This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
Visage Industries Sdn. Bhd. which is located in Bukit Minyak, Penang was founded in year 2001 is a manufacturer of V-Steel Metal Roofing and V-Truss Roofing System has been providing a full-service of roofing system from designing to end products. V-Steel Metal Roofing products are manufactured with the latest equipment that provides top quality finishes and stringent process control at all stages of manufacturing. The systems are available for V-Panel high tensile roofing sheet and able to provide several curvatures roofing profile of the desired radius with quality finishes at all times using high tensile materials. V-Truss Roofing System is a complete roofing solution made of high tensile cold-formed trusses and supplementary structures. Trusses are made of high tensile which are fully designed by the engineers using computerized software from layout to final engineering to ensure maximum safety, durability and cost-effectiveness.
The company is a form of partnership business. His partners are the customers and friends that the founder meets when he was a sale executive before establishing the company. The founder of the company is Mr. Loh Swee Leng, Mr. Peh Chou Shien and Mrs. Wee Sin Yee. Mr. Loh Swee Leng, aged 41, is the Managing Director to the Visage Industries Sdn.Bhd. He holds a Bachelor degree in engineering course from Universiti Teknologi Malaysia in 1994. His business partners Mr. Peh Chou Shien is the Marketing Manager while Mrs. Wee Sin Yee is the Marketing Executive.
In order to provide the services to the customers in a timely, accurate and cost-effective manner, the company had obtained the widely acclaimed International Quality Award-BM Trada Certification of ISO 9001 2000 in year 2004 and at the same time is also under approval list of the JKR as the official system provider for Cold-Formed Roofing System. Hence, with the combination of the strengths of human and capital resources for both of products, the company is able to look forward to provide and deliver engineering solutions to individuals, businesses, government and institutions across whole Malaysia.Â
There are total 60-70 numbers of employees in the company. It includes all employees in different branches across whole Malaysia exclude only Johor, Kelantan, Terengganu, Sabah and Sarawak. The company has exported the products abroad to the countries such as Thailand to expand its international business. The business is currently divided into five departments. Among the departments are administration and accounting department, production department, sale and marketing department, project department and engineering department. Different departments play a different role to help the company to be more successful.
To expand its business to other country, the company needs to make internationalization decision. The decision making processes related to choice of market, timing and mode of entry are important to understand from both a research and managerial perspective. Thus, it takes about 15 months for the upper management level to make the final internationalization decision. To internationalize a business, experiential rather than objective knowledge to be the critical kind of knowledge for internationalization decision making. A lack of internationalization knowledge is a strong influence on the perceived cost of internationalization. Thus, Visage Industries Sdn. Bhd has a very rich business experience at the time the company start to internationalize its business. Similarly, they have also possessed above average of international experience at the time to internationalize business. For Visage Industries Sdn. Bhd, at the year of 6-10 the company only begins to enter the international market after gaining stable market in domestic and also run a comprehensive research.
Internationalization can provide companies numerous benefits including the ability to sell to a larger market, utilization of location economies, using experiences learned in various markets to enhance core competencies, development and transfer of skills between subsidiaries and headquarters and so on. For Visage Industries Sdn. Bhd., they undergo internationalization to find new market, fill market niche, keep the current customers, improve brand equity and most important is to improve the financial position of the company. For the manager, it is definitely can increase the personal income due to the internationalization.
SECTION B - GREEN MANAGEMENT
Green management has a significance effect in the future for businesses nowadays. Many companies are started moving toward the "green" way in doing their businesses. They are competing to create and selling the environmentally friendly products in the market. Green management is a business practice which can help the companies meeting the needs of society in ways that can continue indefinitely into the future. This can be achieved without damaging or depleting natural resources and achieve its competitive advantage over its rivals. Visage Industries Sdn. Bhd as a leader of provider of roofing system in Malaysia also focuses on the issues which are related to green product design and features.
