International Marketing of Malaysia - Case Study Example

Running head: INTERNATIONAL MARKETING International marketing Name Institution Date International marketing Malaysia Malaysia as a country consists thirteen states with one federal in each state. The total landmass for the country is 329,847 square kilometers. To the south, Malaysia is separated by South China Sea with two regions namely; the peninsular Malaysia and Malaysian Borneo. It borders Thailand Indonesia and Brunei with maritime borders such as Singapore and Vietnam. The capital city for Malaysia is known as Kuala Lumpur. The Malaysian population is approximately 28.5 million (Colin, 2001). GDP Growth Definition Economic growth is defined as the value’s increase of goods and services created by a given economy. It’s normally measured in terms of percentages increases in real gross domestic product. The real terms are the ones used to calculate the percentages of growth in economy that is inflation is adjusted to factor in its effect in relation to prices of various commodities in the market. In relation to economics, economic growth rate refers to the increase of total potential output of a country during full employment (James, 2009). GDP Growth Rate for Malaysia The gross Domestic Product (GDP) for Malaysia expanded by over 1.5 percent in the fourth quarter of the financial year 2010 when compared with the previous year 2009.for the last ten years starting 2000 to 2010, the average growth rate of Malaysian GDP, has been found to be 1.20 percent for every quarter. Malaysia being a middle income country, it has kept developing and now is among the great economies in Asia. It has undergone several transformations since the 1970s when it primarily dealt with production of raw materials to a great multi industry economy. The graph shows the percentage growths for every quarter for each year staring 2007 (Colin, 2001). Interpretations In reference to the graph above showing the percentages of Malaysian GDP, the GDP has continued to grow since the year 2007, except in the following quarters; the first quarter of 2007, the first quarter of 2008, the first and the second quarters of 2009 and lastly first quarter for 2010. It is clear that the economy of Malaysia has been doing well in last quarters of the year as compared with the first quarters (Colin, 2001). Per Capita Income and Spending habits Income per capital refers to the average individual disposable income for the citizens of a given country. In this case we take our consideration of Malaysia as a growing economy. Malaysia is categorized as one of the countries in the upper middle income countries in the world. Malaysia is one of the most developed of the countries that are in the middle upper in terms of income earnings per individuals. The purchasing and spending patterns of the people of a given country depends on their level of income meaning that people will only spend what they have in the pocket. The table below shows the income per capital for Malaysia for the last 5 years (James, 2009). Income per capita (percentage growth) Year (Income per Capita) 2005-2006 13.5 2006-2007 14.0 2007-2008 16.5 2008-2009 19.0 2009-2010 21.0 Source: Malaysian central bank annual report. From the table above, it’s clear that the income per capita for the country has been on the increase for the last five years meaning that the spending pattern of the citizens is generally higher and we can conclude that they economically empowered to make purchases. Malaysia is among the top ten countries that spend more on household goods such as food, care products and groceries. It is ranked third in household consumption in the Asia Pacific region (Colin, 2001). Major Products & Services produced locally Natural resources Malaysia as a country is well blessed with different natural resources in various areas such as forestry, agricultural produce and mineral resources. Malaysia is a large producer of agricultural products. The most valuable product in Malaysia is petroleum. At one point, Malaysia was the biggest producer of tin and rubber in the whole world. Most of the world rubber is being produced in Malaysia. Timber and other related products are also produced in large quantities. Other products produced locally include cocoa, pineapple, pepper and tobacco. These products are dominant in the agricultural products (James, 2009). Malaysia is has got large deposits of gas and oil something that has promoted the industry greatly. The oil sector in Malaysia provides up to 35% of the country’s federal tax collections. There are custodians of oil and gas called petronas. These are stores for oil and gas resources. This has attracted many contactors to assist in production. The government has put every strategy in place in order to see the country’s economy grow and become less relying on the export from income. This has demanded the importance to expand the country’s tourism industry. Presently tourism sector is the third largest revenue generator to the country. The Malaysian policy on technology by the ministry of science and technology and other related ministries such as agriculture and environment have promoted the training of students in various fields of science and technology that has the country’s research and development elated activities grow up to 54%. Malaysia Exports products Malaysia main products for export include the following: Electronic equipment Petrolelium Natural gas . Textile The graph below shows the volumes of different commodities produces and exported by Malaysia to various countries such as; china, united states, Singapore, Japan Thailand and Hong Kong in US million dollars in the year 2010 (James, 2009). Source: world trade organization report. From the graph above the county’s most exports are done to china and Singapore and US in the third place meaning that Malaysia’s relationship with neighboring countries is a good one. Malaysia Imports Commodities Malaysia main goods for import include the following; Electronics Machinery Petroleum products Plastics Vehicles Iron and iron products steel products Chemicals Malaysia’s trading partners The graph below depicts the amount of various commodities that Malaysia import from its partners in the year 2010 in percentages.   