MGT6193: Cape Wools International Entrepreneurship Development Report

This report, prepared for an International Entrepreneurship Development course (MGT6193), examines Cape Wools' potential expansion into the Malaysian market. The analysis begins with an executive summary highlighting key findings, including political instability and competitive dynamics within the wool industry. The report delves into an overview of Cape Wools, a South African wool service company, and its mission to support the wool industry through promotion, research, and market intelligence. A PESTEL analysis evaluates the Malaysian market, considering political, economic, social, technological, environmental, and legal factors. The analysis highlights opportunities such as a low unemployment rate and the embrace of hi-tech industries, while also addressing threats such as environmental vulnerability and political corruption. The report then conducts an industry analysis using Porter's Five Forces, assessing the threat of new entrants, substitute products, and the bargaining power of buyers and suppliers, and competitive rivalry. The conclusion emphasizes the need for technological advancements and innovation to navigate international business ventures successfully, particularly in the face of competition and the importance of pricing strategies tailored to the Malaysian market. References to relevant academic sources are also included.

Running head: MANAGEMENT
Management
Name of the Student
Name of the University
Author note

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Executive Summary
The report has thrown light on analysing the external analysis along with industry analysis of
the wools industry in which Cape Wools is operating. In the competitive business
environment, the main aspect which has been noticed is related to the fact that there are high
level of political instability that can be impacting the growth of the company as a whole and
it will be impacting the performance of the company as a whole. On the other hand, as per the
Porter’s Five Forces analysis, the main approach which has been noticed is related to the fact
that there is low competitive rivalry and high substitute products rivalry which needs to be
improved through the involvement of the innovation and technological advancements.

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Table of Contents
Introduction and Overview of Cape Wools...............................................................................3
Evaluation of Malaysian Market with PESTEL Analysis..........................................................4
Industry Analysis of Cape Wools in New Marketplace.............................................................6
Conclusion..................................................................................................................................7
References..................................................................................................................................9

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Introduction and Overview of Cape Wools
Cape Wools South Africa is considered to be the non-profit service company which
has been established and owned by the different wool farmers. Cape Wools have become the
most international generic trade term for the wool produced in the sub-continent. The
company has been incorporated in the year 1997. The company is the tax-exempt entity
without the share without any kind of share capital (Capewools.sa, 2020). The South African
Wool Industry helps in providing high quality as well as environmentally friendly product
which are capable of meeting the different requirements of customers in a suitable manner.
The wool board was constituted in the year 1946 and it promoted wool in the wool industry
in a successful manner as well. The Cape Wools delivers the production of wool advisory
with assistance of the national wool growers (Capewools.sa, 2020).
The first stage processing in the market of South Africa and the first stage processing
in South Africa is modern and technologically advanced which helps the company in
improving the growth prospects of the company as a whole. Over the years, the SA wool has
been capable of earning the strong brand image in the market and it helped them in improving
their growth prospects. The mission of the Cape Wools SA is to support the entire SA
industry of wool with proper promotion, research and development along with market
intelligence through the assistance of transparent projects in a suitable manner
(Capewools.sa, 2020).
On the other hand, the vision of the company is to become the top and leading role
player in the growing and the profitable wool industry which will be impacting the growth of
the company as a whole. The Cape Wools SA is highly efficient and ready in entering in the
international entrepreneurship as they are capable of valuing innovation and being the trusted
partner in the South African market as well. The Cape Wools SA is highly active in

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becoming socially and environmentally responsible which is the key element in the current
scenario as the environmental protection is the vital approach which is needed to be
maintained by the companies. In the South African market, Cape Wools have been successful
in gaining their strong position that helped them in attracting large number of investors and
customers. In order to perform outside, the Cape Wools SA is ready to a large extent as there
are committed towards promoting the interests all over the world successfully.
Evaluation of Malaysian Market with PESTEL Analysis
Political Factor- It is the first and foremost factor wherein the Malaysian economy is
highly connected with the different worldwide organizations. It is considered to be one of the
major opportunities for Cape Wools SA when they will be entering in Malaysia. As Malaysia
is listed member of the Commonwealth of Nations, the UN along with creator of ASEAN, the
company will be able to perform successfully in the respective market (Stack, Gartland &
Keane, 2016). On the other hand, the threat which can be seen in the respective case is
related to the fact that the political system is stable; however it is corrupt which can be
impacting the performance. Even the media which include television and print media are not
safe from governmental control either. It can be impacting the position of the Cape Wools
Company negatively and it will be impacting the growth of the company negatively to a
certain extent (Park & LiPuma, 2020).