The companies has specialized in producing the professional V Truss steel roof system which is designed by the talented engineers using computerized software complying with the latest design code. Visage Industries Sdn. Bhd also allowed their customers to customize the made of the roof system. The roofing system is fire resistance which is the design of the roofing solution is actually an idea of "green" product feature. Visage Industries Sdn. Bhd is working to exceed the requirement of international standards and national laws which are related to the environment. Visage Industries is developed the product to meet customers' environmental standards and legal requirements. The company also works hard to reduce impact on the environment at every stage of a product's lifecycle to make sure that the roofing system is lightweight quality and improve the environmental management system.
Production department of the company makes sure that their products are compliance with Local Building Codes all the time. For example, V-Steel Metal Roofing is manufactured using the latest equipment that provides several curvature of desired radius with quality finishes at all times using high tensile materials. Besides, Visage Industries Sdn. Bhd also continuously examines the environmental management systems for all aspects of their operations, including the supply chain. Mr. Loh as a founder of the company realized that training and education are very important to his employees to increase their awareness of environmental issues facing in today business world. Hence, Mr. Loh will conduct the training for his employees once or twice a year for all the levels of the employees.
Raw materials are very critical for Visage Industries Sdn. Bhd. Green purchasing practices is used during the raw material procurement stage as a way to control the usage of hazardous substances. All of the raw materials and supplementary materials supplied to the companies must comply with all the legal requirements and satisfy the rigorous requirements on maximum allowable concentration levels of harmful substances. It is very important for a business to aware of the political and legal system of the country all the time. In addition, the vendors should meet the standards and requirements for organizing appropriate operational bodies and establishing a green product quality assurance system for Visage Industries. Through these systems, the company is able to manage the environmental policies across the overall value chain.Most of the materials used by Visage Industries Sdn. Bhd are environmentally friendly materials which are compliant with the standards.
Customer demands, cost factors and legal regulations are the major factors that taking into consideration. Visage Industries Sdn. Bhd always gives priority to environmentally friendly materials and aims to reduce consumption and wastage of raw materials to minimize the impact on the environment. The use of environmentally friendly materials is done through the selection of materials during the product development. The resource strategy involves reducing resource usage and enhancing the recyclability of the resources using in the manufacturing process. This strategy may help to reduce the usage of new resources and utilizing recycled materials when it is possible. Visage Industries also reduce the waste of resources by substitute hazardous substances with non-hazardous substances when possible to create an environmental friendly roofing system. The invention and design of chemical products are aimed to reduce or eliminate the use and generation of hazardous substances to protect the environment.
An inspection of the component supplier's facilities is also carried out by Visage Industries Sdn. Bhd. Once final approval has been made, the company can get the certificates. In exchange, the company must agree to guarantee that their products will continue to meet the requirements of this certification. For example, Visage Industries had successfully obtained the International Quality Award-BM Trada Certification of ISO 9001 2000 in year 2004 and at the same time is also under approval list of the JKR as the official system provider for Cold-Formed Roofing System. These certifications help the company gain the quality assurance and can enhance the image or reputation of the company. It is helpful for the company to run its business because once they obtained the certificates, interfere of government will be reduced because the company is met the requirements that set by the government. This indirectly will cut down the costs of doing business and make the company easier to enter to the international market. As the company is taking an effective control measures to ensure that their roofing system is comply with the regulation and customer requirement for green product in the production.
AÂ waste managementÂ systemÂ is refers to a specific technique, strategy, or device used to treatÂ wasteÂ materials. Production department and engineering department focuses on energy efficiency during products development stage. These two departments are working closely with customers, technology suppliers, factories and component suppliers to achieve the energy efficiency. They work closely with the clients to provide necessary product information. Visage Industries is seek to improve the design and develop the roofing system that have a high energy conversion rate, and low energy consumption. The company is striving to cut down energy wastage at the same time upgrade product energy efficiency and develop environmentally friendly steel roofing products. There are different types ofÂ wasteÂ include hazardous waste, or biodegradableÂ waste. Visage Industries Sdn. Bhd put heavy efforts in recycle activities. They will reuse the materials that are recyclable to lower the production costs. Mr.Loh also mentioned that they will provide training programs for their employees twice a year to increase the awareness of green management. Although the company has not arranged an environmental awareness programs to the public such as students, outsider workers at this moment, it is quite often to arrange the environmental awareness programs for employees.
