Expanding Fashion Retail Business Of Bronze Snake In Malaysia: Environmental Analysis And Recommendations

Product that company wants to expand

Small and Medium enterprises are the backbone of any economy. This is because they require large amount of workforce for their operations hence helps the government in reducing the unemployment. It is also a significant contributor to the GDP of different nations. In order to expand in different markets, company has made different types of plans so as to improve their position in the market (KiatGan & Almsafir, 2013). For this first they will have to identify the suitable market. Second, it is essential that companies analyses the external environment at that place so as to find out the opportunities and threat present in the expansion. This is extremely essential as the SME do not have large amount of financial resources to invest and any failure could result in heavy losses for the company. Bronze Snake is one of the leading SMEs in Australia and it is planning to expand in Malaysia. This report analyses the product that this company wants to launch in Malaysia. It also analyses the environmental factors that might effect on the chosen product expansion in Malaysia. At last recommendations related to the product has been provided.

Bronze Snake is one the emerging fashion retailers in Australia hence they aiming to make their name in the Malaysian market. Malaysia is one of those countries that are emerging in the South-East Asian region and is one of the best markets for expansion. The fashion items delivered by the company are of higher quality. Along with this company offers products that are available in different price range (Bronze Snake, 2018). Their main focus is towards the youngsters who are in large numbers within Malaysia. Their products are designed with different types of fabrics and hence offer trendy wears to its customers. Bronze snake has both men and women collection offering trendy dresses. They are doing innovations in the design so as to attract people from every segment of the society. On the other hand the choice of the customers in Malaysia has also changed and hence the people are demanding for the dresses that look trendy and are of high quality. Their products are available at lower cost and offers same value when compared with products of bigger brand name. Since fashion industry demands changes at much faster rate when compared with other industries hence they need to make changes in their product regularly so as to remain in competition with bigger brands.

The rules and regulations related to garment industry has changed significantly in Malaysia. The government policies are attracting both fashion retailers and the cloth manufacturers. Malaysia is a $44 billion market and hence acts an important player in the South-East Region. Recent changes in the Malaysian political momentum have resulted in the confidence booster for both external investors and the domestic customers (Salikin, Ab Wahab & Muhammad, 2014). Along with this, another crucial fact is that fashion industry of Malaysia is having lesser competition when compared with other South-East Asian nations. Previously fashion in Malaysia is influenced by historical fusion of Chinese, Indian, Malay and other indigenous cultures but in recent years the society’s affinity towards western fashion has increased. The growth rate of the fashion industry in Malaysia is expected to experience a growth rate of 12.1%. Alone the apparel industry is expected to grow at a pace of 11.3% (Statista, 2018). This is further boosted by the increasing tourism market in Malaysia as it is attracting fashionable clothes in the country.

Environmental factors affecting the business in Malaysia

Malaysia is a developing nation and hence there is significant change in the environmental factors that are affecting the business of the companies in the fashion industry. It is found that country has a population that consists of people from different cultural and economic backgrounds. In order to understand the external environment, the factors that need to be analysed are:

• Political: The political environment within Malaysia is changing at much faster rate especially after the introduction of technology in the government working. They have fastened the process through which new investments could be made (Kasiran, Mohamad & Chin, 2016). Censorship or prohibition was imposed by the government previously on different types of events such as performance of international artist such as Lady Gaga, Kesha and Beyonce. Situation has changed in the last few years and this acts as a booster for the apparel industry in the country. Government has also promoted the fashion that is from the local areas and outside the world. The new trade relations between Malaysia and Australia have improved the chances of investment across both the nations.
• Economic: For the growth of the apparel industry, it is essential that country’s economic condition remains stable. Malaysia being an emerging economy is promoting fashion industry. There is continuous growth that can be noticed by that currently, it is a low income country and by 2020, it is going to become a high-income state (Umrani, Johl & Ibrahim, 2015). It is one of the exporter nations of oil and gas whose demand is going to increase in the future hence it has benefited from the increasing oil prices. The increase in the per capita income has attracted towards fashionable cultures. This economic improvement in the nation is going to benefit the countries from the fashion industry. Malaysia’s exposure towards the risk environment especially in financial terms has restricted investors to make investments within the country. The external investors have an opportunity to make their impact in the industry. This is the reason why the company has received more than USD 9 billion investment being the highest in the region since 2010.
• Social: This factor has a negative effect on the investment idea of Bronze Snake. This is because it is basically a Muslim dominated nation where the people are more towards their traditions and they do easily accept the external fashion. This would be a challenge for the company at the later stage of the expansion (Chong, 2012). In the initial stage they are just planning to invest in the cities like Kuala Lumpur. This city has changed drastically in terms of clothing and lifestyle. It is one of the populous cities in Malaysia having major parts of the population as young age people. Young people are considered to be their most important target segment.
• Technological: Cities such as Kuala Lumpur is developing in terms of technology but most part of the country is still not very much advanced in the technological terms. This is not good for the company’s expansion policy as this company is largely dependent on the internet mediums for its sale (Moorthy, Tan, Choo, Wei, Ping & Leong, 2012). But, the positive part of the country’s internet infrastructure is that it is expanding and there is significant increase in the numbers of people who have now got connected with the advanced technologies such as mobile technology.
• Legal: The legalities in the nation have changed drastically which is having direct impact on the operations of the apparel companies as well as it is also having impact on the import laws within the country. On the other hand the consumer related laws are still weaker which could help the company to establish themselves with even average quality clothes (Rose, Deros, Rahman & Nordin, 2011). Company will have to formulate their policies in such a manner that it complies with all the laws and regulations made within the country.
• Environment: Malaysia is having a very beautiful natural environment hence the country has been very strict against the corporate exploitation of the nature resources and waste management. Apparel companies like Bronze Snake will have to make sure that they have an effective waste management plan for ensuring that no problems related to the waste disposal occurs (Ng & Kee, 2012). They will have to work on green supply chain management system for which they will have to take the help of their suppliers.
• Competition: The competition in the apparel industry of Malaysia is bit less when compared with the nation such as their parent nation Australia. It acts as an opportunity for the company where they will have their own market share to capture. But, on the other hand they will have to face competition from the sellers of traditional and ethnic clothes (Gunto & Alias, 2014). People have options in the online retail hence they will have to make sure that they have an effective online strategy to sell their products. But the industry is making a positive shift hence more companies are expected to invest in the Malaysia hence it has become essential for Bronze Snake to establish themselves as early as possible.  
• Suppliers: Number of raw material suppliers in the industry has increased considerably. This is having effect on the operations of apparel brands (Mahroeian, 2012). They have got options to choose from. This increase in the numbers of suppliers especially the farmers will help them in reducing the prices as per their demands.

