Impact of TPP on Small and Medium-Sized Enterprises

The assignment discusses the benefits of the Trans-Pacific Partnership agreement for small and medium-sized enterprises in Malaysia, including market expansion and product differentiation opportunities. It also highlights the importance of mitigating risk and threat present in global markets. The report concludes that TPP is helpful in capitalizing growth and expansion opportunities available to SMEs, providing a healthy and legal relationship with other countries engaged in export and import of goods across borders.

Issues in Global Business

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Countries are free to frame trade agreement with other country in order to maintain free
flow of goods and services. Trans-Pacific Partnership Agreement has been considered as trade
agreement which needs to be framed among two or more countries for the purpose of
maintaining their performance in international market (Crane, Matten and Spence, 2013). In this
respective essay impact of TPP agreement is studied on the business organisation of Malaysia.
Various recommendation to the strategic development in order to face various threat in market
related with Trans Pacific Ppartnership(TPP) agreement and development of SMEs in Malaysia
is provided in this following essay.
TASK
Two or more countries are able to frame trade agreement which is known as Trans-
Pacific Partnership Agreement. It is the legal obligation for them to comply. It has been
considered as legal contract. For the same purpose representative from each country signed legal
document and responsible to fulfil their obligations which are imposed on them according to the
rule of law. Various terms and conditions mentioned under such legal document which needs to
be attained by parties. They are bound to fulfil rules, regulation and policies which are imposed
on them as per the rules of trade agreement (Farndale, Scullion and Sparrow, 2010). Each
country selects one person in order to represent themselves. Government frame various types
rules and regulation which are related to their roles and responsibilities. Terms and conditions
needs to be decided to by countries with mutual concept as they are bound to comply with such
rules which are imposed on them. Large number of countries participate in such legal process
such as Cine, Singapore, Germany, Vietnam, USA. Malaysia framed legal agreement with USA
in order to free flow of goods and services. Through this process countries are easily able to
provide products to people according to their requirement. Able to fulfil needs of them through
increase export and reduce level of import.
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(Source 1: TPP AND ITS IMPACT ON MALAYSIA, 2015)
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Main objective of this agreement in to promote economic growth of each country through
support retention as well as creation of job opportunities. This process is able to enhance
innovation and creative skills which is beneficial for entire country. It is helpful to reduce
poverty from the country and able to increase standard of living of people. This is the sign of
good or better governance and able to promote transparency. This legal process has been
established for the purpose of dispute settlement among investor and state. It should be helpful
for growth and development program of the country. The main aim of Trans-Pacific Partnership
Agreement is cut affairs as well as needs to set common standard related to trade agreement
among two or more countries. It is mutually beneficial for them in order to manage their
performance in international market. Furthermore, it is helpful for boosting up of country's
economic growth (Ferraro and Briody, 2017). Members try to balance their level of import and
export of products and services. They have to use their efforts in order to increase level of export
and reduce level of import. Through countries are able to fulfil needs to people ad provide best
quality of products and services to them. Such legal agreement needs to be designed in order to
create one single market which provide all products to their customers.
Impact on organization
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Trade agreement is having impact on performance on companies which are responsible to
fulfil requirement of their targeted customers (Vogel, 2010). Such types of trade agreements are
helpful for maintain free flow of goods and services among entire country which is beneficial for
companies. This way organization is able to provide goods and services according to the demand
or tastes of customers and earn better profits as well. Members can reach to people for the
purpose of maintain their performance in international market and try to increase number of
customers.
Malaysia signed a written legal document called Trans-Pacific Partnership Agreement
with USA for the purpose of attaining mutual benefits. This is having impact on performance of
firms across the national boundaries. It can reduce tax rates as well which is beneficial for
customers. So, SME company of Malaysia able to reach their target and attract large number of
people as well. Firm have to follow rules, procedures and policies which are imposed on them.
They must comply with certain policies which are imposed on them. Malaysia signed trade
agreement with USA in order to fulfil their set of targets. Such legal contracts are having impact
on the SME company (Hill, Cronk and Wickramasekera, 2013). Members have to use their
collective efforts in order to attain their set of objectives which are beneficial for them. Cited
agreement is able to reduce tariff as well as non-tariff barriers for the purpose of increase
investment of parties and maintain their work performance in across the national boundaries.
This will enhance market share which is beneficial for companies. By this approach, entities are
able to manage their work quality and try to attract large number of customers. This legal
agreement having impact on the performance of SME organizations. Partnership agreements
requires two or more parties in order to frame legal document. Those parties are responsible to
fulfil their legal obligations which are imposed on them. They have to follow rules and
regulation which are imposed on them. There are various types of legal obligation which is
mentioned under provision of law. It provides job opportunities to large number of people and
try to improve their standard of living (Kose, Otrok and Prasad, 2012). Customers can able to
purchase goods and services according to their choice and which maintain their taste and nature.
So, various options are available for people which are able to fulfil their needs and demand.
Furthermore, Malaysia is a developed country which provide lots of job opportunities to people
in order to maintain their work quality and raise their standard of living.
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The TPP brings higher flexibility in the product process and helps in delivering the low