To achieve all of these goals, before reach to the clients, the roofing system must be accessed based on their relevance, consistency and accuracy. According to Visage Industries Sdn. Bhd, enhancing energy efficiency will help to reduce changes in the climate at the same time can provide actual economic benefits to the clients. Company has the obligation to protect the environment for future generations by engaging in activities that can maximize energy efficiency during the entire steel roofing manufacturing process. Green Management can reduce the waste and pollution because of the changing patterns of production and consumption in the business process.
Today, consumer awareness of the environment and preference for more environmentally products is growing steadily. The labelling on the products such as "degradable" and "recyclable" can affect the intention of customers to purchase. To remain competitive in the industry, companies have to respond to this challenge. Traditional marketing approach is no longer the most suitable to employ in the market. Green marketing is becoming a trend to sell the products. Consumers tend to react to the eco-label and will make their purchasing decision based on the eco-label on the products. Green product labels are more important than advertising.Â
The same situation goes to Visage Industries Sdn. Bhd. The demand for environmentally friendly products is increase compare to last few years. Visage Industries Sdn. Bhd is adapts to this changing and makes some changes on its marketing effort. From the advertisement, Visage Industries Sdn.Bhd is listed out the word "environmentally friendly" to show that their V-Steel Metal Roofing and V-Truss Roofing System are brought no harmful to the environment. Eco-label is very important in the sales of products because consumers tend to more attract to the products which is reusable and recyclable. Eco-label is an effective tool to increase the motivation of consumer's response.
In a conclusion, there are an increasing number of companies embracing green management practice. The efforts to implement the green management are rely on the sound managers which able to carry out the management functions in order to provide order and consistency. These may includes establishing goals and metrics, staffing the organization, rein-forcing values and practices, and ensuring compliance. The green vision and values should be a part of the culture in the company and in the mind set of all employees at all levels.
SECTION C - PORTER COMPETITIVE MODEL & ENTRY MODE
Porter 's Five Forces Model
Porter five forces analysis is a framework for industry analysis and business strategy development formed by Michael Porter in year 1979. In this analysis, the five forces appoint the competitive intensity and the attractiveness of a market. The five forces are the threat of new entrants (potential entrants), the threat of substitute products or services(substitutes), the bargaining power of suppliers (suppliers), the bargaining power of buyers (customers) and the rivalry among existing firms (industry competitors). These are the forces driving industry competition and they determine profit potential through their influence on prices, costs and investment.
Visage Industries Sdn. Bhd was considering the environment that it will deal with when entering international market. Visage Industries needs to carefully analysis its external factors which could directly affect the business of the company. Porter Model considers the five forces that should be taken into account when a company is making decision to start its business abroad.
Competition & Rivalry
The "competitive environment" varies by industry, company, and country. Competitor is the external environment factor in international business. Thus, Visage Industries Sdn. Bhd. must take its competitors into consideration when making decision about entering international market. It is important for them either in home country or in targeted country. They must understand their industries and competitors when they develop and implement their international business strategy. The level of competition is high in Malaysia and other foreign countries for Visage Industries to expand its business.
Visage Industries Sdn. Bhd. is the company which achieves the top 3 ranking of the steel roof industries in Malaysia. But, they still face the high level of competition in this industry. For example, Winsteel Building System & TradingÂ and Eagle Aspect Sdn. Bhd. are among the intense rival of Visage Industries in Malaysia. They also provide a full-service of roofing solutions to the local customers which same as what the Visage Industries Sdn. Bhd. provided. If the Visage Industries Sdn. Bhd. put more concentration on their export, it has to bear the risk of losing their local customers.