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Figure 1: Level of Corruption in Malaysia
(Source: Martin, Javalgi & Ciravegna, 2020)
Figure 2: Analysis of tactics Used by Malaysia in improving the practices
(Source: Martin, Javalgi & Ciravegna, 2020)
Economic Factor- The major opportunity for Cape Wools is the fact that there is
minimal unemployment rate which showcases the fact that current economy of Malaysia is
healthy and active in nature (Martin, Javalgi & Ciravegna, 2020). The country still benefit on

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a large manner from different exports and it can be the strength for Cape Wools to expand
their business and generate high level of revenues in a successful manner as well. In addition,
the economy of Malaysia is highly dependent on too many exports which mean that it will be
the opportunity for Cape Wool if they can be taking over the franchisee option wherein they
can be exporting the products from South Africa to Malaysia within the stipulated time frame
(Jing, Li & You, 2017).
Figure 3: Economic GDP of Malaysia
(Source: Jia et al., 2017)

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Figure 4: GDP and Economic Scenario of Malaysia
(Source: Jia et al., 2017)
Social Factor- Innovation is the key element and factor in the economy of Malaysia
wherein the social status of the individuals are elite and it will be beneficial for Cape Wools
to price their products on that basis (Jia et al., 2017). In case of Malaysia, the social status is
high which will be beneficial for the company in improving their growth prospects
successfully.

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Figure 5: Rate of Unemployment in Malaysia
(Source: Hollender, Zapkau & Schwens, 2017)
Technological Factor- In the Malaysian economy, embracement of the hi-tech
industries is the key elements which will be helpful for improving the growth of Cape Wools.
Moving in the new technological zones are the key elements which are needed to be
implemented for making the government focus on the different new initiatives for making
Malaysia preferred spot for the hi-tech investments successfully (Hollender, Zapkau &
Schwens, 2017). It is the key opportunity for Cape Wools as they can be implementing the
new technologies in manufacturing and producing wool.

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Figure 6: Technological Innovation in Malaysia
(Source: Hannibal, Evers & Servais, 2016)
Environmental Factors- The eco-system of Malaysia is vulnerable in nature which
makes the company’s progress negatively. It can be the threat for Cape Wools as the
manufacturing of the wool needs the stable flora and fauna which can be impacting the
growth of the company and profitability negatively to a certain extent (Hannibal, Evers &
Servais, 2016).

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Figure 7: Environmental Aspect of Malaysia
(Source: Ahi et al., 2017)
Legal Factors- In Malaysia, there is following of the common law system and they
are capable of following the legal framework that will be capable of involving protection of
the Malaysian citizen rights in a successful system. It will be an opportunity for Cape Wools
in improving their business successfully (Ahi et al., 2017).

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Figure 8: Legal System in Malaysia
(Source: Ahi et al., 2017)
Industry Analysis of Cape Wools in New Marketplace
As commented by Ahi et al. (2017), the five forces analysis is considered to be the
framework which is capable of analysing the competitive environment in which the Cape
Wool is operating. The competitive rivals along with threat from substitutes are needed to be
identified for improving their growth prospects in a successful manner.
Threat of New Entrants- It is the first and foremost aspect which is medium or
moderate in nature as the Cape Wools Company has been producing wool with different
technological innovation and investment which can be difficult for the new entrants to
compete as the capital requirements are high. The respective industry is lucrative and brand
identity of the company Cape Wools in the respective industry is high which can be the other
challenge for the new companies which are planning to enter in the market (Buccieri, Javalgi
& Cavusgil 2020).