Source: world trade organization Major cultural aspects, cities and population Kuala Lumpur is the capital city of Malaysia and it is one of the major centers of attraction because of its diversified cultural events within the city. In this city, there is a national museum situated near Mahameru highway that acts as a hub for both local and foreign tourists. The city is fully of Islamic arts that exhibit more than eight thousand artifacts that are rare in most countries. Kuala Lumpur is the most densely populated city in the country. It has the population of about a population of about 6,700 heads of inhabitants in a square kilometer. The population growth rate for Malaysia is on the decline. The population for young people below the age of 15 years is about 26% in the year 2009 compared to 30% in the year 2000. The working class is about 63% while the rest of the population is for the elderly (Colin, 2001). The national language for Malaysia is Kuala Lumpur. Other languages include mandarin and Cantonese. English has also made large presence in the country especially for business class people and foreign students. There are many religions in the country. There is the Islamic religion being practiced by the Malays and the Indians who are Muslims. Other major religions include the Hinduism and the Confucians common among the chine’s people. The high-class technology blended with the Asian traditions has resulted to emerging of new cities that are more ultra modern with most magnificent structures across the continent. Most of these structures have been a development of old structures to new structures that are friendlier to the climatic changes throughout the year. The latest and modern structures began to appear in about two decades ago as a result of economic growth. Some old buildings such as Bok house have since been razed to a new beginning for modern houses. Most houses are now well blended with glasses all over the city and major towns (James, 2009). Information application In regard to the information collected, it creates a guideline in making very important decisions such as business decisions. It’s good to note that the economy of Malaysia is an economy supported by high technology and higher service delivery. This means that one has to coincide with the business capability in order to match with the current tends in the country. Another one must know is that Malaysia is middle income earning country and most people spend more on household goods. This will assist one to know the kind of products that he should bring into the market (Colin, 2001). Question 2 Reasons for Trade Agreements Trade agreement gives opportunity to members to freely trade with other members in the world market. It is intended in improving the lives of its citizen through growing economies. It’s a free trade environment whereby people are allowed to make free choices at the prices of their wishes. At least it creates an environment where one can have so many alternatives to choose from in terms of commodities and services (Baldwin, 1995). Trade agreements also enhance efficiency in production by encouraging their countries to specialize in their areas of production. This is so as one can simply import what he does not produce. This advantageous because different countries have different capabilities of production and therefore they can engage themselves where they are good at. Through specialization, one has competitive advantage over the other because he is to produce relatively cheap goods for market consumption. In doing this, the members are able to enjoy quality goods at cheaper prices (Baldwin, 1995). Trade agreement block-Example A good example of a trade block is between Chile, Britain and China. This block of countries can do unilateral trade with every country being independent of its own actions, i.e., without many tariffs. This can enable these countries realize trade benefits unlike other types of trade. Such a trade that is open to its members can see a faster growth of their income. There is a high possibility of these member countries doing well due to their capability in technology and manpower. China for example can provide large market for commodities within the block due to its large population. At the same time it can provide electronic goods while Chile and Britain have the capabilities of producing machines that are used in industries. Barriers to international trade agreements Establishment of trade agreements means that the trends in the market are going to change. It also to various shifts in the market whereby people are going to move from low waged counties to high income earning countries in order to get better pays. This will create unfair competition for the countries that are developing. This could be used as a saving for some countries while others will be on the loosing end. Because of these reasons, different barriers have been put forward to try to eliminate the unfair conditions from within the blocks. Barriers refer to those means that are put in place to counter unusual practices and they include; Quotas Quotas refer to areas of restrictions. It’s a policy used to set the exact level of the amount of goods that should cross the borders of the member countries. This used to reduce competition within the block. In most cases this is common in those countries where certain commodities are not produced and therefore do not have any competitive advantage. Duties This refers to those taxes that are charged goods that are imported to the county though the customs authorities. It can be based on the total value of the import or weight or even the physical quantity of the commodity. This is intended to raise the prices of these products so that to make them less competitive in the local markets. Exchange Rate Controls This is the method used by developing countries to protect their local industries. This is intended to make local businesses self reliant by educing the effect of foreign currency in the local market. Though exchange rates and the foreign currencies are reduced within the country thus creating more demand for local currency. This will make it stronger than the other currencies in the long run (David, 2009). Dumping Policy These are policies put in place to stop foreign commodities from the market. It’s common whereby the prices of these commodities sell below the local market prices thus sweeping away the market for locally produced goods. It’s also aimed at wiping out competition from the market. Subsidies This refers to both financial and material support provided by the governments to reduce the production cost of goods so as to reduce their prices in order to sell them cheaply in the foreign market. This affects the relative prices of commodities with the intention of wiping the competing commodities out of the market before increasing the prices again (David, 2009). References Baldwin, E. (1995). A Domino Theory of Regionalism. New York: Macmillan. Colin, B. (2001). Modern Malaysia in the global economy: political and social change into the 21st century. Massachusetts: Edward Elgar publishing Limited. David, A. (2009). Regional trade agreements: law, policy and practice. London: Carolina Academic Press. James, B. (2009). Financial Development and Economic Growth in Malaysia. New York: Routledge. Read More