When the Visage Industries Sdn. Bhd. first enters to the international market, they will put most of their effort on exporting. And this may cause them losing control on their local business eventually. The competitors will take this opportunity to gain the market share from them. They have to balance between their local and international business. Besides, there are many competitions abroad that Visage Industries Sdn. Bhd. would face when entering into international market. The company must carefully analysis the actions of their competitors before they expand their market in that particular country. Some more, the market growth is slow compare to others industry because customers don't often change their roofing. So, it is very crucial for Visage Industries in differentiate itself by innovating the services because customers tend to compare on the basis of service quality and prices.Â
Visage Industries must find ways to make production costs lower than other competitors to give best prices to buyers at the same time make a good profit margin.
In the Thailand market, Suntech, JS Steel Co., Ltd and I-Thana Co., Ltd. are the potential competitors for Visage Industries. Suntech is one of Thailand's most comprehensive and largest producers of metal roofing. There is most challenge for Visage Industries in the Thailand market. Thus, they should provide the higher quality metal roof to the Thailand customers to win the customer loyalty. This reflects that competitors for targeted country are one of the most important factors that they have to taking consideration when entering international market.
Buyer or customer is usually refers to a current or potential buyer or user of the products of an individual or organizational. Customer plays a vital role in the international market. For Visage Industries, the buyer power will be high because the buyers have the other choices except of Visage Industries. To enter into international market, Visage Industries Sdn. Bhd. needs to put more effort to keep current customers in home country by differentiate themselves in the industry. Powerful customersÂ can exert pressure to drive down the prices or increase the required quality for the same price. At the end, the profits in an industry can be reduced.
Customers taste and incomes may be differing in each country. Because of the different preferences of customer in different market, the company needs to consider whether the goods are suitable to customers in Thailand. The company can create more choices of customization roofing system for the customers to surpass its rivals in the market. The buyer power is high in this industry because the customers can switch easily to other companies to purchase the roofing system. The switching cost for buyer is quite low.Failed to understand customer preferences may cause the failure of the business. The company will only export goods to country which the income level is considered high. This is because the company needs to make sure customers in targeted country have the ability to afford the goods. In addition, customer knowledge of goods and services need to taken into account as well. Customer knowledge of goods are differs.
Customer knowledge of goods can influence the purchasing power. Customer will consume more if they understand the goods well. For Visage Industries Sdn. Bhd., the customers are another most important factor that has to take consideration. To create and sustain long-term profitability within this industry, Visage Industries Sdn. Bhd must focus on one customer group where competitive forces are weakest. They should produce the roofing system which can match with the preferences of customers. There is an end for a business if they can't make any changes to meet the consumer's needs. Besides, Visage Industries Sdn. Bhd will conduct the survey for customers from time to time to make sure that customers are satisfied with their services and products.
Threat of substitutes
The threat of substitute products is low because without further advance technology, it is very difficult for the new companies to substitute the roofing system. So, the threat of substitutes is low because it is not easy for new competitors to imitate the roofing system. The substitution of product is low because many customers are demanding for the environmental friendly products. Nowadays, the demand for steel and glass roofing is increasing. Customers prefer green products because the issues of global warming. The green and environmental friendly products because the major consideration for the company when produce something new. Visage Industries can gain advantage over its rivals because they already received the awards and recognitions from the government which make them more popular in this industry. It is difficult for the new firms to obtain the awards of government such as ISO 9001 in the short time.
Political stability is also an important consideration when it comes to making decision about entering international market. It will affect the threat of substitute products. The unstable political situation in home country or targeted country will affect to the expansion of the business. The changes of government policies or from different political party also influence in regulation and national laws. Unstable political leads to the economic down. The political crisis in Malaysia since March elections making the economic development could not be maximizing. Thus, the consumption of goods decreased, Visage Industries Sdn. Bhd. reduce the output to maximize the profit. The changes of government in home country or targeted country influence the business safety. Sometimes, there is no safety guarantee from a government. So, it would make the substitute of the products become harder because of the political instability in some countries.
