International Engineering Management - Perspectives of Vietnam and Malaysia Markets for TNA Pty Ltd - Example

International Engineering Management Name: Course: Instructor: Institution: Date of Submission: TABLE OF CONTENTS 1. Abstract ……………………………………………………………………………….. 4 2. Introduction and Background …………………………………………………………. 5 3. Culture and International business ……………………………………………………. 5 4. Social and cultural environment ………………………………………………………. 5 5. Religion in Malaysia …………………………………………………………………… 6 6. Religion in Vietnam ……………………………………………………………………. 6 7. Language ……………………………………………………………………………….. 6 8. Language in Malaysia ………………………………………………………………….. 6 9. Language in Vietnam …………………………………………………………………… 7 10. Education in Malaysia ……………………………………………………………………7 11. Education in Vietnam …………………………………………………………………… 7 12. Infrastructure ……………………………………………………………………………. 8 13. Infrastructure in Malaysia ………………………………………………………………..8 14. Infrastructure in Vietnam ………………………………………………………………. 8 15. Political stability ………………………………………………………………………… 8 16. Political stability in Malaysia …………………………………………………………….8 17. Political stability in Vietnam…………………………………………………………….. 9 18. Population in Malaysia …………………………………………………………………. 9 19. Population in Vietnam ………………………………………………………………….. 9 20. Patent protection ………………………………………………………………………… 9 21. Patent protection in Malaysia …………………………………………………………… 10 22. Patent Protection in Vietnam ……………………………………………………………. 10 23. Measuring Economic Activity ………………………………………………………….. 10 24. Malaysia GDP …………………..……………………………………………………… 10 25. Vietnam GDP ……………………………………………………………………………. 11 26. Malaysia GNP …………………………………………………………………………… 11 27. Vietnam GNP ……………………………………………………………………………. 12 28. Inflation rate ……………………………………………………………………………… 12 29. Inflation rate in Malaysia ………………………………………………………………… 13 30. Inflation rate in Vietnam ………………………………………………………………… 13 31. Natural economy resources in Malaysia …………………………………………… 14 32. Natural economy resources in Vietnam ……………………………………………... 14 33. Imports and export goods to and from Malaysia……………………………………… 14 34. Imports and export goods to and from Vietnam……………………………………… 15 35. Taxes in Malaysia compare to Vietnam …………………………………...…………. 15 36. Advantages and perspectives of Vietnam ……………………………………………. 15 37. Advantages and perspectives of Malaysia ……………………………………………. 15 38. Disadvantages and risks of Vietnam…………………………………………..………. 16 39. Disadvantages and risks of Malaysia …………………………………………….…… 16 40. Recommendation ……………………………………………………………………... 16-17 41. Conclusion……………………………………………………………………………… 17 42. References ……………………………………………………………………………… 18 - 20 1. Abstract International businesses have to conduct research on different target markets to ensure that they invest in a country that favors their goals and objectives better. The project below will evaluate which between Malaysia and Vietnam is the best target market for TNA Pty. Ltd. Based on some of the factors to be evaluated below, a recommendation will be provided to present which market TNA should invest in for the increased achievement of the company’s targets. 2. Introduction TNA Pty. Ltd. is a business that has succeeded in all international markets it has ventured. The success is linked to its capacity of technical developments that surpass the technical developments perceived in the machines of the competitors. According to Alf Taylor, his achievements have always been successful since the requirements of packaging in different countries have always been the same. For instance, through his analysis, Taylor discovered that the only difference in the competitors’ products was color. The machines were all-similar, conducted their operations in similar manners; their performances were also equal. Consequently, TNA attained the competitive advantage of competing with the products based on his technical expertise in the machines and the intended better and improved performance of the products than ever perceived with the majority packaging machines. The objective of the task is to evaluate whether TNA would succeed in Malaysia or Vietnam as international Markets as well. 3. Culture and International business Numerous businesses are becoming global and expanding in numerous countries. Different countries have different cultures, which may negatively influence communication. The different languages may lead to challenges in international business. Thus, the TNA Pty. Ltd ought to consider the different cultures and languages to develop strategies that assist them to attain their goals in the countries. The barrier that culture differences impose on international businesses is communication hurdles (Junior, et al., 2006). According to Hofstede, Culture is the collective programming of the mind that distinguishes the members of different groups (Hofstede, 1991); culture is learned not inherited. 4. Social and cultural environment The social environment refers to the social factors that influence the business. The factors may include issues such as religion, educational institutions, family and others that are dominant as evaluated below (Hofstede, 1991). Below, the study will evaluate some of the social and cultural factors in Malaysia and Vietnam that may affect the performance of the TNA business in the market. 5. Religion in Malaysia Malaysia exists as a multicultural country. According to the 2010 housing census conducted in the country of the entire population, 61.3% are Muslims, 19.8% are Buddhists, 9.2% are Christians, 6.3% are Hindus, and 1.3% practices the Chinese religions. Dominantly, the Muslims (Islam religion) dominate the country. Thus, it is fair to stipulate that Malaysia is an Islamic country. Religious beliefs influence international trade by either enhancing trust or also accord different importance’s to trade activities. For Muslims, trade is perceived as a positive reputation, not a necessity (Helble, 2006). However, the religious openness perceived in Malaysia presents a positive impact on influencing trade, which is one of the factors that fosters economic growth in the country. Muslims tend to borrow ideas from other systems that are consistent with their beliefs. 