Strategic Business Development in Malaysia’s Oil & Gas Sector

This is a research paper that explores the importance of strategic business development in the oil and gas industry of Malaysia, in the context of Palfinger Asia Pacific Pte Ltd. The paper discusses the company’s financial health and the need for strategic business development to expand its business in the oil and gas sector of Malaysia. The paper also includes a literature review on strategic business development, a review of the business portfolio and financial turnover of local agents, an analysis of the strengths, weaknesses, and opportunities of the oil and gas industry in Malaysia, and an assessment of local competitors’ approaches and business strategies. 

Running head: RESEARCH PAPER
Topic: To Review and Propose Strategic Business Development in Malaysia for the Oil &
Gas Sector
Name of the Student:
Name of the University:
Author note:

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Acknowledgement
I would like to express my gratitude towards all the people, who have helped me in conducting
my research study on the importance of strategic business development in the oil and gas
industry of Malaysia, in the context of the multinational company, Palfinger Asia Pacific Pte Ltd.
They have helped me in every possible manner to explore my potential and strength and utilize it
in the best manner for conducting the research paper. I also thank my supervisor, who has guided
me through the entire time of the research by providing excellent guidance and monitoring. I also
express my gratitude towards my friends and family who have supported and encouraged me
throughout the research work so that I could complete the study in proper time.

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Abstract
This research paper explores the importance of strategic business development in the oil and gas
industry of Malaysia, in the context of Palfinger Asia Pacific Pte Ltd. Oil and gas industry is one
of the most important sectors in Malaysia. It contributes a significant amount of revenue in the
country’s economy. Palfinger Asia Pacific Pte Ltd is a heavy lifting crane and other equipment
supply company that has global business. It is one of the most trusted companies in terms of the
supply of crane and other hydraulic solutions to various industries in the country. In this study,
the researcher collected primary data through structured and unstructured interviews and
secondary data from the annual report of the company. Qualitative and quantitative methods for
financial ratio analysis were applied on the data and it was found that the company is in good
financial health and strategic business development is necessary for expanding its business in the
oil and gas sector of Malaysia.

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Table of Contents
CHAPTER 1: INTRODUCTION....................................................................................................6
1.1 Introduction............................................................................................................................6
1.2 Company overview................................................................................................................7
1.3 Research aim..........................................................................................................................8
1.4 Research objectives...............................................................................................................8
1.5 Research questions.................................................................................................................9
1.6 Research rationale..................................................................................................................9
CHAPTER 2: LITERATURE REVIEW.......................................................................................11
2.1 Strategic business development...........................................................................................11
2.3 Review of Business Portfolio and Financial Turnover of Local agent with that of
Palfinger’s Standard...................................................................................................................16
2.4 Strengths, weaknesses and opportunities of the oil and gas industry of Malaysia..............16
2.5 Assess and Compare local competitors on their approach and business strategy to the Oil
and Gas Sector...........................................................................................................................18
2.6 Possibilities for Direct Business in Companies or Business to Business Distribution model
via Local Agent..........................................................................................................................19
CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY..................................................21
3.1 Research philosophy............................................................................................................21
3.2 Research purpose.................................................................................................................22

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3.3 Research approach...............................................................................................................22
3.4 Research design...................................................................................................................23
3.5 Data collection process........................................................................................................23
3.6 Sampling technique.............................................................................................................24
3.7 Data analysis process...........................................................................................................25
3.8 Ethical considerations..........................................................................................................25
CHAPTER 4: DATA ANALYSIS AND FINDINGS...................................................................27
4.1 Data analysis and findings...................................................................................................27
4.1.1 Financial ratio analysis for Palfinger Asia Pacific Pte Ltd...........................................27
4.1.2 Qualitative analysis.......................................................................................................33
4.2 Market analysis....................................................................................................................38
4.3 Summary of findings...........................................................................................................41
CHAPTER 5: CONCLUSION AND RECOMMENDATIONS...................................................44
5.1 Linking to the research objectives.......................................................................................44
5.1.1 Linking to the first objective.........................................................................................44
5.1.2 Linking to the second objective....................................................................................45
5.1.3 Linking to the third objective.......................................................................................46
5.1.4 Linking to the fourth objective.....................................................................................47
5.1.5 Linking to the fifth objective........................................................................................47
5.2 Recommendations................................................................................................................48

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5.3 Future scope of the study.....................................................................................................50
References......................................................................................................................................51
Appendix........................................................................................................................................57

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CHAPTER 1: INTRODUCTION
1.1 Introduction
The oil and gas industry of Malaysia started its operations almost a century ago. Over the
years, the industry has flourished to be one of the most dynamic industries in the country dealing
with the natural reserves of oil and gas. It has also become one of the biggest producers of the
liquefied natural gas (LNG). There are almost more than 3500 oil and gas companies in Malaysia
that includes both the national and international companies. The oil and gas industry of Malaysia
contributes around 20% -30% in the Gross Domestic Product (GDP) (Nikhalat‐Jahromi, Fontes
& Cochrane, 2017.
As the industrial sectors in the global economy are changing quite rapidly and bringing
different dimensions to the businesses, it is highly important for the organizations in every
industry to stay relevant to the industrial needs and the market demands. The business
implications have a profound impact on the organizations to stay competitive and sustainable at
the same time for achieving long term growth (Ngoasong, 2014). Hence, it is extremely essential
for the organizations to understand the principles of the market and develop strategies
accordingly to not only gain a competitive edge in the market but also for sustaining in the long
term. It is seen usually seen that the businesses adopt strategies that directly or indirectly reflect
the national culture and the value that it delivers to the customers. Thus, any strategic business
development should adopt business models that explore the relationships between the nature of
the business, culture, innovative management and proposed value of the organization to deliver
the best outcome (França et al., 2017).

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Business development depends on quite a few important factors, namely, communication,
cross channel marketing, remote working, and storytelling technique for brand promotion. The
main motive of strategic business development is to create long term relationship with the proper
demographic of the society and proposing the best value to the customers and in turn earning
profit (Björkdahl & Holmén, 2013). Strategic business development helps the organization to
find out the USP of its product, service or idea and create a business plan around it. This process
is followed in all the industries or sectors.
This study aims to review and propose strategic business development in the oil and gas
industry of Malaysia. The case of Palfinger Asia Pacific Pte Ltd in Malaysia will be chosen to
conduct this study. The business model of this company will be reviewed to explore the different
aspects of the company which are relevant for the industry. A comprehensive literature review
will be conducted to create a conceptual context for the study. It will focus on the business and
financial portfolio of Palfinger Asia Pacific Pte Ltd in Malaysia to compare the industry
scenario.
1.2 Company overview
Palfinger Asia Pacific Pte Ltd is one of the major lifting solution providers in Malaysia.
The company provides highly innovative, cost effective and reliable hydraulic lifting solutions in
the commercial vehicle industry and in the maritime field. In Malaysia, the company offers
products like loader cranes, marine cranes, Epsilon timber and recycling cranes, davit system,
tail lifts, access platforms, mobile cranes, passenger lifts, truck bodies, railway systems, rope
access professionals and truck mounted forklifts. It also offers tools and equipment for

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improving the efficiencies of its cranes. Hydraulic Loader Crane is its most popular product,
which is known for high efficiency and user friendliness. Palfinger has more than 120 products
in its portfolio and has more than 30% market share and it is one of the market leaders in the
world in this segment (Palfinger.com, 2019). The company has been signed for supplying
complex offshore hydraulic cranes to Dong for the exploration and production operations on the
Danish Hejre Field. Palfinger has been able to establish a position in the marine industries and in
the oil and gas industries in European countries by providing highly advanced deck winches and
lifting equipment, bulk handling equipment, bunker etc. The winches of the company are electric
and have controlled frequency. Palfinger wants to expand its business in the oil and gas industry
of Malaysia by offering its world class lifting products.
1.3 Research aim
The aim of this research paper is to study and review the existing business model of
Palfinger Asia Pacific Pte Ltd in Malaysian Oil and Gas industry to evaluate the current business
scenario of the industry and to provide recommendations to the company to install the future
growth drivers.
1.4 Research objectives
The objectives of the research study are stated below:
 To analyze and review business portfolio and financial turnover of current Local agent in
Malaysia in accordance to Palfinger’s Standards as Principle
 To conduct a market analysis studies on the strength, weakness and potential opportunities
in the Oil and Gas sector of Malaysia

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 To assess and Compare local competitors on their approach and business strategy to the Oil
and Gas Sector
 To evaluate possibilities for a direct Business to Companies or Business to Business
distribution model using a local agent
 To propose structured and improved work procedure and future business strategy for long
term growth
1.5 Research questions
1) What is the business portfolio and current financial status of the Palfinger Asia Pacific
Pte Ltd in Malaysia?
2) What are the strengths, weaknesses, and potential opportunities of the oil and gas
industry in Malaysia?
3) What are the possibilities for direct B2C or B2B distribution model in this industry using
a local agent?
4) How to improve the growth strategy for the Palfinger Asia Pacific Pte Ltd to expand its
business in Malaysia?
1.6 Research rationale
The significance of this research lies in the fact that this study will contribute
significantly in both the academic world and in the corporate world. Firstly, the study will make
additions to the literature world by highlighting different aspects of the research topic. The
relationship between business portfolio and the strengths, weaknesses and opportunities will be
examined to highlight the future growth potential. This will help the future researchers and the
oil and gas sector as well for further research. The study will illustrate the necessity of the
strategic business development in the oil and gas companies in the Malaysian oil and gas sector.