Threat of new entrance
The threat of new entrance is low too because the barriers to entry is high. As to enter into this industry, the competitors need to fully occupy with the further technology and produce a good quality roofing system than Visage Industries Sdn. Bhd. It is quite difficult for the new entrance to enter to the market because the new companies need to be recognized by the government first. Then, the new companies need to meet the requirement of government and customers at the same time continually meet the requirements of customers. It is high cost for new entrance to successfully surpass Visage Industries Sdn. Bhd because the existing company already has readily available talents and recourses in the manufacturing process.
Moreover, Visage Industries Sdn. Bhd has a high reputation and is leading provider for roofing system and roofing solution in Malaysia now. The switching costs for the new companies are very high because the roofing system is regulated by government and it requires a huge capital. The government policies and rules make the entrances become more difficult. Hence, regulatory costs and rules is very important factor for Visage Industries Sdn. Bhd. when making decision to enter into international market. Without estimates of the costs of regulation there could be no regulatory budget. Â Visage Industries Sdn. Bhd. allocated the costs discreetly in home country. Both capital and operating costs incurred in complying with regulations. The company capital costs such as outlays for extra construction and new equipment. Operating costs include expenditures on added research and development and extra variable inputs such as labor and raw materials.
The owner of Visage Industries Sdn. Bhd. stated that high in capital and operating costs will make them face great difficulties to internationalize business. To enter into Thailand market, the company has determined additional costs such as tariff, time costs due to border delays and costs associated with country differences such as language, the legal system or culture. All of these difficulties also make the new competitors hardly to gain the market share in this industry because of the regulatory and rules of the countries either are home or partner country. The biggest advantage of Visage Industries is that their product differentiation and their brand reputation in this industry. They can gain the cost advantage such as raw materials, experiences and knowledge over its competitors.
The bargaining power of suppliers is high because there are very high switching costs of raw materials and labors. Visage Industries is highly dependent on their supplier to produce the products. The supplier is powerful because the raw material they provided is expensive and valuable. For example, the price of steel is always unstable and frustrate in the world market. To obtain more profits, Visage Industries Sdn. Bhd must build a good and strong relationship with suppliers. They must buy in the raw materials such as steel during the price is low or before the price of steel increase. Hence, supplier is a key factor of success for the company because the price of the steel can directly bring impact to the revenues of company. Supplier power is low if there are many other alternatives for the company. However, Visage Industries Sdn. Bhd has a few of alternatives to chose from especially the labor. So that the bargaining power of supplier is high.
Labor markets usually an informal market where workers find paying work, employers find willing workers, and where wage rates are determined. Labor markets may be local or international in their scope and are made up of smaller, interacting labor markets for different qualifications, skills, and geographical locations. Employers in international business must be efficient, profitable, and competitive. So, the quality and quantity of the labor market become of great importance.
Visage Industries Sdn. Bhd. requires more quality and quantity worker in their home country, Malaysia rather than targeted country. They require them to produce the higher quality metal roof that supply to the local and Thailand customers. For Thailand, they just require the excellent agents to conduct their product to Thais. They didn't build up the factory at Thailand because this will increase their cost compare with Malaysia. The company tends to switch their production line to the countries which are cheaper labor costs. Besides, Visage Industries can also try to apply backward integration in their manufacturing process in order to reduce the dependent on the suppliers. Most of the companies are become their own suppliers to produce the raw material themselves to get better hold of production costs.
There are six different entry modes to enter the foreign markets: exporting, turkey projects, licensing, franchising, establishing joint ventures with a host-country firm, or setting up a new wholly owned subsidiary in the host country. Many manufacturing firms begin their global expansion as exporters since it has two distinct advantages. First, it avoids the often substantial costs of establishing manufacturing operations in the host country. Second, exporting may help a firm achieve experience curve and location economies. The Visage Industries Sdn. Bhd. also chooses to be an exporter as their first step of internationalize because its start-up costs and risks are limited, and profits can be realized early on.