6. Religion in Vietnam In Vietnam, most of the population account for non-religious folks, which is 73.2% of the entire population. 12.2% accounts for Buddhism, 6.8% accounts for Catholicism among others. Thus, mainly Vietnam is considered as an atheist state as declared by the communist government. Religion influences trade by affecting international trade through influencing customs, laws, government, and traditions among other factors of the organization. Lack of dominant religious groups in Vietnam may influence TNA business as the non-believers discriminate against the believers, which influences them to divert trade from the potential welfare gains due to religious culture differences (Rauch, 2001). 7. Language .1 Language is a major delineator of cultural groups since it presents the manner in which a society communicates with each other. Language influences the manner in which the members of society think interpret activities and behaviors and body language (Junior, et al., 2006). Thus, by evaluating language and education in Malaysia and Vietnam, the study will present which of the countries will suit TNA better. 8. Language in Malaysia In Malaysia, the official language is identified as Bahasa Melayu though English is widely spoken. English is compulsory in all schools of Malaysia and all cities (gap year, 2016). The language assists in improving the tourist attractions, which in turn improves the economic condition of the country. Similarly, international businesses such as TNA have a high probability of succeeding in the country. 9. Language in Vietnam The sanctioned dialect in Vietnam is Vietnamese. It is also the native language of many people in the country. Vietnamese is considered a minority language, though in Vietnam it is used in providing the election data or any other important statistics, legal information, public signage, and other material necessary (Junior, et al., 2006). Thus, in Vietnam, only the Vietnamese language would ensure the business succeeds. However, in Vietnam English is a foreign language that is taught in schools and may someday become a widely spoken language in the country. 10. Education in Malaysia The education system occurs in five levels, which include the preschool, primary, secondary, post-secondary, and tertiary education (Clark, 2014). Education in the country is provided through the multilingual public school system, private system, and homeschooling. Primary education is compulsory. Thus, the literacy level of the people is high as all people with fifteen years and above are educated (Clark, 2014). That is; the education system of Malaysia aims at ensuring that all people attain efficiency, unity, equity, and quality education. 11. Education in Vietnam In Vietnam, education is also divided into five levels the preschool, primary, secondary, high school, and higher education. The goal of education in Vietnam is to provide all people with general knowledge, fostering talent and training the people on quality human resources. Vietnam has the highest GDP growth, and it is currently trying to overhaul its education system as it is corrupted. The education system faces issues such as the outdated curricula, the teaching approach is linked to a lecturer-centered process, huge discord between practice training and theory leading to the lack of jobs for graduates where a lack of skills drives inflation levels in the country (Report, 2010). 12. Infrastructure It includes an analysis of all the factors that improve the economic system of the countries. Infrastructure may include an overview of the developments in bridges, roads, seaports, and all other issues that influence the investment of the company or business in the country. Businesses benefit in countries where the infrastructure level is high by ensuring traveling in countries is easier, efficient, and modernized among other factors as perceived below. 13. Infrastructure in Malaysia In Malaysia, the infrastructure of the port is good, airport; railway and roads are all good. It also has major international logistics ports, which increases the chances of success for international businesses. More importantly, all the ports in the country have advanced and sufficient facilities that include the usage of EDI systems with the probability of handling any demand in the country or foreign markets. The railway is also good in that the freight volume of the railway is only 0.5% (Business-in-Asia.com, 2016). 14. Infrastructure in Vietnam In Vietnam, the infrastructure of the road, railway, airport, and port are all fair. There are two main ports that the Hai Phong and Ho Chi Minh City. However, the larger vessels do not use these ports. Thus, though the ports are available, they do not have the capacity to handle all the demands of the market (Business-in-Asia.com, 2016). 15. Political stability The political stability of a country refers to the peace that the government and political parties of a country encourage in the country. Countries with stable political parties and systems enhance businesses while those with unstable political coups or systems do not favour investors. The section below compares the political system of the countries to determine the one that favours TNA investments. 16. Political stability in Malaysia Malaysia is considered as one of the most vibrant economies in Asia with an increasing industrial growth and political stability. The major political Muslim ethnicity is politically dominant in the country. It benefits through attaining the positive discrimination in business, education literacy though the Chinese minority in the country attain the economic power of the country (BBC News, 2016). Malaysia is a democratic country, which articulates that the people have the right to vote. Thus, the political stability of the country is high, though the system is stipulated to be faulty. 