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The study will be conducted in an extensive manner to assess the buying patterns and trends of
the customers and to determine the strengths and weakness of the market. The study will
examine the market competition scenario to assess the possibilities for growth in this market for
Palfinger Asia Pacific Pte Ltd. Based on the findings, the need for strategic business
development will be suggested for Palfinger Asia Pacific Pte Ltd and the ways to implement
those strategies in the most effective manner. Thus, the study will be beneficial for the oil and
gas companies which would want to expand its businesses in an established market and thus
need to focus on strategic business development.

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CHAPTER 2: LITERATURE REVIEW
This chapter presents an overview of the literatures that dealt with the strategic business
development and its various aspects. This would help the researcher to create a context for the
specific research study, that is, importance of the strategic business development in the oil and
gas sector of Malaysia. This would also help the readers to get acquainted with the broad
research subject and the research topic. This chapter will contain a thorough discussion on the
relevant peer reviewed journal research papers and other relevant sources of information to
highlight the broader aspect of the research study and to determine the research variables.
2.1 Strategic business development
As stated by Lee et al. (2015), business development refers to the method of identifying,
nurturing and acquiring new business clients and driving the business opportunities towards
profitability and growth. Business strategy represents the process of documenting the plans and
actions of the organizations for developing the business. The scope of the business development
includes broad range and it varies from one organization to another. Morden (2016) writes in his
book that strategic business development includes various combinations of different individual
tasks with a goal to implement and develop the growth opportunities within the organization
itself or between two or more business organizations. It leads to the all round development of the
business to make the operations more efficient and increase the value proposition to the
customers. In other words, strategic business development aims to establish long term value
factor for the organization by considering the market demands and positions, customer positions
and the interrelationships.

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The strategic business development process can be illustrated through the marketing
funnel model. It has three different stages, namely, attracting prospects, building engagements,
and turning opportunities into clients.
Figure 1: Three stages of Marketing Funnel
(Source: Nikhalat‐Jahromi, Fontes & Cochrane, 2017)
The first two stages are attributed to the traditional marketing operations, while the last
stage is entirely traditional sales operation. Thus, strategic business development process
combines marketing and sales operations to increase its market share.
Wirtz et al. (2016) highlighted some of the most popular business strategies. Those are
networking, referrals, sponsorships and advertisements, outbound telephone and mails, content
marketing and though leadership, and combined strategies of the above mentioned factors. The
authors mentioned that business strategies and models are useful for implementing innovations,
change, evolution, assessing the performance of the resources, controlling and designing in the
business operation to improve its value and profitability.

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Skokan, Pawliczek & Piszczur (2013) addressed the topic of strategic management and
strategic planning and their positive impact on the business performance of the micro, small, and
medium sized enterprises in the Czech and Slovak Republic. The authors found that for the
micro size and SMEs, there is significant impact of the strategic planning and management as
that helps these enterprises to run their operations smoothly and also helps them to reduce their
operational cost as well as valuable resources.
Herrmann & Herrmann-Nehdi (2015) highlighted some basic strategic business
development ideas, such as, proper recruitment at the proper time and for proper role, grabbing
the right opportunity in the market, understanding the precise requirements of the clients and
deliver satisfaction through best quality product and service, and implementing innovation.
Kandemir & Acur (2012) provided an argument for the necessity of innovation and new product
development. The authors conducted the study on the impact of proactive strategic decision
making flexibility for the new product development or innovation. It has been found that the
strategic flexibility is a highly important factor or the success of a firm, however, in majority of
the cases, the organizations face the challenges of implementing strategic flexibility in the
decision making processes or in case of new product development or product innovation.
Through strategic flexibility, firms can translate the resources and capabilities into new products
in the most cost effective manner. The authors showed that proactive strategic decision making
flexibility is quite essential in the development of new products, which can create new
opportunities in the market and also compliance with market needs. The study generated the
outcome that strategic flexibility in the business decision making process is significant as it helps
the organizations to adapt to the changing environments for new product developments and
creating new market opportunities and accessing the technological changes and upgradation for

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delivering a new or innovative product. Strategic flexibility allows the organizations to
understand the market demand and take decisions accordingly to adjust their production process
or the product. Along with that, it also helps the organizations to offer benefits like cost, quality
and timeliness. Hence, strategic flexibility should be incorporated in the strategic business
development process.
Schweitzer (2014) conducted his study on leadership and capacity build for innovation in
the strategic alliances. The author conducted the study on the impact of heterogeneity along with
capacity development on the intra-firm leadership behaviour. The transformational leadership is
more effective in establishing the attitude and the development of the innovative or dynamic
capabilities of the strategic alliances while it is less effective in operational capabilities or
substantive or operational capabilities. However, transactional leadership becomes effective in
case of preserving the operational capabilities. Thus, innovation requires new product
innovations which help the companies to satisfy the needs of the customers in the most precise
manner.
Heger & Rohrbeck (2012) wrote in their paper that, for ensuring the long term
competitiveness, organizations must develop the capabilities of exploring, planning and
developing new business ideas, fields or products. According to the authors, an appropriate
business development approach faces quite a few challenges as it requires to integrate various
perspectives on different aspects of a business, to ensure a high level participation of major
stakeholders and the decision makers, to function effectively despite different levels of
uncertainty and to take into account the interdependencies among the influential elements. Thus,
the authors suggested that the organizations should integrate multiple strategic foresights and

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methods in a direction that should help the organizations to achieve the long term
competitiveness by implementing innovations in the business ideas.
Rosemann & vom Brocke (2015) highlighted that the business process management can
be decomposed into six elements, which helps the organizations to channelize their efforts and
resources towards that aspect which requires first or most attention. Those six elements are
strategic alignment, governance, processes or methods, the information technology, people and
culture. These elements are framed such that these can address various business and operational
areas and hence can lead to efficient problem solving and in a faster manner.
Prajogo (2016) conducted his study on examining the role of the business environment,
that, competitiveness and dynamism as the contingency factors that affect the effectiveness of the
product and process innovation strategies while delivering the business performance. The author
showed in the context of Australian manufacturing firms that the dynamic business environments
strengthen the impact of product innovation on the business performance. However, on the other
hand, the competitive business environments weaken the impact of product innovation on the
business performance but strengthen the impact of process innovation. Thus, two aspects of
business have quite different impacts on the product and process in the business performance.
The author therefore demonstrated that a strategic fit between the product innovation strategy
and dynamism and also between the process innovation strategy and competitiveness, and it has
been found that product innovation and competitiveness do not go well together.

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2.3 Review of Business Portfolio and Financial Turnover of Local agent with that of
Palfinger’s Standard
The oil and gas sector’s business in Malaysia dropped by about 11% due to the fall in the
crude oil price, which made the marginal growth of the industry halted (George et al., 2016). The
industry took the strategy of securing the energy of Malaysia by exporting more of the sweet
crude oil and importing more of the low grade oil for the downstream facilities. The refining
capacity of the industry is increased to enable the country increase its exporting capacities. The
capacities of Pengerang Integrated Petroleum Complex (PIPC) in Johor as well as the Sipitang
Oil and gas Industrial Park (SOGIP) in Sabah are getting increased to almost double (Ngoasong,
2014). With more than 3500 local and global oil and gas companies, this industry is quite big
with quite a few opportunities along with some challenges.
2.4 Strengths, weaknesses and opportunities of the oil and gas industry of Malaysia
As highlighted by Ong, HMahlia & Masjuki (2012), oil and gas is one of the major
industries of Malaysia, which has a strong impact on the Malaysian economy. The sector
contributes a huge amount of revenue in the country’s GDP. There are some global trends in this
industry which shape its growth, such as, resource scarcity, volatile oil prices, and the effect of
emerging markets. The industry also faces challenges like reducing productivity, increasing
costs, and competitive forces, which are putting pressures to find out new as well as innovative
ways for meeting the expectations of the investors in the most effective manner along with
meeting the ever increasing global demand for energies. Thus, this industry faces quite a few
opportunities as well as challenges.
A report by PwC (2015) highlights the strengths, weaknesses, opportunities and threats
for the oil and gas industry of Malaysia. As per the report, the strengths of this industry includes

