Analyzing market environment

1. ENVIRONMENTAL
ANALYSIS
• EXTERNAL
⮚GENERAL
✔PESTLE
⮚INDUSTRY
✔(PORTER’S 5 FORCES)
⮚COMPETITORS
✔ (CPM)
= O & T
• INTERNAL
⮚COMPANY
✔CULTURE
✔WORKFORCE
✔DEGREE OF MARKET
ORIENTATION
⮚FINANCIAL POSITION
= S & W

2. PESTLE analysis
Malaysia

3. PESTLE analysis
PEST analysis (Political, Economic, Social and
Technological analysis) describes a framework of
external environmental factors used in the
environmental scanning components of strategic
management.
The assumption is that if the country is able to audit its
current environment and assess potential changes, it
will be better placed than its competitors to respond to
changes.

4. Malaysia (Political analysis)
Malaysia is a multi-party democracy country.
The ruling Alliance party (Barisan Nasional) party has been in power over 63
years. (This fact provided the country with a high degree of stability, which is
important factor for businesses investing in the country). Although the helm was
mandated to PH in 2018, post GE14, it was somehow returned to BN smoothly
without any hostility. Similarly the change of government happened post GE15
in 2022 where PH won majority and formed Unity government with BN in its
formation.
Corruption does exist in the country. (This fact may become a barrier to foreign
businesses as it adds to firms costs and can cause problems), ref:
https://www.transparency.org/en/cpi/2021
Transparency International ranks Malaysia 61 of 180 countries in its Corruption
Perceptions Index. Malaysia also saw a decline in Dec 2022 where CPI score
dropped from 48 to 47. Nevertheless rank improved from 62 to 61..

5. Malaysia (Economic analysis)
Malaysia’s main attraction as a location for business is
its vibrant economy.
Over the last 10 years, economic growth has averaged 7%
per year.
This rate of growth has lead to a large increase in
consumer incomes and therefore demand, which has
attracted retailers such as IKEA, Tesco and AEON.
Malaysian location makes it ideally placed to engage in
international trade.
Exports account for 37% of Malaysia’s GDP and the country
achieves a healthy current account surplus.

6. Malaysia (Social analysis)
The Malaysian population consists of three main
groups: Malay (60%), Chinese (30%) and Indian (10%).
This mix of populations gives Malaysia a rich and vibrant
culture, and the country is seen as an example of racial
harmony as the different populations have existed
peacefully together for years.
The country is predominately Islamic in its religion but it’s
only the Malay muslims who are bound by Islamic laws; the
rest of the population are free to practise their own
religions.

7. Malaysia (Social analysis) cont.
The mixture of religions in the country gives rise to a
large number of religious celebrations - Malaysia has
more public holidays than any other country.
The cultural differences mean that businesses
entering the country will have to adapt their products
and business practices to suit the needs of the
population.

8. Malaysia (Technological
analysis)
The Malaysia is still need to develop its technology to
enable it to compete in international markets.
In 1996, the govt. initiated the ‘Multimedia Super Corridor’
(MSC), which is a strip of land stretching from the central
business district of Kuala Lumpur to the out-of-town Kuala
Lumpur International Airport.
This corridor hosts more than 360 multinationals, including
foreign-owned and home-growth Malaysian companies, all
focused on multimedia and communications products.
It continue to expand and attract world-leading ICT
companies.

9. Malaysia (Technological
analysis) cont.
The high levels of investment in training and education,
including the creation of a number of ‘Smart Schools’, and
an excellent infrastructure, including a brand new town
called Cyberjaya.
Cyberjaya is a ‘self-contained intelligent city with world-class
IT infrastructure’.
It’s this level of technological support that makes
Malaysia an attractive place for foreign firms to do
business.
In fact, Cyberjaya is considered one of the top three
destinations for business support services and outsourcing
in the world.

10. Malaysia (Legal analysis)
The Malaysian legal system is based on British
common law, although Islamic law is applied to the
Muslim population.
The British law element can be seen as an advantage to
firms investing in the country as the law will be familiar
to them.
However, although the legal basis of the system is
British, many of the punishments for those who break
the
law are far harsher - the death penalty and flogging are still
widely used.
Therefore, investing in a foreign country need to be
familiar with the laws there and confident that they will be
applied fairly.

11. Malaysia (Environmental
analysis)
The rapid development of Malaysia has come with high
environmental costs (negative externalities).
According to a data from the UN, Malaysia’s deforestation
rate is increasing at a faster rate than other tropical
country.
Since 2000, the country has lost an average of 140,200
hectares – 0.65% of its forest area – per year.
Much of the country’s land that was once rainforest is
now given over to the production of palm oil, which is
used for the processing food we eat and as a source of
biofuel.

12. Malaysia (Environmental
analysis) cont.
Malaysian environmental impact has been criticised by
environmental groups as it has a devastating effect on
the habitats of some rare wildlife.
Malaysians, and particularly the govt. have little time for
these criticisms and see them as evidence of Western
hypocrisy over environmental issues.
However, Western companies need to be careful
that they aren’t seen to be participating in this
environmental damage as they may face
demonstrations and protests from pressure groups
such as Greenpeace and the World Wildlife Fund.

13. INDUSTRY
PORTER’S 5
FORCES

14. Competitor’s Profile Matrix
Gardenia Mighty
White
Massimo
Key Factors Rating Weightag
e
Score Weighted
score
Score Weighted
score
Score Weighted
score
Taste 5 0.27 5 1.35 3 0.81 3 0.81
Affordability 4 0.23 3 0.69 4 0.92 4 0.92
Availability 3 0.16 4 0.64 3 0.48 2 0.32
Nutrition 4 0.23 3 0.69 3 0.69 3 0.69
Packaging 2 0.11 3 0.33 3 0.33 3 0.33
Total score 18 1 3.7 3.23 3.07