17. Political stability in Vietnam Vietnam is reflected upon as one of the countries with a high political stability due to the availability of the motivated workforce and the attracting foreign investment. Vietnam has under intense pressure due to high inflation rates. However, it has a high FDI, which fuels the growth rate in the country. Thus, Vietnam exists as an attractive destination for making investments regarding its political stability (Pandey, 2008). 18. Population in Malaysia Malaysia country occupies the Malaysian peninsula, which is part of the Borneo Island. By the end of the year 2015, the life expectancy of the people rose by 0.7 years from the statistics of 2010. All children born are expected to live to at least 74.8 years old. At the end of the year 2014, the population of the country of about 70% of the population was aged between 15-64 years. The population of the Malaysia is expected to grow to about 32.4 million by the year 2020 (Countrymeters, 2016). 19. Population in Vietnam The population of Vietnam by 2016 is at 94, 444, 200 million. Since the 1950s, the population has been growing constantly. The yearly population growth rate at current occurs at a 1.07% rate. The populace of Vietnam is equivalent to the total world population of 1.27%. That is; the country is ranked number 14 of all the countries regarding population. The population density of the country is perceived at a 305 per km2, which is equal to 789 people per mi2. About 33.6% of the population lives in urban areas (world0meters, 2016). 20. Patent protection Patent protection refers to the ability of the government to protect the development of innovations and merchandises among others of a company. They are protected through the usage of the constitution, the courts, and judges (BiotechCorp, 2011). Thus, by evaluating which county ensures innovations and products of a company are protected for TNA investment. 21. Patent protection in Malaysia The1983 Patents Acts and 1986 Patent Regulations govern the protection of patents in Malaysia. The patents statuses mark the beginning of an independent patent registration in Malaysia. Malaysia does comply with international standards regarding intellectual property that ensure international businesses succeed in protecting their patent rights in the country. Patents are attained through filling direct national application or an international patent application. They are filled under the national patent law or PCT system respectively (BiotechCorp, 2011, 6). 22. Patent Protection in Vietnam Currently in Vietnam, there exist two approaches to patent protection. That is; the protection of invention and utility solutions. The utility solution patent in other major jurisdictions is considered as a utility model patent. More importantly, the patents application process occurs in the process of a first-to-file system (Bayntun-Lees, 2015). The first individual to apply for the patent becomes the owner of the innovation or utility. 23. Measuring Economic Activity This refers to the income that a country has earned in a year. The income derives from the exports and imports that a country has operated. The income is measured through several activities including GDP and GNP as provided below. GDP refers to the gross domestic product while GNP refers to the gross national product. 24. Malaysia GDP In 2014, the GDP of Malaysia was worth 338.10 billion dollars. The value represents the 0.55% of the entire world economy. The graph below presents the annual growth rate of the GDP in Malaysia. By the end of this year, the GDP of the country is expected to stand at a 1.10. The last recorded GDP was 338 where in the second quarter of the year 2016 it is expected to stand at 355 billion (tradingeconomics, 2016). (tradingeconomics, 2016) 25. Vietnam GDP The GDP of Vietnam by the end of 2015 summed to the US $205 billion. The GDP of Vietnam by the end of 2014 was at 186.20 billion dollars, which presents about 0.30% value of the world economy. The GDP growth rate was at 7.01% in 2015while the lowest rate perceived annually was at 3.14% in 2009. The highest value was at 8.46% in 2007 while the previous GDP was at 6.08%. In the 4th quarter of the year 2015, 7% growth rate was experienced. The growth rate between 2000 and 2015 had reached the annual highest growth rate of 8.46% in 2007 (Trading economics, 2016). 26. Malaysia GNP The figure below presents the Gross National Income of Malaysia over the past several years. Gross national income presents the GNP, as it is the value of the national product income in the country. Thus, as presented below the value of GNP in Malaysia appears to grow constantly in the country. By the end of 2012, the GNP was at 905.899 MYR. 27. Vietnam GNP By the end of 2012, the GNP was at $3, 115, 227 VND. The figure above presents that the GNP of Vietnam has been growing constantly. Thus, despite other factors supporting its poor economic performance, the increase stipulates it perform well given that yearly, the GNP grows (Knoema, 2015). 28. Inflation rate The inflation rate refers to the rate in which the price of products in a country rise. Once they rise, the country’s currency power of purchasing fall. Thus, the countries where prices of goods do not rise or fall constantly. 29. Inflation rate in Malaysia The inflation rates on year-on-year by March 2016 have risen by 2.6% though from March it is a decline from 4.2% (tradingeconomics, 2016). (tradingeconomics, 2016) The inflation rate of products in Malaysia from the start of 2016 have increased significantly. The consumers pay high prices for the goods, due to the high demand and low supply of the products (tradingeconomics, 2016). Consequently, businesses benefit as they raise the prices of their products leading to high profits for businesses and losses to the consumers. 