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the great level of high quality oil resources in the country, the country being one of the largest
producers of LNG of the world, and it is a net exporter of crude oil, and established market has
been well supported by well developed auxiliary industries. On the other hand, there is shortage
of skilled workers, many of the oil producing fields have become mature, and there is high
requirement for capital for the upstream activities are some of the weaknesses of this industry.
The industry has plenty of opportunities. There are deepwater oil fields, which are still
unexplored, the marginal fields also could have more undiscovered potential when there is
advanced technology, the large international companies are shifting their attention towards the
developed markets providing field opportunities for the local companies. There is scope for asset
acquisition at discounted prices and the government gives tax incentives. Moreover, there is
newly introduced Risk Sharing Contracts (RSC) which gives opportunities for the companies for
exploring the marginal fields and thereby mitigating the risk of non-discovery. Thus, it can be
said that there is a big scope for the oil and gas industries of Malaysia which needs to be
explored with proper planning and techniques. However, there are some threats also which create
challenges for the industry. The lower price of the oil and the volatility of the prices affect the
prospects of longer term production. There are situations for delays in the project execution and
asset delivery. There is also long waiting period for the RSCs, which makes the projects on the
marginal fields freeze for some time due to falling oil prices. The highly geared companies face
insolvency risks and the development of Pengerang as a regional oil and gas hub faces tough
competition from Singapore. Thus, it can be stated that there are opportunities along with threats
for the industry and it should take measured and controlled actions to tap the opportunities while
handling the threats in a strategic way.

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2.5 Assess and Compare local competitors on their approach and business strategy to the
Oil and Gas Sector
The contribution of the oil and gas industries in the Malaysian economy is quite
significant. Crude oil and the gas were the largest exports of Malaysia in 2014 after the
electronic and electrical goods and accounted for almost 20% of the GDP of the country.
However, more than 60% fall in the oil prices in 2014 and the remaining range bound between
the USD 35-45 per barrel made the growth of the upstream activities quite challenging. To
overcome this challenge, PETRONAS took measures such as, both the OPEX and CAPEX
undertakings were reduced by RM50 billion with an aim to realize the target savings of RM16
billion in 2016 (Pwc.com, 2016). As seen in the report by PwC (2016), in the domestic upstream
activities, which includes 101 Production Sharing Contracts (PSCs) and 6 Risk Sharing
Contracts (RSCs), pressures were on the approaches for unlocking the reserves.
Hassanzadeh (2013) highlighted that for unlocking the reserves, the oil and gas
companies in Malaysia took measures like monetizing the marginal fields, tapping the under
explored deep water potential, and intensifying the EOR. Malaysia expected to unlock almost 0.6
billion BOEs that are spread across in more than 100 marginal fields by introducing the RSCs.
However, the break even cost was set at USD 55 which has been making the approach quite
challenging. It has been seen that 7 billion BOE resources are yet to be explored and discovered,
among which only 50% are found by the oil and gas companies of Malaysia, which indicates that
there is a large potential oil reserve in the deep water which needs to be explored. Moreover, the
Enhanced Oil Recovery (EOR) can be implemented on 14 identified fields and 0.8 to 1 billion
BOE can be unlocked further though cost is a big challenge for the Malaysian industry. For the
upstream industries, the low crude oil price environment is a big challenge, as that pushes up the

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cost of production in the marginal fields. Thus, innovative low cost solutions are in high demand
for the upstream industries to monetize the marginal fields and unexplored deep water reserves.
For the midstream and downstream companies, the low price for oil also put up
challenges in terms of cost of operations. These companies also need high amount of capital to
run the operations and PETRONAS took the decision of rebidding for securing better prices,
while the depressed oil prices also resulted in rephrasing some of the petrochemical projects that
involved phenolic chains (Pwc.com, 2016).
As highlighted by Thorn, Johansen & Hjertaker (2012), the high pressure on the oil and
gas companies to reduce the cost of production may be beneficial for the multinational oil
service companies who might pull their stuff out from Singapore and place them in Malaysia.
This way, many major players have been benefiting the economy of Malaysia. The real estate
costs are lower and hence, the expenditure on the commercial property is reduced too, which is
also making Malaysia a compelling location for the support industries of the oil and gas sector.
There has been a significant increase in the subsidiary industries in Malaysia for the local oil and
gas companies and these companies are in the process of amalgamation to become stronger as
cost and scale competitiveness are highly required in this industry to operate profitably.
2.6 Possibilities for Direct Business in Companies or Business to Business Distribution
model via Local Agent
As stated by Esteves, Coyne & Moreno (2013), the local agents are preferred by any
multinational company in the oil and gas industry for gaining the comparative advantage in a
country of operation. Since, this industry always deals with large scale organizations, the
individual retail business deals do not happen. Thus, for the oil and gas industry, all the dealings

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happen for business to business. Hence, in the distribution model, if the local agents are chosen,
the local economy will benefit more. However, it has been seen that the local economies are
often unable to take the advantages of these initiatives for creating sustainable economic
development in terms of jobs, development of local business, development of skills and
improvement of technologies. Sometimes, the government also makes rules and incentives to
include the local agents in the distribution process of the multinational large scale oil and gas
companies to promote the business of the local agents. Local agents include local registration,
local ownership, local workforce, local value added goods and services and joint collaboration
between the foreign and a local company. Thus, it can be stated that if the local agents are
involved in the process of distribution in the oil and gas industry, there could be improvement in
their businesses as well as in the local economy.
Ngoasong (2014) highlighted that the oil and gas companies adopt business practices that
include the development of local content strategies that are implemented through various
programs and initiatives, meant for the development of the host countries by using their
workforce and suppliers. Thus, including the local agents in the distribution process of the oil
and gas companies are often observed in the less developed locations.

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CHAPTER 3: RESEARCH DESIGN AND METHODOLOGY
This chapter describes the strategies and actions taken for collection of the necessary data
and analyzing those to address the research questions. Thus, research methodology refers to the
steps of data collection and analysis to get the findings to the research questions. it includes the
specific techniques or procedures that are used for identifying, selecting, processing and
analyzing the information about a specific topic. These processes are beneficial for critical
evaluation of the overall reliability and validity (Kumar, 2019). The research methodology
includes research philosophy, approach, design, data collection method, sampling and data
analysis process. The research study revolves around the exploration of the strategic business
development in the oil and gas industry of Malaysia in the context of Palfinger Asia Pacific Pte
Ltd and for the study, the processes adopted are described below.
3.1 Research philosophy
As stated by Mkansi (2012), research philosophy represents the assumption or belief
regarding the method in which the information about the research phenomenon should be
collected, analyzed and interpreted. The source and nature of the research topic often determines
the research philosophy. There are different types of research philosophies, such as, positivism,
realism, interpretivism and pragmatism. While positivism focuses on collecting quantitative data
and analyzing those using quantitative method to get scientific outcome to the research
phenomenon, realism allows the researcher to explore the reality than theories. Interpretivism
allows the researcher to implement the interpretation skills and analyze the research phenomenon
qualitatively. Lastly, pragmatism allows the researcher to apply both the qualitative and
quantitative research methods to get a more in-depth overview of the research topic (Converse,

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2012). In this given study, the researcher applied both the qualitative and quantitative method of
research and hence followed the pragmatism research philosophy. Using both the methods
helped to get both the scientific and social and humanitarian aspects of the research topic.
3.2 Research purpose
The purpose of the research generally lies in either explaining the research phenomenon
on the basis of established theories or exploring the topic in an untested direction. There are two
types of research purpose, explanatory and exploratory. Under explanatory research, the
researcher focuses on the explanation of the cause and effect relationships on the basis of prior
knowledge and it goes beyond only describing the phenomenon and explains the reasons. On the
other hand, exploratory research involves the methods to explore the research topic in depth to
get new insights (Kumar, 2019). In the given study, the researcher applied explanatory research
process to present the outcomes of the research topic, that is, the analysis of the business
portfolio and financial portfolio of the case study company and provided recommendations on
the need of strategic development to venture into the oil and gas sector of Malaysia.
3.3 Research approach
Quinlan et al. (2019) stated that research approach represents the plan and procedures
consisting of the steps of assumptions for the study and the detailed process of data collection,
and analysis, followed by interpretation. Thus, the nature of research problem often determines
the research approach. Inductive and deductive are two types of research approaches. Inductive
research allows the researcher to generate new theories from the research topic, while deductive
research allows the researcher to examine the research problem on the basis of established
theories (Sekaran & Bougie 2016). In this study, the researcher followed the deductive research

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approach. The findings from the data were tested to present the cause and effect relationship
among the research variables.
3.4 Research design
Research design represents the framework of techniques and methods chosen to combine
different components of the research study in a precise and logical manner to handle the research
problem efficiently (Maxwell, 2012). The design of the research topic is generally used to
explain the type of the research, that is, survey, case study, correlational, experimental, quasi
experimental etc. In this study, the researcher has chosen descriptive case study research design.
Palfinger Asia Pacific Pte Ltd. is the case study company in Malaysia that is involved in the
heavy lifting machinery manufacturing. The research findings would address the issue of this
company and then provide generic conclusion and recommendations to deal with similar
problems. The benefit of case study research design is that it helps to assess the research topic in
the real world scenario with practical implications (Hancock & Algozzine, 2016). Thus, it is
beneficial in drawing feasible recommendations to address the research problem.
3.5 Data collection process
Primary and secondary are two types of data that are used in the research studies. The
data which is gathered directly from the field of study through surveys, interviews, focus groups
etc. is known as the primary data and the data that is collected from secondary sources such as
journals, books, newspaper reports, government websites, publications, and official websites and
annual reports etc. is known as secondary data (Zhan, 2013). In this study, the researcher
collected both the primary and secondary data. The primary data was collected through
structured and unstructured interview process, and the secondary data was collected from the
journals and annual report of the case study company.

