Siam Canadian Foods Co., Ltd. - New Venture Creation

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MBSA 2313

New Venture Creation (NVC)

SEMESTER I, 2015/2016

Siam Canadian Foods Co., LTD.

Lecturer                : Dr. Adriana Mohd Rizal

Student Name        : Teo Yin Cheng    

Matric Number        : MBS141153

Questions:

1. In considering his Burmese investment decision, Gulkin had to consider several trade-offs. Could he afford to take a “wait and see” approach to Burma while other Asian firms started to tap into the market?

Gulkin may not able to afford to take a “wait and see” approach to Burma while other Asian firms started to tap into the market. As Burma was the largest mainland country in Southeast Asia with a population of 47 million, it could be a large potential market for SC. The long coastline of total 2,830 had created abundant natural resources like seafood. As one of the poorest country in the world, SC could save the operation cost by hiring low cost labor, production cost and other lower cost of manufacturing. With the lower manufacturing cost, SC could have a better competitive edge to compete with others competitors in Thailand or other global competitors.

Besides that, Gulkin should not hesitate from tapping into Burma market even their potential or direct competitors had been established in the region. Even PL Corporation, Sun Wah Trading Company, Mitsui had been setting up in Burma, SC should have figure some plan and strategy for not competing with those strong competitors head on. Recognizing an opportunity is a very important criteria for a new entrepreneur to start-up business and also existing entrepreneur to expand their business. Definitely there are some risk and factor for the investment in Burma, but after witness and analyzing the improvement of Burma political and economic development, SC should had taken this brave move to tap in the market. If Burma market was limited and unstable for a business, SC’s competitos will not have set up in the region. SC may have late for penetrating Burma market compared with PL Corporation, Sunwah Trading Company and Mitsui, but Burma still considered as an undeveloped market which have a large business potential.

SC should take this timing as a breakthrough before more Asian firms started to tap into the market. With the establishment of SC’s network in Thailand, Vietnam and the next Burma, SC could be able to expand his business and achieve a better sustainability.      

1. Similarly, could he afford to allow this opportunity to pass him by given that other seafood exporting opportunities in the region were quite limited?

Gulkin’s business philosophy was developing and managing diverse supply sources and products ranges. As Burma considered as undeveloped market, SC should identify the opportunity and do not let the chance pass him. At this point of time, Gulkin had considered the Thai seafood market was simultaneously experiencing increased levels of competitions as well as dwindling supplied of raw material. He also estimated that the seafood industry in Thailand had reached the saturation point in terms of number of processor operating and that raw material supply levels would gradually deplete to the point where the industry would be in definite decline within ten years. It is very important that a company have a strategic planning of what the company could achieve in a short and long term period so they could cope with any problems or crisis that occur. If Gulkin do not foresee the potential risk of saturation of the raw material supply in Thailand, SC may experiencing a serious downturn when the raw material supplied in Thailand achieve a critical low point. SC may need to reject any large contract if they have no enough supply to support on those contract which could cause a low profitability to the company in a long run. SC may not able to sustain the operation cost of different region plant and eventually may cause to downsizing or even close down of the plant.

Although the seafood resource of Burma was not as rich as Thailand, but the fishing industry still considered new compared to other economic resource in Burma, According to exhibit 2, livestock or fishing only contribute to 7.2 % of the GDP area of economic activity. We can recognize this figure as the new and undeveloped sector for government compared to other sector like agriculture, trade, manufacturing, etc. By knowing the limited resource in the region, Gulkin could have planned for the operation in Burma in a short or long term period. By forecasting the resource available in the region, Gulkin can make the decision of investment and also resource allocation in Burma. Before the deplete of the resource in the region, SC could have identify another potential location for continuing the material supply so the business sustainability could be achieved.