Gain international experience Explore own advantages on markets abroad Increase profit
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Transcript of Gain international experience Explore own advantages on markets abroad Increase profit
Repositioning Strategy for Malaysian Companies Internationalization
ISMI RAJIANI
Universiti Teknikal Malaysia Melaka
Malaysia in Brief
Progressed socio economicallySince 1957
First-class network of infrastructure that is comparable to those
in developed countries
strategic location in the fastest-growing
region with a strong natural resource
endowment
Xavier, J. A and Ahmad, Z. U. (2012). Proposed scholarly research agenda for transforming Malaysia into a model developing nation. International Journal of Public Sector Management, 25 (3), 231 – 243.
Stuck in the middle-income trap
Cannot compete with Vietnam and
Indonesia in lower costs and labour-
intensive production
Unable to compete with high value-added
economies
Malaysian COMPANIES
Will they all adopt the
Overall Cost Leadership
Product Strategy co-
aligning with their
local competitive advantage?
Going Global
Proposition 1:
Malaysian exporting companies have a different initial position compared to that of Western companies when starting their export activities as form of internationalization.
Uppsala model
“psychic distance” companies expand
first to market which is psychically close
move further as their knowledge well-
developed
Uppsala’s model for Malaysia
culture language, religious customs
close distance
Indonesia as
potential market
Variables Definition
COI : buyer’s attitudes and feelings toward the country , developed through contact, association, or past experience with the country, its people, and its products (Sahin, 2010).
Animosity: the remnants of antipathy related to previous or ongoing military, political, or economic events"(Klein et al, 1998).
Ethnocentrism: believe that buying a foreign product or foreign brand is not patriotic, and they tend to choose local products or local brands, regardless price or quality considerations (Shankarmahesh, 2006).
Thus…
The case of Air Asia and Proton (Ahmad and Neal, 2006 ; Ahmed & Humpreys, 2008), and many firms believe that a low-price strategy is the main competitive advantage (Young et al., 1996, ; Ahmed & Humpreys, 2008).
Preposition 2:
There are 15 triggering cues for internationalization motives
15 triggering cues for internationalization motives
1. Gain international experience2. Explore own advantages on markets
abroad3. Increase profit4. Increase sales volume5. Gain access to internationally
experienced management or skilled human resources
15 triggering cues for internationalization motives
6. Gain international experience7. Achieve international reputation and brand
recognition8. Receive government support or finance9. Improve own-product development and
innovation ratio10.Increase technology content of own
products
15 triggering cues for internationalization motives
11.Improve customer service12.Improve quality of products13.Improve cost efficiency in production 14.Search efficient alliance15.Maintain domestic positioning
Proposition 3:
The 15 triggering cues can be allocated to and distributed
between four strategic positions, based on expected
importance in securing competitive advantage in each
position.
Four Strategic Position (Soderman et al., 2008)
3. High Price Low Volume
4. High Price High Volume
2. Low Volume Low Price
1.High volume Low Price
Volume
PRIC
E
Four Strategic Position (Soderman et al., 2008)
3. Focus on innovation
4. Focus on Growth
2. Start up company
1.Focus on cost efficiency
Volume
PRIC
E
Four Strategic Position (Soderman et al., 2008)
3. Focus on innovation
4. Focus on Growth
2. Start up company
1.Focus on cost efficiency
Volume
PRIC
E
None will be willing to stay in position 2!
3. Focus on innovation
4. Focus on Growth
2. Start up company
1.Focus on cost efficiency
Volume
PRIC
E
1.Focus on cost efficiency
1. Sales Volume2. Cost Efficiency in Production3. Explore own advantages4. Profit5. International Experience6. Government Support7. Opportunity
3.Focus on innovation
1. International Reputation & Brand Recognition2. Product Development and Innovation Ratio3. Technology Content of Product4. Searching Efficient Alliance5. Management and Skilled Human Resources6. Internationally Experienced7. Maintaining Domestic Position8. Profit
4.Focus on Growth
1. Customer Service2. Quality of Product
Proposition 4:
Most Malaysian companies will stay in position 1 because of their country-specific advantages, but will reposition by leaving position 1 and aiming for position 3, the
high-price/low-volume segment.
Data and Methodology
• The research questions were operationalized in a questionnaire adapted from Soderman et al., (2008) .
• The target population of this study is managers in manufacturing sectors in Selangor, Negeri Sembilan, Malacca and Johore Bahru states.
• The survey is targeted to obtain 100 respondents.
Conclusion
• Uppsala model concept of psychic distance by preference to start exportation to neighboring countries seems to apply also for Malaysian companies
Conclusion
• As competition increases in their domestic market, great numbers of Malaysian companies will consider Western markets attractive for their products and services thus make the company reposition their strategy
Conclusion
• Europe does not represent a neighboring or ‘home’ market, as do markets in South-East Asia making the Uppsala model concept of psychic distance and Porter’s overall cost leadership are no longer relevant.
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