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In the structured interview, all the interview participants were asked the same questions.
The benefits of such interview technique are effectiveness of data collection in a single direction,
consistency in the data, as same questions are asked to all the participants, and clear
understanding of the topic makes it easier for the participants to answer the questions (Doody &
Noonan, 2013). Managing director, finance Manager and Business development manager of the
company were chosen for the structured interview. On the other hand, unstructured interview is a
non-directive interview with questions not pre-arranged. This process was followed to gather a
more in-depth insight regarding the perception of the employees on the social aspect of the
research topic (Brinkmann, 2014). Few employees of the company were chosen for the
unstructured interview. Through this process, the researcher collected qualitative data on the
research topic.
3.6 Sampling technique
Sampling is essential for primary data collection. The population for the research study
consists of all the employees of Palfinger. However, it is not possible to conduct interview on
every employee of the company as that would be highly time consuming and would make the
study robust. Hence, applying appropriate sampling technique, a sample, that is, a smaller subset
containing the same characteristics as the population is drawn for the purpose of data collection
(Acharya et al., 2013). There are two types of sampling techniques, probability and non
probability. Under probability sampling, each sample has equal and random probability of
getting selected, while under non-probability sampling, each sample does not have equal and
random probability of selection and it highly depends on the judgment of the researcher (Levy &
Lemeshow, 2013). For the given research study, the researcher applied purposive sampling
technique, which is a non-probability sampling technique. This technique is judgmental and

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subjective and helps in reaching the targeted sample in a faster manner. The purpose of the
researcher plays a major role in the selection of the sample. It is used in cases where a limited
number of people or object, having specific characteristics is required for conducting the study
(Etikan, Musa & Alkassim, 2016). In this study, the researcher chose 3 employees of Palfinger
Asia Pacific Pte Ltd who have working experience with the company for 3 to 5 years for the
unstructured interview and Managing director, finance Manager and Business development
manager were chosen for the structured interview.
3.7 Data analysis process
The researcher applied mixed methodology for the data analysis, that is, both the
qualitative and quantitative analysis methods were applied in this study. The primary qualitative
data from both types of interviews was analyzed using thematic analysis method. Quantitative
data was analyzed using quantitative methods. Financial ratio analysis was performed on the
financial performance of the company and based on that, the recommendations would be
provided on strategic business development. The quantitative analysis was performed to
recommend on the future expansion strategy for the company. Thus, by using both the analysis
methods, the researcher highlighted both the industrial and social aspect of the research and also
by reviewing the financial reports, the business performance of the company was assessed. This
was beneficial in assessing the market position of the company and understanding the buying
patterns of the customers and trends in the market. This was helpful in providing the overall
potential of the oil and gas sector of Malaysia.
3.8 Ethical considerations
The researcher followed all types of ethical considerations in this study. Firstly,
originality of the paper was strictly maintained by citing all the information properly. As

26RESEARCH PAPER
plagiarism is a serious offense in the academic world and has a heavy consequence, thus, all the
references to the information were correctly cited. Secondly, informed consent was taken from
both the employees and the organization before conducting the interviews. The purpose of the
study was clearly stated and none of the participants was forced to participate in the survey. They
had the right of voluntary participation. Thirdly, anonymity and data confidentiality was
maintained strictly. None of the participants were asked any personal details. The data would be
used only for academic purpose and would be stored in the university database.

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CHAPTER 4: DATA ANALYSIS AND FINDINGS
In this chapter, the researcher presents the analysis of the collected data using appropriate
techniques and the findings obtained to address the research questions. The findings are also
interpreted to give a thorough overview of the research topic. In this paper, the researcher
conducted the study on the importance of strategic business development for Palfinger Asia
Pacific Pte Ltd and the study aimed to provide an insight about the effective measures to
establish business development and how to implement those measures to increase the business of
the company in the oil and gas sector of Malaysia. For the purpose of the research, both the
primary and secondary data were collected. Primary qualitative data was collected through
structured and unstructured interviews conducted on the employees of the Palfinger Asia Pacific
Pte Ltd, Malaysia. The sample was chosen by using purposive sampling technique. On the other
hand, the secondary data on the financial performance of the company was collected from the
annual report of the company and comparison with the industry was done by exploring the
reports of oil and gas industry of Malaysia. The details of the data analysis and the
interpretations are provided below.
4.1 Data analysis and findings
4.1.1 Financial ratio analysis for Palfinger Asia Pacific Pte Ltd
Ratio analysis is an important quantitative analysis of the financial performance or
financial health of any company. This is important for assessing the efficiency, profitability,
liquidity and solvency of the company. The ratio analysis helps to assess if the company is
improving or deteriorating and it helps in comparing the financial standing of the company with
the industry average. Thus, for evaluating the financial health of Palfinger Asia Pacific Pte Ltd,

28RESEARCH PAPER
financial ratio analysis is performed. The secondary data on the revenues, incomes, assets and
liabilities were collected from the annual report of the company. The ratios and the
interpretations are presented below. The values of the ratios are compared between 2017 and
2018 to review the profitability and business growth of the company over a financial year.
RATIO ANALYSIS SPREADSHEET
BALANCE SHEET RATIOS: Stability (Staying Power) 2018
(Values in € thousands)
1 Current
Current Assets € 688,252.00 1.657089
Current Liabilities € 415,338.00
2 Quick
Cash + Accts. Rec. € 262,286.00 0.6315
Current Liabilities € 415,338.00
INCOME STATEMENT RATIOS: Profitability (Earning Power)
4 Gross Margin
Gross Profit € 404,126.00 0.250136
Sales € 1,615,628.00
5 Net Margin
Net Profit Before Tax € 111,048.00 0.068734
Sales € 1,615,628.00
ASSET MANAGEMENT RATIOS: Overall Efficiency Ratios
6 Sales-to-Assets
Sales € 1,615,628.00 1.05729
Total Assets € 1,528,084.00
7 Return on Assets
Net Profit Before Tax € 111,048.00 0.072671
Total Assets € 1,528,084.00
8 Return on Investment
Net Profit Before Tax € 111,048.00 0.199825
Net Worth € 555,726.00
Table 1: Financial ratio analysis for Palfinger, 2018

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BALANCE SHEET RATIOS: Stability (Staying Power) 2017
(Values in € thousands)
1 Current
Current Assets € 650,407.00 1.665443
Current Liabilities € 390,531.00
2 Quick
Cash + Accts. Rec. € 306,646.00 0.785203
Current Liabilities € 390,531.00
INCOME STATEMENT RATIOS: Profitability (Earning Power)
4 Gross Margin
Gross Profit € 358,970.00 0.244019
Sales € 1,471,075.00
5 Net Margin
Net Profit Before Tax € 6,117.00 0.004158
Sales € 1,471,075.00
ASSET MANAGEMENT RATIOS: Overall Efficiency Ratios
6 Sales-to-Assets
Sales € 1,471,075.00 0.995056
Total Assets € 1,478,384.00
7 Return on Assets
Net Profit Before Tax € 6,117.00 0.004138
Total Assets € 1,478,384.00
8 Return on Investment
Net Profit Before Tax € 6,117.00 0.011952
Net Worth € 511,780.00
Table 2: Financial ratio analysis for Palfinger, 2017

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4.1.1.1 Balance sheet ratios
Balance sheet represents the statement of assets, liabilities and equities of a business for a
particular financial period (Kapan & Minoiu, 2013). In the balance sheet, the assets must be
equal to the liabilities and equities of the company. Balance sheet ratios are also known as
liquidity ratios include current ratio, quick ratio and debt-to-worth ratio. These ratios indicate the
stability or liquidity of the company, that is, the staying capability of the organization in the
industry (Drake & Fabozzi, 2012).
Current ratio is the assessment to the current assets and liabilities of the company and the
optimum ratio is 2:1 (Williams & Dobelman, 2017). For Palfinger, the current ratio for 2018 is
1.65 while that ratio was 1.66 in 2017. This indicates that the company is managing its assets and
liabilities in a proper manner. The liquidity position is good as assets are more than liabilities and
it is in a stable position to undertake a new venture.
Quick ratio represents a more accurate financial position of the company by assessing the
cash and accounts receivable that is, liquid assets and liquid or current liabilities. The optimum
ratio should be 1:1, which indicates a good financial health for the company (Williams &
Dobelman, 2017). In this case, the quick ratio for Palfinger is 0.63 in 2018 and 0.78 in 2017.
Thus, it indicates that the quick ratio has reduced in 2018 from 2017, which implies that the gap
in the liquid assets and liquid or current liabilities is more in 2018 than what it was in 2017. It
indicates a positive business growth.