Before making an investment, it is essential that company finds the opportunities and the threats that could have impact on their plan of expansion and their venture. There are different types of threats and opportunities in the apparel industry of Malaysia hence need to be analysed in an appropriate manner. Some of the factors that are acting an opportunity for the clothing industry are:

• Increased suppliers numbers: This is giving boost to the companies that is having low priced model for the clothes. Internal consumption of raw materials has increased which is a positive sign for the industry (Ng, 2012). This venture can get raw materials from the local suppliers easily hence reducing the prices will not be a concern for the company.
• Increasing GDP: It is one of the biggest GDP in the region and has received high amount of invest in the past few years hence the market shows the positive trend towards investment and the failure rates have been relatively low (Anwar & Sun, 2011). They can easily get partners for investments which can be beneficial for the company in the long run.
• Changing mind-set: In terms of people perception about the fashion large numbers of changes can be noticed. People of the country especially in the city areas have changed their perception about the western culture (Koe & Majid, 2013). The influence of the western culture on the mind-set of the people has given Bronze Snake an opportunity to expand in this country.
• Emerging cities: There are large numbers of development projects going on in the country. These development projects have led to emergence of advanced cities. These metropolitan cities have people from different parts of the world and from different cultural backgrounds (Ahmad, Wilson & Kummerow, 2011). It acts as an opportunity as company could sell their clothes in this region.
• Target market: This Country has huge amount of people of young age. These people are the major target market of Bronze Snake. On the other hand its per capita income also suits the types of product that it sales and the purchasing power of the people.
• Low investment cost: The cost of investment is on the lower side. The skilled and qualified labourers are easily available in the city. Labour cost is on the lower side hence they can easily reduce the overall cost of operations. In the time to come this will be most essential aspect in the success of the business. Government has launched skill development program which will have effect on the overall workforce present in the country (Ahmad, Abu Bakar, Faziharudean & Mohamad Zaki, 2015). The value of the Malaysian currency is dropping against the dollar hence the cost of investment will be further on the lower side.

There are certain factors that are adding as a threat to the company. Some of these factors are as follows:

• Financial risk: Due to the slowdown in the world economy especially in the American and European region has made the environment of Malaysia unstable. Since it is still considered to be the market with low income hence the stability in the market can get disturbed. As the Bronze Snake has limited amount of resources hence must a proper business plan.
• Corruption: The level of corruption is on the higher side hence the investment is not easy to make as the company will have to waste lot of money on the bureaucracy. Getting permissions in business is not easy to get.
• Higher attachment towards their culture: People of Malaysia has a strong affinity towards the cultural values and ethics of their own. This is having influence on the purchasing behaviour of the people (Isa, Aziz & Razak, 2011). Company will have to make long term plans for marketing their products effectively. This is crucial for changing the purchasing behaviour of the people.
• Absence of differentiated product: Since apparel industry has least chances of making differentiated products as the designs are almost similar in all the countries. This lack of differentiation might not give company with an opportunity to increase their market base.
• Average technology infrastructure: The technological infrastructure within the country is on the lower side when compared with the countries like Australia. This will increase the operational problems for the company as Bronze Snake is suitable in doing business through online mediums (Mokhtar, Yusoff & Ahmad, 2014). There are people from the local and industrial areas.

In order to expand in Malaysia there are certain things that needs to be taken care of. First is the fact that it is not technologically as Australia is hence it is crucial that company focuses on the cities like Kuala Lumpur in the starting phase. More brick and mortar kind of set up will be needed by the firm so as to establish the name of the company in the market as Malaysian market is still more into such kind of business. Apart from this, company needs to find suitable partners in the country which will help them to understand the complexities present in the country. The partnership will also be required in terms of suppliers so as to ensure that high quality local raw materials could be available to the firm. It is also recommended that company use different modes of sales promotions but the special focus should be on the mobile based app marketing (Rabimov, 2018). This is because it will help the company to reach directly to the customers and hence could easily do personalised marketing. It is also recommended that company brings nation’s culture touch in their products as well as in their business model. Company should maintain their low pricing strategy as the market still prefers the products that are having lower or average price range.

Conclusion

From the above based report it can be concluded that SMEs are the backbone of any economy. Bronze snake is similar kind of company that aims to expand its business in Malaysia as they are performing well in Australia. Since the company more relies on their online business hence they might face certain problems as the technological advancements are weaker in Malaysia when compared with Australia. Political, economic and environmental factors are favouring the apparel industry while social factor is not supporting its expansion. Increased suppliers numbers, Increasing GDP, Changing mind-set, Emerging cities and Low investment cost are some of the factors that are working as an opportunity for the company. On the other hand financial risk, Corruption, Higher attachment towards their culture, Absence of differentiated product and Average technology infrastructure acts as a threat in their venture plan.

External opportunities and threats

References

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