cost to the manufacturers of SME. This respective agreement beneficial for increasing
profitability of SME in Malaysia (Trompenaars and Hampden-Turner, 2011). This will provide
better access to the exertion market in countries like Peru, US, Canada, Mexico etc. SME can
develop various strategies to increase their profit margin as the imported goods are costive as
compared to the local products, this will provide opportunities to grow their enterprise.
Accessing to low production cost by using cheaper raw material from other countries and convert
this into profit making goods for business firm. The odds to TPP agreement in the country and
growth of SME can lagging behind of cultures, customs of society, values etc. As TPP brings
higher hybridisation of cultural belief from the various country members in marketplace and
Malaysia is having threat of losing their own culture.
Malaysia SME are not involved in expanding their businesses through gaining advantage
over the TTP agreement introduced by government. This is a beneficial engagement to serve the
products and services to 12 other countries. But only 17.8% of the total SME are engaged in
expanding business through export, other are engaged in running domestic business. The TTP
agreement largely helpful in providing various growth opportunities to SME as the enterprises
can collect raw material from 12 other member countries and deliver finished goods to other
countries (Eva Yeong. 2016. ‘TPPA will benefit Malaysia’). TPP model leaders to increase
competition in marketplace. So, the SME which are engaged in expanding business through
export services the enterprises have to take care of quality standards of products as there are
large numbers of competitors present in global market who are dealing with same kind of
product line. So, in order to take advantage of TPP agreement the SME of Malaysia should take
care of higher competition in marketplace as well have to be concerned about maintaining
quality standards in global market.
Recommendation to capitalise and mitigate threat in marketplace to SME organisations
There are many threat to the SME of Malaysia to develop practises of exporting business
products to external market through utilising various growth opportunities developed because of
TPP agreement in country. This is highly profitable for the enterprises who are thinking to
expand business and enhance profitability of firm in many folds. Various opportunities in
business can be grabbed through TPP implementation in practices are that companies can have
access to wider market and serve their services to 12 other member countries of TPP agreement.
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Which is a great opportunity to expand export of enterprises in Malaysia. This is also recognised
with development of a healthy competitive market which helps in developing new strategies to
expand business and deal with large number of customer (Scherer and Palazzo, 2011). While the
threat of Trans Pacific Partnership may be inability to fulfil large demand of products in different
countries. Another threat to the TPP agreement can be its inability to develop quality products
and inability to maintain the standardisation in product in global market which helps in
developing good brand image. So, in order to carry out business practises the SME enterprise
should be responsible and actively involved in capitalising over the various growth and
expansion opportunities available to businesses also have capability to mitigate the risk
associated with expansion strategic plan in relation with TOPP agreement between countries like
Malaysia, Vietnam, China, Mexico, US etc. Some of the recommendation towards the strategic
development for TPP agreement to capitalise on opportunities and mitigate the various threats
and risk associated with expansion plan of SME organisation in Malaysia are described below.
 The company should effectively define their performance and quality standards related
with products which will helps in developing good brand image in global market.
 Another threat of company is to compete with higher competition in market which can be
mitigated through using effective promotional strategies and maintaining good
relationship to gain competitive advantage in marketplace (Tarique and Schuler, 2010).
 The various growth opportunities of SME companies in the Malaysia can be grabbed by
developing various expansion plans related with market expansion, product
differentiation in order to fulfil different demand and wants of customers effectively.
CONCLUSION
From the above report, this can be concluded that the Trans Pacific Partnership
agreement is very much helpful in capitalising various growth and expansion opportunities
available to the Small and medium sized enterprises of countries. This agreement provides
maintaining a healthy and legal relationship with the other countries engaged in export and
import of goods across the borders. TPP is having great impact on development of any business
enterprise which may be negative or positive, depending upon the mitigating capability of
company towards risk and threat present in global market.
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REFERENCES
Books and Journal
Crane, A., Matten, D and Spence, L. J., 2013. Corporate social responsibility in a global context.
Farndale, E., Scullion, H and Sparrow, P., 2010. The role of the corporate HR function in global
talent management. Journal of world business. 45(2). pp.161-168.
Ferraro, G. P and Briody, E. K., 2017. The cultural dimension of global business. Taylor &
Francis.
Hill, C. W., Cronk, T and Wickramasekera, R., 2013. Global business today. McGraw-Hill
Education (Australia).
Kose, M. A., Otrok, C and Prasad, E., 2012. Global business cycles: convergence or decoupling?
International Economic Review. 53(2). pp.511-538.
Scherer, A. G and Palazzo, G., 2011. The new political role of business in a globalized world: A
review of a new perspective on CSR and its implications for the firm, governance, and
democracy. Journal of management studies. 48(4). pp.899-931.
Tarique, I and Schuler, R. S., 2010. Global talent management: Literature review, integrative
framework, and suggestions for further research. Journal of world business. 45(2).
pp.122-133.
Trompenaars, F and Hampden-Turner, C., 2011. Riding the waves of culture: Understanding
diversity in global business. Nicholas Brealey Publishing.
Vogel, D., 2010. The private regulation of global corporate conduct: Achievements and
limitations. Business & Society. 49(1). pp.68-87.
Online
Eva Yeong, 2016. ‘TPPA will benefit Malaysia’. [Online]. Available through:
<http://www.thesundaily.my/news/1723514>. [Accessed on 5th September 2017].
TPP AND ITS IMPACT ON MALAYSIA, 2015. [Online]. Available through:
<http://businessloan.my/economy/tpp-and-its-impact-on-malaysia/>. [Accessed on 5th
September 2017].
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