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4.1.1.2 Income statement ratio analysis
Income statement ratios present the profitability of the company. Gross and net margin of
profit are two most crucial components of a business as without profit, the business will go out of
industry (Gazzola & Amelio, 2014). Net profit is calculated by eliminating the taxes from the
gross profit. For Palfinger, it is seen that, in 2018, the gross margin was 0.25, that is, the
company earned 25% gross profit, while it earned 24% gross profit margin in 2017. Thus, it says
that the company’s profitability position has improved slightly in 2018.
However, the net margin was only 6% in 2018, which is higher than in 2017, where the
value of net margin was 0.0041 as the net profit value before tax was significantly lower in 2017.
Thus, there is an improvement in the net profit margin of the company in 2018.
4.1.1.3 Asset management ratio analysis
These ratios represent the overall efficiency of operation and resources of the company.
Asset management ratios are known as the turnover ratios and these include sales to asset ratio,
return on asset ratio and return on investment ratio. These ratios provide insights into the success
of the inventory management and credit policies of the company (Brooks & Mukherjee, 2013). It
is seen that, the sales to asset ratio value for Palfinger is 1.05 in 2018, while that was 0.99 in
2017. Thus, it can be said that the sales as per the available asset have increased in 2018 than the
previous year, that is, the assets of the company performed well in 2018, and hence, the revenue
against the assets have improved in 2018. This is a good sign for the business operations of the
company.
The ratio of return on assets calculates the net profit before tax and total assets of the
company and it is found that in 2018, the ratio of return on assets for Palfiinger is 0.07 that 7%

32RESEARCH PAPER
while the value was quite insignificant (0.0041) in 2017. This indicates a considerable
improvement in the efficiency of the assets and therefore there is a good return on the assets in
2018 than the previous year.
Lastly, the ratio of return to investments indicates the relationship between net profit
before tax and net worth of the company (Kabajeh, Al Nuaimat & Dahmash, 2012). This is
another crucial factor for any company as that reflects the efficiency of the investments and the
level of returns those bring to the company. In 2018, 0.19 was the value of the ratio of the return
on investment for Palfinger, while it was 0.01 in 2017. Thus, there has been a significant
improvement in the efficiency of the assets and investments of the company, which made the
return 19% in 2018 from 1% in 2017. This is a positive outcome for the company from 2017 to
2018.
4.1.1.4 Equity position
Equity reflects the value of shares of a company in the market. This is a part of the
balance sheet that represents the difference between the total assets and liabilities of the company
(Al-Matari, Al-Swidi & Fadzil, 2014). The equity of Palfinger was €478,984 (in thousands) in
2017, which increased to €514,033 (in thousands) in 2018. The equity ratio improved from
34.6% in 2017 to 36.4% in 2018. This indicates that as the revenue of the company has increased
in the past financial year, it also improved the market share of the company. The retained
earnings improved significantly. Thus, it can be said that the company performed quite well in
2018, although there have been slight improvements in some of the ratios, while others have
experienced good improvements.

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Lastly, it can be inferred that the performance of the company has improved considerably
in the year 2017 with an indication of good financial health. The return on investments have
improved and also the sales and revenue. The level of employment has increased and rate of
employee turnover has reduced, which is a sign of improvement in the business as well as in the
working environment of the company. It has been seen from the annual report of the company
that Palfinger has been focusing on implementing digital transformation with smart products and
smart business models. This includes highly advanced lifting solutions for the customers, new as
well as existing. The company suffered some setbacks in the timely delivery of its products due
to heavy demand in the market, which slightly affected their business in 2017; however, it started
to meet the delivery deadlines in the second half of 2018, which gave a boost up in their
business. In the marine business, there is significant operational progress for the company, which
can be an opportunity for Palfinger to expand its market in the oil and gas industry.
The company has undertaken a big challenge in 2018 in terms of introducing new
organizational structure, which is a part of their strategic business development process. The
company aims to create value for the customers on a daily basis in all the sectors that they
operate in and the plan to expand the business in the oil and gas industry of Malaysia is a new
venture that the company wishes to undertake for contributing significantly in the economy of
Malaysia through revenues and employment.
4.1.2 Qualitative analysis
The researcher collected primary qualitative data through interview method. Two types of
interview were conducted, structured and unstructured. For both the types of interviews,
purposive sampling was chosen. For the structured interview, the researcher selected the
Managing director, Finance Manager and Business Development Manager of the company, who

34RESEARCH PAPER
have been working with Palfinger for more than 5 years. On the other hand, for the unstructured
interview, the researcher chose 3 employees, with work experience in between 3 to 5 years. The
interviews were conducted face to face and the responses are attached in the appendix section.
The responses were analyzed using qualitative analysis method.
Thematic analysis process was followed for the analysis. Under this process, relevant
themes were chosen for the study as per the research objectives and questions and according to
those themes, the analysis was carried forward. The judgment and the interpretation skills of the
researcher are very important in this type of analysis process and hence, in depth knowledge on
the research subject is required. The interpretations of the responses are as followed.
Three managers of the company were chosen by the researcher as it is assumed that the
managers would have a much broader idea about the business and industry as they are more
involved in the administrative operations. The managers would have a better idea about the
strategic decisions taken by the company and the market position and competitions. Hence, the
managing director, finance manager and business development manager were contacted by the
researcher for the interview. Structured interview method contains same set of questions and in
the same order. Thus, the managers were asked 5 questions, that dealt with their tenure, their
perception about the financial health of the company, the need for strategic business
development, factors that would help it to expand the business in the oil and gas industry of
Malaysia, and their take on the business and marketing strategy that could be adopted by
Palfinger for expanding their business.
According to the Managing Director of Palfinger Asia Pacific Pte Ltd, the financial
health of the company is quite good. The company has more assets than the liabilities and has

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other ratios that have improved from that in 2017. Thus, the company has the ability to venture
into a new market, that is, oil and gas industry of Malaysia. The finance manager and the
business manager of the company also reported similar point of view. As seen from the company
records, it has been performing well in the past few years and hence, all the financial ratios are in
good position in comparison to the previous years’ records. Thus, the perspectives of the
managers are aligned with the findings from the financial statements of the company. Hence, it
can be interpreted that a good financial health of a company indicates that its assets are more
than the liabilities and with those assets, it can explore further opportunities in the market by
taking more risks and making more investments.
Thirdly, the managers were asked about the need for strategic business development in
Palfinger. All the managers reflected on the similar ideas for strategic business development. For
a company to grow and improve the profitability, it is essential to increase the number of clients
and also to maintain the operational cost. A business development takes much time and requires
in-depth planning. Strategies for developing a business should be flexible, even if the operation
has started. At any point in the business process, strategies can be changed as per the market
condition. Thus, when a company wants to expand its business to a new industry, strategic
business development is required. As stated by Hacklin & Wallnöfer (2012), strategic business
development has a tendency to shift or get modified depending on the corporate strategy of the
company and the leadership style. These factors play a major role in influencing the new
direction of the organization. As in case of Palfinger, the company wants to make an entry into
the oil and gas sector of Malaysia with its existing products and existing objectives, and thus,
strategic changes in the business operations need to be done to adjust to the demands of the new
market. Strategic business development can include changes in one or multiple departments or