The major reason for the Visage Industries Sdn. Bhd. to internationalize is to find new markets for its product. The country that it chooses to enter is Thailand. Thailand is one of the major emerging economies in the Asian region. And it is one of the countries that import the iron and steel products. Since Thailand has the demand for steel products so the Visage Industries Sdn. Bhd. decides to supply their products to Thailand. The products that it has export to Thailand included metal roofing, bracket, truss, screws and anchor bolt.
The major factor that leads to succeed of the Visage Industries Sdn. Bhd. as a supplier of truss and steel accessories in Thailand is their exportation through foreign agents. Before enter to the market in Thailand, they have considered several types of entry mode which are export through foreign agents, export through cooperative partners or direct export without foreign partner. But after evaluate the pros and cons of each type of entry mode, they choose to export through foreign agents.
In contrast to integrate corporate channels (foreign sales office or subsidiary), nonintegrated channels (independent agents or distributors) provide a relatively easy form of foreign-market entry (Root, 1994). Experts note that the majority of world trade is handled through independent middlemen and that these export intermediaries possess strong local-market knowledge, crucial contacts with foreign buyers, and the ability to provide sophisticated marketing services (Clasen, 1991).
Because many manufacturers are unable to integrate vertically into global distribution, the nonintegrated market entry modes of foreign distributor and agent are frequently used. The Visage Industries Sdn. Bhd. faces the same problem as well. As targeted country's market knowledge is deemed critical, so the Visage Industries Sdn. Bhd. decides to employ the foreign agents to handle their exporting.
In the view of Mr. Loh, the Managing Director of Visage Industries Sdn. Bhd., there are many benefits to employing an export agent, including the agents will bring specialist knowledge to his business. The agents also allow the business to quickly engage with an established trade network. Employing an agent may cost-effectively satisfy a skills gap in the company. The agents will help the business to maintain focus on its core skills while gaining knowledge of a new market.
After deciding to use an agent structure to service the export market, the next challenging part that Mr. Loh faces is find the best agent. He uses a set of specific selection criteria to help his company employ the best agent, including marketing experience, sector experience and resource. The agent has to quickly provide the company with expertise in a foreign market either equal to or better than their own domestic expertise. The agent should be able to demonstrate their market understanding and proven track record. Ideally the agent will have worked in their sector or related areas. Besides that, the resources of the agent also very important and this may include the agent's staffing, premises, equipment and financial security.
The last but most critical part is that Mr. Loh and his partners must handle is about the managing of agent. They have to adopt the will and procedures to manage a positive, long-term relationship from the start of this process. They also have to maintain regular communication and evaluation of the agent to build the relationship in a way, which positively impacts on their business.
SECTION D - DISCUSSION
The line of production the company wishes to internationalize is truss with its accessories. According to Mr. Loh, he wish to internationalize truss with its accessories because the potential of its company and the other environmental factors. The company realize that it is very important to internationalize its products to avoid their competitors will go ahead them in the future. Their company gain advantages in internationalize this products because of their system of production. Their system of production was keep developing and growing along the time. The upper level of management always aware the changing of the technology and environment. Mr. Loh believes that with their professional management team and advanced production system, their products can be definitely success in the international market.
The implementation of green management can help the company improve their financial performance in the long run at the same time increase the reputation of the company. Green management business practice brings many benefits to the business. It not just help the company increase the sale and revenues, it can helps the company improve the net financial performance in the future. For example, green supply chain in the Visage Industries help the company utilized the resources more effective. By incorporating Green Supply Chain Management thinking in their entire business process, Visage Industries now able to purchase green input resources in produce the desired green products. On top of that, green management increases the effectiveness of managing the suppliers too in the supply chain. By managing the resources and suppliers effectively, Visage Industries can benefits from production costs reduction and save the usage of raw materials. Also, by producing the environmentally friendly roofing system can preventing organizations from being fined because of violating the environmental regulations. Company that produce products which are technologically advanced and environment friendly will find this will enhance the brand image in customers' mind. Consequently, the relevant operational costs will be reduced and the company can operate in the more effective and efficient way than before.
