Corporate Strategy

Investment of a British Multinational Company (MNC) in Passenger Car of Malaysia:

An analysis on Malaysia and Passenger Car Industry

Table of Contents Page

1 Executive Summary 3

2 Introduction 4

3 Study framework 5

4 Analysis and Discussion of passenger car industry 6

4.1 Porter’s 5-force analysis 6

4.1.1 Rivalry amongst Existing Firms 7

4.1.2 Bargaining Power of Suppliers 8

4.1.3 Bargaining Power of Buyers 9

4.1.4 Threat of Substitute Products 12

4.1.5 Threat of New Entrants 12

4.2 Industry Life-Cycle Analysis 13

4.2.1 Development Stage 14

4.2.2 Growth Stage 14

4.2.3 Shakeout Stage 14

4.2.4 Maturity Stage 15

4.2.5 Decline Stage 15

5 Analysis and discussion on Malaysia 16

5.1 PEST Analysis 16

5.1.1 Political Analysis 16

5.1.2 Economic Analysis 17

5.1.3 Social Analysis 17

5.1.4 Technology Analysis 18

6 Findings and Recommendations 19

7 Bibliography 20

8 Appendix 23

Executive Summary

This assignment will contain the introduction about a British MNC interested in investing into Malaysian passenger car industry. A PEST analysis on Malaysia environment will be analyzed to see the suitability of British policies and preference matches. For the industry analysis, porter’s 5-forces and the life-cycle analysis will be used to determine the current market share and where the passenger car industry is currently. When all information is gathered, a proper strategy will be given to unsure a better entrance for this British MNC to enter the market of passenger car.

Introduction

A decade has past since the ASIAN financial crisis in 1997-1998 and Malaysia seems to still be strong in the global market with a forecast growth of between 6%-6.5% this year (Dato’ Yusli Mohamed Yusoff, 2008). Since independence from British colonization in 1957, Malaysia has remained a commonwealth nation thus investment by British companies has always been easier in the sense of restriction and policies.

After experiencing rapid industrialization for the pass thirty years mainly from natural mineral and agricultural, Malaysia has move towards manufacturing and service industry. Since 2005, Malaysia was ranked �upper middle income country’ and the third richest country in ASEAN after Singapore and Brunei by EU (Ferrero Waldner, 2006).

With Malaysia continuing to grow and also a commonwealth nation, the similarities between Malaysia and British company will be somewhat same. As for why Malaysia was chosen and passenger car as the industry will be discuss in the analysis that follows.

Study Framework

For this analysis on Malaysia and the passenger car industry, my group has chosen three framework tool to be use to better understand the country and industry. PEST analysis is the first framework to be used to analysis the macro-environment for factors that might have an impact on the British MNC decision on investment. PEST analysis studies the political, economical, social and technological aspect of a country such as Malaysia. Kotler (1998) mention that this tool is useful to determine market growth, current market situation and potential to enter or grow.

Porter’s 5-forces analysis unlike PEST studies the micro-environment of a particular industry which is mainly focusing on the factors influencing competition such as the degree of rivalry, the threat of entry, the threat of substitute, buyer power and supplier power.

Last but not lease is the Industry Lifecycle model which is use for determining where a particular industry position in the market