36RESEARCH PAPER
business segments, such as, human resource, marketing, finance and accounts, sales, production
etc. It may require training for the employees, or change in the marketing or sales strategies etc.
Hence, it is very important to implement strategic business development ideas and plans while
venturing into new industry to make a sustainable move.
Fourthly, the managers were asked about their opinions about the changes or strategic
moves that Palfinger needed to make to expand its business in the oil and gas industry of
Malaysia. It has been found that all the managers put emphasis on the company objectives of
providing the best and enhanced value to the customers in all the sectors, which would be the
core objective for expanding in the new industry also. Apart from that, it has been found that the
company should put more effort in digital transformation and newly implemented organizational
restructuring. Both of these initiatives are a part of the strategic business development process. It
has also been mentioned that the company should conduct market surveys and assess the market
demand as accurately as possible. There are many companies in the market that provide
machineries and equipment for oil and gas production and exploration, and hence, this is an
established market already. It is always beneficial to know about the quality of the products from
competitors and the loopholes in their supply. That would help Palfinger to evaluate the market
demand and supply and its position in the new market. Along with that, understating the demand
would also help the company to minimize the resource wastage and keeping the production and
operational cost minimized. Thus, this process would not only help in achieving cost
effectiveness, but would also be beneficial for achieving more efficient financial ratios in the
coming years.
Lastly, the managers were asked about their opinions regarding the required business and
marketing strategies that would be suitable for Palfinger to enter into the oil and gas industry. It

37RESEARCH PAPER
is observed that the managers emphasized on adopting the differentiation focus strategy for
entering the new market. As for product differentiation, the company would be offering highly
advanced and customized lifting and exploring solutions to the oil and gas production
companies. Initially, it might need to opt for cost focus strategy, in which they would offer the
products to the target market at the lowest cost to capture the market share. However, the
technologically advanced and customized products for the clients would be its main business
strategy. The marketing strategy should be developed with proper marketing mix that would
highlight the features of differentiated products.
Unstructured interview analysis
3 employees of Palfinger were contacted for conducting an unstructured interview. In this
process, the employees were asked different questions that revolved around the financial
condition of the company and its new venture in the oil and gas industry of Malaysia. It has been
observed that despite being in different departments and different positions in the company, the
employees were aware about the financial performance of the company. The growth in the
business that happened in the past few years has brought improvements in the working culture
and employee benefits and hence, the employees were enthusiastic about the new venture of the
company. According to the interviewees, the company should focus on delivering best value to
the new target market, and for which they should manufacture customized products as per the
general market demand for the oil and gas industry. The products should be enhanced with
technologies required for the oil and gas production and exploration. Along with that, Palinger
should focus on the marketing techniques to capture a new target market. Such activities can be
sales promotion techniques such as offer price, discounted price for bulk purchases etc. Along
with that, the organizational restructuring is a new process, which requires training for the

38RESEARCH PAPER
employees to get adjusted with new systems for effective functioning. Thus, effective resource
utilization is extremely essential to implement new business strategies in the most cost effective
manner. Moreover, strategic business development process should also be implemented to
expand the business in the oil and gas industry, which already has a competitive supply market.
4.2 Market analysis
Market analysis is an essential tool to evaluate the market condition of any company.
This analysis helps a company to assess the competitiveness of the market and how the obstacles
could be overcome to increase the market share. As stated by Manganelli (2014), market analysis
is important for any company to understand the target market as that would help it to identify
several factors to have impact on the clients and take decisions accordingly, and thus, help in
reducing risks. Various types of market analysis techniques are used, such as, PESTLE analysis,
porter’s five forces analysis, porter’s generic strategies etc. In case of Palfinger, the Porter’s five
forces model was applied to evaluate the market condition for the company.
Porter’s five forces analysis is a tool that helps the organization to understand the
competitiveness in the market along with other factors, such as, threat of new entry, threat of
substitution, bargaining power of the suppliers and bargaining power of the buyers (E. Dobbs,
2014).

39RESEARCH PAPER
Figure 2: Porter's five forces analysis
(Source: E. Dobbs, 2014)
Threat of new entrants: The business of Palfinger is a highly capital intensive one. It requires a
large amount of investment in manufacturing of the lifting products suitable for industries like
construction, marine transport, railways etc. Thus, as palfinger aimed to venture the new market
of oil and gas industry, it itself becomes the new entrant in an existing market. However, it has a
well performing financial condition, which would help in its expansion. On other hand, due to
high level of capital intensity, new companies would not like to venture into the market. Thus,
the treat of new entrant is low.
Threat of substitutes: there are quite a few companies that provide supplies to the oil and gas
companies in Malaysia. The products are quite similar in their purpose and designing and thus,
those are close if not perfect substitutes. Hence, though Palfinger’s products would be highly
advanced and to be made as per the market demands, yet it faces the threat of substitutes. Thus,
this threat is quite high for the company.

40RESEARCH PAPER
Bargaining power of suppliers: Palfinger’s have been operating in the lifting solution industry
for a long time. It has a global supply source and the suppliers do not have much bargaining
power, as the supply market has many sources of supplies. Thus, this threat is low for Palfinger,
even when it is entering into new business.
Bargaining power of buyers: this will be high for Palfinger as it aims to enter a new market and
the buyers that is the customers would take some time to have faith on the new brand. Hence, the
oil and gas companies would first prefer to buy the products from a new company at a lower cost
and would have a high bargaining power.
Competitive rivalry: Many companies are operating as subsidiary businesses in the oil and gas
industry of Malaysia. These companies provide good quality lifting products, such as the cranes.
Although Palfinger has been operating in the construction, mining and other heavy industries,
where lifting solutions are necessary, it is venturing in a new market, that is, oil and gas industry.
Thus, it will face competition from the existing companies such as, Hyva Malaysia Sdn Bhd,
Shanker Crane Trading, MHE-Demag (S) Pte Ltd, Liftech Engineering (K.L) Sdn. Bhd., Tat
Hong Holdings Ltd etc. and the competitive rivalry is quite high for Palfinger.
Porter’s generic strategy for market entry
Porter’s generic strategy describes three ways of gaining competitive advantage in the
market for any organization. While entering into a new market, a firm must seek competitive
advantage to maintain the profitability. Product differentiation and the low cost are the two basic
types of competitive advantage that are followed by the organizations. These basic types of
competitive advantage are combined with scope of activities, which lead to three generic

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strategies, namely, cost leadership, differentiation and focus. The focus strategy has two
categories, cost focus and differentiation focus (Tanwar, 2013).
Figure 3: Porter's generic strategies
(Source: D. Banker, Mashruwala & Tripathy, 2014)
As stated by D. Banker, Mashruwala & Tripathy (2014), cost leadership strategy is
adopted when an organization wants to enter the new market as the low cost producer in the
industry, while under differentiation strategy, an organization provides unique or differentiated
products or services to the industry and thereby creates high value for the customers. The unique
position is created by addressing the needs or perceptions of the customers that are highly
valuable for them. Lastly, the cost focus or differentiation focus are meant for narrow target
markets.
As seen from the interview responses of the managers of Palfinger, two of the three
managers emphasized that the company should adopt the differentiation strategy to expand its
business in the oil and gas sector of Malaysia. Palfinger has been providing highly advanced
lifting solutions to many industries on the ground, sea and air sectors. As it aims to increase its

42RESEARCH PAPER
business territory by entering into the oil and gas industry, it should provide unique solutions or
products. Being a low cost producer would not be beneficial in the long run as there are already
established companies that are supplying the machinery, tools and equipment to the oil and gas
producing companies at a competitive price. Thus, to capture a new market, differentiation
strategy would be suitable. Palfinger should adopt this strategy by delivering customized lifting
products to the oil and gas producing companies. The demand for hydraulic cranes is quite high
in the oil and gas sector of Malaysia and thus, if Palfinger can manufacture customized products
as per the needs of the clients in the oil and gas industry, it can capture a substantial market size
by opting the differentiation strategy.
4.3 Summary of findings
The research study included both the primary and secondary data for exploring the
opportunities for Palfinger Asia Pacific Pte Ltd, Malaysia for expanding its business in the oil
and gas industry in Malaysia. Qualitative primary data was collected through interview process
for which the sample was chosen using purposive sampling. Secondary data on the financial
health of the company was collected from the annual report of Palfinger. It has been found from
the secondary data analysis that, the company’s financial health is quite good. It has been seen
that the ratio of current assets and liabilities of the company is good in 2018 and it has slightly
improved than the previous year’s status. However, the quick ratio has reduced than what it was
in 2017. This indicates that the level of liquid asset has diminished as the company is reinvesting
its assets for expanding its business. Under the income statement, there have been improvements
in the gross margin as well as in the net profit margin, which indicates that the company has been
experiencing a profitable situation, which is an encouraging point for business expansion.
Similarly, the asset management ratios have also improved considerably in 2018, than the figures

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in 2017. This also indicates that the company has an efficient asset management system, which
also maintains cost effectiveness of the company. Thus, with a healthy financial condition,
Palfinger is in a position to further expand its business in a new sector.
A similar view was observed in the analysis of qualitative data collected through the
interviews. The managers of the company perfectly highlighted about the financial health of the
company and they have also reflected on the expansion opportunities for the company in the oil
and gas sector. It has been said that the company should opt for differentiation strategies for
entering the new market. They should assess the market demand for crawling cranes, hydraulic
cranes and other type of lifting and extraction machineries, required in the oil and gas sector and
thereby manufacture the products accordingly. This will help the company to provide
differentiated products to the oil and gas companies and create a market in that industry.
According to the responses of the employees in the unstructured interviews, a similar perspective
was observed. Thus, it can be said that the company has a good prospective if they opt for the
differentiation strategy for gaining competitive advantage in the oil and gas industry.