Besides, Visage Industries Sdn. Bhd believes that by practice the green management in the business will very helpful in differentiate their roofing system with other competitors. In the customers' perception, the roofing system is environmentally friendly. It can help the company attracting more new profitable customers and give competitive edge over the competitors in the market place. Because of increasingly awareness toward environmental friendly, customers now prefer to choose the company which has green business practice. It is helpful in strengthening the image and reputation of Visage Industries in market place.
Mr. Loh feels very confident and proud when he mentions that his company has already own the recognition of government of Malaysia. Visage Industries Sdn. Bhd. had widely acclaimed International Quality Award-BM Trada Certification of ISO 9001 2000 in year 2004 and at the same time is also under approval list of the JKR as the official system provider for Cold-Formed Roofing System. They gain advantages in human and capital resources for the production of truss related products. This may enable his company to look forward and export their products to other countries. Furthermore, his company has already success in tender several huge projects in domestic market. All of these should thanks to green product that practicing in the company. By employed this green practice in the manufacturing process, the company can place a better control in the product safety and quality to meet the requirements of the government regulations and rules.
However, Mr. Loh feels that it is very important to link all the departments of its company in order to success in the international market. As we mentioned in the section 1, the business actually runs follow by the system. Each department has their own role. For example, the sale and marketing department may not be stand alone without the cooperation of another department. Lastly, Mr. Loh explained that their company provides the cultural differences training for all his employees when they decide to enter the international market. Although the size of company is considered as moderate, he actually feel that study the cultures of other countries will benefits them in the future. He added that, many international businesses failed in the international market because of neglecting the important of host country's cultures too. The successful or failure in the international market is highly depend on the five forces which are mentioned in Section C. The supplier, buyers, new entrances, substitutes of products and competitors are highly correlated in affecting the operation of business abroad.
Mr. Loh as a Managing Director is sensitive to the changing of the environment when he decided to export his product to Thailand. Most of the decisions are made based on the competitors, customers, regulatory costs and rules, political stability and labor market of host country (Thailand). The prices of product are depending on its competitors and customers. When its rivals increase the prices, his company will choose to increase the price of products. However, he said that he will only increase the prices of certain products but not all the products. The prices will not be extremely higher or lower than its rival. The setting of price in the international market is usually depending on the action of rivals.
Customers will be taken into most important consideration when enter into international market. Mr. Loh put customers as the first place in his business. The customers abroad may be criticized on them if they failed to produce the high quality products. For maintaining the royalty of customers, it is necessary for them to set the right price for their products. The right price for international market is different with the price in the domestic market. In international market, there is a need to compare the price of products with the cost of regulatory and rules of the host country. Thailand has a quite lower of regulatory cost compare with others countries. Strict and sticky rules of host country may increase the operating costs of a business.
The most challenging part of Visage Industries Sdn. Bhd is supply of raw materials by suppliers. Because the price of steel is always frustrate and unstable in the world market, it is very difficult for the company to sell the roofing at the same low price all the time. When the price of steel is increase, the revenues of company will decrease. Hence, maintains a strong relationship with suppliers is a challenge for Visage Industries Sdn Bhd because it can help them to obtain the raw materials in a good quality and cheaper price. The company mentioned that Thailand is a country which is not stable in politic. However, Mr. Loh still chose to internationalize their products at there. The reason behind is that the company can enjoy the lower exportation cost in Thailand. Mr. Loh emphasized that sometimes they are facing dilemma. Although export to Thailand may benefits his company, the instability of political in Thailand is actually bring some troubles for them. For example, when there is a demonstration or protest in Thailand, the exportation of products may be stuck for certain period.
To internationalize the products, the Visage Industries Sdn. Bhd feels that the labor market of host country may bring effect to their business although the effect is not very significant. The labour market of Thailand has begun to change in recent years as Thai industrialists are forced to cope with volatile export markets characterized by ever increasing competition from the world market. The labour market in Thailand is experienced transformation from low-end labour intensive industries to more capital intensive or labour saving technology. The production of some labour intensive manufacturing products has shifted to neighbouring countries with lower wages, a move necessary to maintain their price competitiveness. The managing director of Visage Industries Sdn. Bhd. thus believes that they maybe will transform some part of production of the product to Thailand. But, now is not the suitable time for them to do so because it may involve risks and very long detailed of plan.
