main motive of increasing their extent of profit
and sales as well. Therefore, the private sector has been constructing various plans and
strategies with the help of which they promote the online business in the economy and
thereby establish online business in the market.
Malaysia has a huge market for the development of internet and therefore significant
amount of potentiality is existent in accordance to which millions of ringgit can be earned.
The increasing number of online business websites and internet cafes are optimistic symbols
for influencing the Malaysian populace to go online (Rahman et al., 2015). The private
sectors and the online businesses have been undertaking several promotional activities and
advertisements with the help of several mediums with the help of which the consumers of the
country can have certain idea about online business thereby increasing the number of sales
and revenue for the business.
There have been several seminars that were held in order to make the customers
aware about the benefits of online business so that they get motivated and encouraged to

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undertake activities that can improve these businesses. The information that is in relation to
the development of new ventures in the online business has been the availability of trust. The
trust with the online business company and among the customers and the company is one of
the success factors. The willingness of a party to be susceptible to the activities undertaken by
another party is dependent on the expectation that the other party will undertake a distinct
action is significant to the consumer irrespective of the capability to control and manage the
online business transactions (Marais et al., 2017). This kind of online transactions are helpful
for the development commitment among the customers and increase the level of customer
satisfaction thereby able to maintain competitive benefit. There are several potential benefits
of online business and it is seen that accessibility is one of the success factors as well. The
introduction of the fast mechanised internet services and tools are able to improve the
operational services associated with the online business (Lampadarios et al., 2017). The
customers are able to go through various products and services as the level of connectivity of
the internet is very high and satisfaction level increases. The quality that is provided by the
online businesses are similar and in some cases better than the one that are offered by the
offline shops. The effective level of interaction and communication with the customers are
helpful in understanding what the customers wants and the perception of the customers with
the help of which online businesses can enhance their quality and maintain competitive edge.
In the current time period, there has been an observation that there are demand for
online products and services in Malaysia have increased. This has created a potential for the
development of the new online businesses. The rise in demand has mainly been due to the
various promotional and advertisement campaigns with the help of which the online
businesses have been able to make the customers aware of their products (Amin et al., 2017).
The online businesses provide discounts and benefits to the customers so that they are able to

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purchase the products at a lower price that would influence the customers to increase their
level of sales and respectively the profit as well.
The government has a significant role to play as the rules and regulations that have
been constructed by the government is helpful in increasing the level of online business
activities (Lee et al., 2016). The initiative of the educational programmes and events
undertaken by the government in order to make the consumers aware of the benefits of online
business in Malaysia. The government has been providing basic infrastructure along with the
favourable environment with the help of which smoother online business activities can be
undertaken. The government has the vision towards 2020 which is a national agenda and
therefore looks construct distinct objectives and goals for the development of online
businesses for the long term. The government has even looked to expose the rural population
in the age of information technology and computers so that they receive training on internet
based activities and thereby is able to take the benefit out of online businesses as well. These
have been the key success factors that have motivated the new investors to undertake
ventures in the online businesses and is able to increase profit for the entrepreneur (Mian et
al., 2016).

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Conclusion
The report has therefore been able to address how online business has enhanced from
time to time and has motivated various investors and entrepreneurs to undertake business in
this sector. The online business in Malaysia since its inception has been explained and an idea
has been attained with the help of which the demand for online business in the current period
has been understood. The report has even addressed the fact that there exists various success
factors that are associated with the development of the online business in Malaysia.
The availability of huge Malaysian populace is one of the key factors that has
encourage new entrepreneurs and investors to enter the online business market in order to
gain profit and maintain competitive edge. The rules and regulations that have been laid
down by the Malaysian Government is another factor as well that has encouraged the
entrepreneurs to enter the business as the government offers the basic framework needed for
the initiation of the online business and the offers extensive benefits like the waiver in taxes
for the online business and thereby providing a scope of earning more profit from the market.
The development and introduction of technological tools and mechanisms have a key role to
play with the help of which the company is able to increase their level of sales transaction
and maintain a hassle free and secured transaction process. The entrepreneurs with the help of
the online business activities have been able to reduce their time and efforts and accordingly
reduce the level of cost that is associated with the operational activities of the company.
Hence, the report has been able to explain the key success factors and thereby have been able
to understand the reason why the new entrepreneurs have the requirement of making ventures
in the online business.

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