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CHAPTER 5: CONCLUSION AND RECOMMENDATIONS
This chapter presents the concluding remarks on the study along with some
recommendations to address the research issue. The research study aimed to evaluate the need
for strategic business development for exploring the business expansion opportunities for
Palfinger Asia Pacific Pte Ltd in the oil and gas sector of Malaysia. The researcher has
established a connection between the research objectives and the findings in this chapter. The
context of the research was established by conducting a thorough and extensive literature review.
The literature review was helpful both the readers and the researcher to have a good
understanding the broad research subject and its various aspects which helps in creating the
conceptual framework for the study. After the literature review, the research methodology was
chosen appropriately to address the research objectives in the most logical and unambiguous
manner. Pragmatism research philosophy was adopted, followed by explanatory research
process, deductive research approach and descriptive case study research design, in which
Palfinger Asia Pacific Pte Ltd is the case study company. Both primary and secondary data were
collected analyzed using qualitative and quantitative analysis process. The findings reflect that
Palfinger should adopt the strategic business development process to make the business
expansion more cost effective and efficient. The fulfilment of the research objectives are
described below.
5.1 Linking to the research objectives
5.1.1 Linking to the first objective
The first objective of the study was to analyze and review the business portfolio and
financial turnover of current Local agent in Malaysia in accordance to Palfinger’s Standards as

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Principle. For fulfilling the objective, the researcher explored the condition of the oil and gas
industry in Malaysia. It has been found that as the oil price is declining, the oil and gas industry
is down by 11% in the past year, leading to a fall in the overall marginal growth. The sector is
now trying to improve the level of its product export and for that, Pengerang Integrated
Petroleum Complex (PIPC) was established in Johor and Sipitang Oil and Gas Industrial Park
(SOGIP) in Sabah is working to double their oil refining capacity from 588,000 bbl/day to
1,158,000 bbl/day. It was also found from the study that, in Johor and Sabah, the facilities of
LNG are expanded and that is helping the sector to experience some growth despite facing tough
competition from other exporting countries. The country has more than 3500 oil and gas
production companies, which includes both local and global companies and thus, has a huge
scope for associated companies. Thus, it can be concluded that the oil and gas industry of
Malaysia has a growth prospective in the near future which can be explored by local agents like
Palfinger Asia Pacific Pte Ltd.
The company’s financial health was analyzed using information from its annual report. It
has been found that the company has been experiencing growth in the past few years, which is
reflected through its income, balance sheet and asset management statements. The company is in
a stable position to expand its business in the oil and gas industry by implementing strategic
business development that would help to utilize its assets in the most efficient manner. Thus, it
can be said that the first objective is fulfilled.
5.1.2 Linking to the second objective
The second objective of the study was to review the strengths, weaknesses and
opportunities of the oil and gas sector of Malaysia. It has been found from the literature review
that, there are high quality oil reserves, the country is one of the largest producers of the LN and

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a net exporter of the crude oil, and has highly developed auxiliary industries. These are the
strengths of this industry. On the other hand, the weaknesses of the industry include the shortage
of the labour with adequate skills, maturity of many oil producing fields, and requirement for
high amount of capital for the upstream activities. As per the report by PwC, it is seen that there
are ample opportunities for the oil and gas industry of Malaysia, such as, the unexplored
deepwater oil reserves, with the technological advancements many marginal fields could be
explored further, the shift of attention towards the developed markets by the large international
companies leaves opportunities for the smaller local companies, like Palfinger, asset acquisitions
at discounted prices, the tax incentives by the governments, and the newly established risk
sharing contracts offer the opportunities for the oil companies for exploring the marginal fields,
mitigating the risk of non discovery of potential reserves. Thus, by assessing all these factors, it
can be said that the opportunities are quite a few in this industry, which can not only help the
industry to grow but also helps the auxiliary industries to grow as well. Thus, the third objective
is also fulfilled.
5.1.3 Linking to the third objective
The third objective of the study was to assess and compare local competitors on their
approach and business strategy to the Oil and Gas Sector of Malaysia. In other words, the
competitiveness of the company, that is, Palfinger, was assessed through Porter’s five forces
analysis to understand the market condition for the local businesses for expanding their
businesses in the oil and gas sector of Malaysia. It was found that Palfinger faces low threat of
new entrants and low bargaining power of the suppliers, while for the other three aspects, that is,
threat of substitutes, bargaining power of buyers and competitive rivalry, the level is quite high.
Thus, it can be said that, the company must focus on the enhancing their product quality and

47RESEARCH PAPER
features to increase their popularity in the market. Product differentiation strategy should be
relevant for the company to expand its target market as product uniqueness is required for it to
gain competitive advantage in the market.
5.1.4 Linking to the fourth objective
The fourth objective of the study was to evaluate possibilities for a direct Business to
Companies or Business to Business distribution model using a local agent. It can be inferred
from the data analysis that since, the nature of business of Palfinger is such that only business to
companies or business to business relationship is possible. As this business is large sale and
capital intensive, Palfinger must make deals with the oil and gas companies that are involved in
production, exploration, supply and export of crude oil. Thus, by considering the growth
opportunities of the industry, it can be said that, Palfinger has a growing opportunity of business
if it chooses the business to business distribution model. This model will also help the company
to develop its own business due to higher level of capital acquired.
5.1.5 Linking to the fifth objective
From the data analysis on the market situation, it can be said that, for a company like
Palfinger, that have been operating for quite a long time in the business of providing variety of
cranes and heavy lifting solutions to various types on industries, such as, construction, transport
etc., can expand its business in a new sector like oil and gas industry, product differentiation
would be the most relevant business strategy. The strategy of cost leadership would not be
suitable as the company has already established economies of scale and they cannot get lower
cost than that. Choosing that strategy would lead to losses for the company and they might not
succeed in the new industry.

48RESEARCH PAPER
5.2 Recommendations
Going by the research issue, fulfilment of the research objectives and findings from the
data analysis, it can be said that Palfinger has a good opportunity in expanding in the new sector.
However, they should focus on certain aspects. Recommendations based on the findings are
provided below.
 Palfinger should conduct a very thorough research on the market of oil and gas industry
of Malaysia. Market research is highly important to tap the unexplored market
opportunities and take decisions accordingly. It is important for the company to know
where their products would fit in most appropriately and what is the exact demand of the
clients or target market, and market research helps in getting that data. There are various
types of market survey tools and using any of those, Palfinger should conduct a market
research before planning for strategic business development.
 Palfinger must try to understand the market demand and take enhancement decisions
accordingly. This step is very crucial for implementing strategic business development in
the business operations. While the company already has been manufacturing lifting
products, it is important to understand the demands and expectations of the new target
market for expanding business in the new industry. The market survey data must be
analyzed qualitatively as well as quantitatively to know about the market trends and
demands. Once it is understood, the company can take adaptive measures to implement
strategic business development necessary for business expansion.
 The company should adopt the differentiation strategy for gaining competitive
advantage in the new market. As the company already enjoys economies of scale, it
would be difficult for the company to sell its products at a price lower than the market

49RESEARCH PAPER
standard. That would lead to losses for the company. Thus, differentiation strategy for a
broad market, such as, the oil and gas industry of Malaysia, would be suitable for
Palfinger. After understanding the market demand, the company should focus on
supplying differentiated products, such as, customized lifting solutions for the companies.
That would help them to acquire new clients as well as new market share. along with that,
That would also not put much pressure on the cost of production and thus, the business
would remain mostly cost effective.
 Palfinger should put more focus on the new sales and marketing promotional techniques
to reach out to the new target market. The target market consists of the local and
international oil and gas companies of Malaysia and palfinger wants enter the market of
supplying hydraulic cranes for the oil and gas extraction. Although, it is one of major
companies in its own industry, yet, while entering into a new market, Palfinger must use
new marketing techniques along with new differentiated products to gain competitive
advantage in the new market. Sales discount, such as, introductory offers, discounts on
bulk purchase, or free maintenance service for one year after the purchase etc. should be
introduced.
 Strategic business development process should be implemented while planning for
business expansion. It is important for the company to take necessary measures to make
changes in the business operations and manufacturing process in the most effective
manner. For example, producing customized cranes may require new technology to be
implemented and for that, the employees should be trained. Thus, skilled workforce
should be hired and both the new and existing employees should be given training on