The company chose to export its products through foreign agents. By exporting through foreign agents, Visage Industries Sdn. Bhd. can know more about the market structure abroad. The agent may quickly provide the company with expertise in a foreign market either equal to or better than their own domestic expertise. The agent should be able to demonstrate their market understanding and proven track record. Mr. Loh said that through the foreign agents, the company can save a large amount of expenditure. This is because the agents are usually come with expertise, skills and experiences. It may provide company much more useful information and help the company gain more understanding about the exportation. The Managing Director, Mr. Loh said that his company only chose to export to Thailand for this moment. However, he does not deny that the Visage Industries Sdn. Bhd. will have further expansion to another country in the future. To maximize the profits, the company choose to export to Thailand first. By starting the exportation of products to Thailand can prevent the company from the huge losses in the international market. This is because of the starting cost in Thailand is low. The operating cost and other costs in that country also lower.
Currently, the company has internationalized its business to Thailand. Since the market in Thailand has achieved stability, the company wishes to internationalize the business to South East Asian countries. Over the last few decades, the East Asian region has grown as a new growth pole for the economy. It is a good opportunity to expand the business in those countries since there are many advantages of internationalization in those areas. Visage Industries Sdn. Bhd. is able to benefits from larger economies of scale. The company will in a better position to review its operational structures by taking into consideration of a larger market potential than they used to. It is an opportunity for the company to modernize its operations by investing in modern technologies and larger plants to provide for a larger market. Simultaneously, Visage Industries Sdn. Bhd. could enlarge its regional business network. Coupled with improved efficiency and competitiveness, this network is a window of opportunity for the company to go global.
ASEAN Free Trade Area (AFTA) is aimed at enhancing economic development, growth and linkages among the ASEAN member countries through a liberal trade and investment regime. AFTA will lead to increased intra-regional trade and investment and rapid economic development in the region. It will also facilitate efficient utilisation of scarce resources and provide opportunities for the ASEAN member countries to further strengthen their competitive advantage. With the establishment of AFTA, AFTA has cut tariffs on manufacturing and agricultural products to less than 5%. The cut of tariffs result in product price reductions. Thus, the company benefit from lower cost inputs. Costs of inputs are expected to reduce due to increased competition among suppliers. This competition will not only enhance the efficiency of input suppliers, but will also benefit other industries in terms of boosting the company's competitive edge. At the same time, consumers will benefit from cheaper prices of goods given lower tariffs on a host of raw materials used by the company. As a result, the company sales will grow continuously.
Since most of the South East Asian countries are developing countries, developing countries do not possess the same infrastructure as fully developed countries do. It would be beneficial for the company in developing countries to increase the amount of consumers they can target across a larger geographic area. By doing business in those countries, the company can also reduce the risk of loss to the business.
According to Mr. Loh, start the exportation function in developing country is the best way to enhance the image n reputation of Visage Industries Sdn Bhd. Company can actually implement the Corporate Social Responsibility (CSR) in developing country. Implementation of Green Management also can be considered as one of the CSR in the company because it helps to save and protect the environment by minimizes the waste of usage on resources. Some of the developing countries in the world do not have well business infrastructures in their countries. Visage can take this opportunity to build infrastructure such as schools, highway and so on. The goal of CSR is to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, customers, employees, communities and stakeholders .The green management can help the company successfully penetrate the market at international market.
Mr. Loh stated that, a positive approach to CSR may lead to lower operating costs at the same time enhanced brand image, greater productivity, increased customer loyalty, better access to capital and ultimately to improved financial performance. Many companies tend to neglect the important of CSR when they are doing business apart from their home country. Nowadays, the company not only concentrates on how to maximize their profits anymore. Conversely, they should focus more on implementing socially responsible policies too. By practice the CSR, business will be benefits in the long term and can gain a competitive edge over its competitors.