50RESEARCH PAPER
new technologies to make the production, distribution and marketing process more
efficient and cost effective.
 Palfinger should now focus on new marketing channels than relying on only the
traditional channels. For example, it should focus on digital marketing, such as, social
media marketing. Social media is a powerful channel in the modern world and it helps to
reach out to a larger audience in a more convenient and faster manner. To reach out to the
oil and gas companies of Malaysia for their new venture into the industry, Palfinger
should take the advantage of social media marketing. They should announce about their
new launches and connect with the oil and gas companies regarding that. A separate team
should be created who would look after the social media and other digital marketing
channels, which is again a part of their strategic business development.
5.3 Future scope of the study
The research study was aimed to provide an insight about the importance of strategic
business development in the oil and gas industry of Malaysia. It has also provided few
recommendations in the context of Palfinger Asia Pacific Pte Ltd. which wants to expand its
business in the oil and gas industry. With the implications of the findings, the future researchers
can dig deep into the broad research subject to find out any other aspect of the oil and gas
industry or about the subsidiary industries. This study will be beneficial to understand the
implications of strategic business development in the future studies, in which the researchers can
focus on other aspects of the business development, based on the findings of this study.

51RESEARCH PAPER
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Appendix
Qualitative analysis
Structured interview
1) How long you have been associated with Palfinger Asia Pacific Pte Ltd?
2) Over the years, how the company is performing in the industry?
3) What is the need for strategic business development in Palfinger Asia Pacific Pte
Ltd?
4) What according to you can help the company to expand its business in the oil and
gas industry of Malaysia?
5) What business and market entry strategy should be taken by Palfinger to enter into
the oil and gas industry of Malaysia?
Managing director
1) I have been associated for almost 3 years with Palfinger.
2) The company has been performing quite well over the years. There has been a steady
growth in the revenue, incomes and cash flows over the years. The financial health of the
company is quite well in the industry.
3) Strategic business development is extremely essential in the effective functioning of a
company and growth. It is an important process to acquire new client and drive the
growth of the business. For Palfinger also, we continuously try to grow our business by
acquiring new clients.

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4) The oil and gas industry of Malaysia is one of the major and largest industries of
Malaysia. To be associated with this industry would help Palfinger to grow in a big
manner. The commitment of the company is to create values for the customers by
providing the best lifting solutions suitable for all the industries. The new organizational
structure and digital transformations in the business can help it to understand the market
demand in the oil and gas industry and thereby provide the efficient solution to improve
the production efficiency of the oil and gas companies.
5) Palfinger should focus on the market demands of the oil and gas industry while upgrading
its products specifically for this industry. The investment should be properly directed so
that the efficiency of the resources can be achieved. The type of lifting solutions will be
different for oil and gas companies and after learning those specifications, we would like
to implement the product improvements so that resource waste can be minimized and
profitability can be maximized. Experienced employees will be hired to look after the
production of those meant for the oil and gas companies. For the market entry strategy,
we will opt for differentiation focus strategy, that is, we will start providing highly
advanced and cost effective lifting solutions to the oil and gas companies in Malaysia.
Finance manager
1) I am associated with Palfinger for the last 5 years as the Finance Manager.
2) The company has been performing quite well, especially in the last financial year. The
revenue has increased along with other financial parameters have improved considerably.
The market share has increased too. The financial health of the company is quite well to
take up new ventures.

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3) Palfinger wants to expand its business in the oil and gas industry of Malaysia. For that,
the company wants to develop a new business and marketing strategy. This requires a
heavy investment, not only for producing lifting products for the oil and gas companies,
but also for marketing. Thus, strategic business development is required in the company.
4) The company should try to find out the specific requirement of the companies that are
doing businesses in the oil and gas industry. The advancement in technology should be
implemented in a specific and customized way. This will reduce the costs of production
and operation of the company and help to increase profitability. Thus, market survey is
important.
5) Apart from strategic business development and proper market research, the company
should adopt cost focus strategy for market entry. There are already many companies
supplying lifting solutions to the oil and gas companies, thus, to create a new market,
Palfinger must adopt the lowest cost strategy that is cost focus strategy.
Business development manager
1) I am working with Palfinger for the last 6 years.
2) The company has been performing quite well in the last few years, especially in 2018, the
current ratio and other important financial ratios have improved significantly, thereby
allowing the company to plan for its new ventures in a new industry.
3) Strategic business development is an essential part of business operations. For entering
into a new industry while maintaining the efficiency in the existing market, strategic
choices must be made. These strategies should be made in a way so that the resources
function in a cost efficient manner and improve profitability.

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4) The market first has to be assessed in a precise manner. Market survey should be
conducted to find out the exact requirement and based on the findings, the technology
should be enhanced. The resources should be utilized in an effective manner to keep the
cost under control. At same time, new marketing activities should be developed to gain a
competitive advantage in the new market.
5) Differentiation focus strategy should be undertaken to enter the oil and gas industry. The
company should also undertake specific marketing strategies to reach out to the new
target market, that is, the oil and gas companies in Malaysia. In this new venture,
Palfinger has to compete with the existing equipment suppliers and hence, lower cost for
improved technology and proper marketing is required.

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Unstructured interview
Unstructured interview 1
1) What is your designation in Palfinger Asia Pacific Pte Ltd?
2) For how long you have been working with this company?
3) Are you aware about the financial health of the company?
4) Do you know that Palfinger wants to enter the oil and gas industry of Malaysia?
5) What measures according to you should be taken by the company to expand its
operations and enter the market?
Answer to Question 1- I am working with Palfinger Asia Pacific Pte Ltd as Trainee wherein my
chief job role is to train and hire employees and participate with the human resource
management in managing the workforce effectively.
Answer to Question 2- I have joined the organization and working here for last three years and
during the entire three years span, I tried to learn and equip myself with required skills and know
how of becoming efficient and responsible manager.
Answer to Question 3- As per the annual reports of the company is concerned, the financial
health of Palfinger Asia Pacific Pte Ltd is positive as the revenues of the company is growing
and the profitability ratio is towards the healthy side. The cash balance of the organization has
showcased the positive long-term growth of the company as well.
Answer to Question 4- Yes, I have the idea that Palfinger Asia Pacific Pte Ltd is entering the oil
and gas industry of Malaysia as the company has decided to join new forces as to develop new
products and enter the market to create a new venture for themselves.

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Answer to Question 5- The measures which should be taken by Palfinger Asia Pacific Pte Ltd in
expanding their business are as follows:
 Tap the new sales along with delivery channels
 Analyze the target new customer segments
 Sell more products along with services to the existing customers

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Unstructured interview 2
1) What is your designation in Palfinger Asia Pacific Pte Ltd?
2) For how long you have been working with this company?
3) Do you know about the market position of Palfinger?
4) How the company can expand its market in the oil and gas industry of Malaysia?
Answer to Question 1- I am working here as an employee wherein the main job role is to work in
the marketing department of the company and I have received the real work experience ranging
from communication and negotiation skills.
Answer to Question 2- I have been serving the organization for the last four and half years and I
have been able to equip myself with the different skills which are required as to meet the
deadlines of the different projects which have been handled by me.
Answer to Question 3- According to me, I feel as per the annual reports of the organization, the
company is in good and healthy position as the revenues and profitability has increased and the
net profitability of the organization is healthy as well.
Answer to Question 4- The company will be expanding in the oil and gas industry as the
company wants to expand their business operations in oil and gas sector as it is a completely new
aspect which can be profitable for the organization.

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Unstructured interview 3
1) What is your designation in Palfinger Asia Pacific Pte Ltd?
2) For how long you have been working with this company?
3) How the company is performing in the last few years?
4) Do you think it is profitable for Palfinger to enter the oil and gas industry of Malaysia?
Answer to Question 1- I have been working with Palfinger Asia Pacific Pte Ltd as an Employee
wherein the main job responsibility is to undertake the different projects and strive hard to
deliver their level best and achieve the assigned targets.
Answer to Question 2- I am working with Palfinger Asia Pacific Pte Ltd for the last five years
and I am trying to learn the different aspects of the organization appropriately as well. With the
help of the higher authorities, I am being able to assign the targets within stipulated deadline.
Answer to Question 3- The company is moving at a steady pace during the last few years and
they are gaining huge profitability in the respective business. As per the financial reports, it can
be identified that the company is at healthy side as there is huge growth in the revenues which
have been earned by them.
Answer to Question 4- Yes, I feel it will be a profitable aspect for Palfinger Asia Pacific Pte Ltd
to expand their business in the oil and gas industry in Malaysia, as there are different new
opportunities for the company to explore in the respective sector as well.