30. Inflation rate in Vietnam Year on year, the inflation rate in Vietnam rose by 1.89% in the month of April. Housing and construction were higher with a 2.24%, medicine at 13.48%, education at 3.85% while food declined by 0.23 %, transport by 0.33% among other categories (tradingeconomics, 2016). (tradingeconomics.com, 2016) The inflation rate in Vietnam is constantly growing. Thus, businesses such as TNA will perform better in the country as the manufacturers and suppliers in the country are forced to charge more for their products. Thua, TNA would charge its products at prices that support its objective of increasing the profit margins. 31. Natural economy resources in Malaysia The business spending and the consumer are high and is expected to continue growing. The improved economic performance of the country is linked to the commodities such as crude oil, palm oil, rubber, and natural gas. Thus, Malaysia has numerous natural resources that improve the economy of Malaysia (The World Bank, 2013). The natural resources in the country have been improved into long-term sustainable growth by reinvesting the natural resources revenue in other assets such as education and infrastructure presenting the benefit of natural resources and abundance in the country. 32. Natural economy resources in Vietnam Vietnam is a country that has numerous natural resources. However, due to the status of the war in the country, it has not exploited the natural resources to improve the economic performance of the country. Despite having numerous natural products, it has a deficiency of the resources. For instance, crude oil and natural gas were developed in the early 1980s where soon after their exploiting capabilities diminished (ita, 2016). 33. Imports and export goods to and from Malaysia Malaysia has been a major hub for trade over some years. Today, the trade relations of Malaysia with other countries such as India, China, and the U.S are very good. Malaysia is associated with the WTO, APEC, and ASEAN, stipulating that the import and export trade regulations and operations are effective in the country (OEc, 2015). Some of the products exported include palm oil, telephones, petroleum gas, and integrated circuits among others. The value of the exports in 2014 summed to $273 billion. The imports include integrated circuits, crude petroleum, gold, helicopters and spacecraft among others. The imports in 2014 summed to $204 billion (OEc, 2015). 34. Imports and export goods to and from Vietnam Vietnam is ranked number 28 among other largest exporting economies. The main exports in include products such as crude petroleum, equipment’s for broadcasting and integrated circuits. The products GNP in 2015 summed at $811 Billion dollars (OEC, 2015). The major imports include refined petroleum, telephones, and integrated circuits among others. The value of the imports summed to $788 billion (OEC, 2015). The destinations for trade include the U.S highly, China, Japan, Germany, and Singapore among others (OEC, 2015). 35. Taxes in Malaysia compare to Vietnam In Vietnam, the corporate tax rate is 22% as of January 2014; in 2015, it was at 25%. Currently, the tax rate was expected to reduce by 20% as of January 2016 (KPMG, 2015). In Malaysia, twenty-five percent is the expected tax rate of the year 2016. International business is companies under the Malaysian tax on the basis year when the business management and control is exercised in Malaysia (KPMG, 2013). 36. Advantages and perspectives of Vietnam High population is high at more than 90 million providing a ready market in Vietnam for TNA to venture. Political stability promotes security for conducting business in the country. High probability of patent protection provides the TNA with the opportunity to protect their innovations and utility models. 37. Advantages and perspectives of Malaysia Improved economic performance supports the well-being of businesses in the country. Better democracy status in the country that supports the development of businesses among other factors. Freedom of religion and multiple languages support the ability of businesses to perform well in the country due to easy negotiations. High education literacy and a high population promote the availability of labor, which increases cost-effective ways to support the business. Advanced infrastructure that supports the capabilities of businesses to operate effectively. Better patent protection rights and processes. An advanced and strong GDP that supports economic growth for the TNA business. 38. Disadvantages and risks of Vietnam Lower education literacy levels, which stipulates that giving instructions or process of operations in the country may be slow and poor, which will be perceived in the economic and financial performance of the organization. Language barriers due to the lack of numerous English speakers in the country. That is; English is available, though only a few people can speak it. The only language that ensures businesses succeed is the Vietnamese language. Poor economic growth mainly due to lack of ways of exploiting the natural resources to improve the economy or businesses performance. The infrastructure does not support high foreign demand or operations. That is; the exportation and importation of products may be facing delays due to lack of reliable infrastructure to support its businesses. 39. Disadvantages and risks of Malaysia Regarding political stability, the country’s performance is poor making it an unstable country for investments. That is; the investors cannot predict the direction the government will face in making decisions regarding the business. Strict patent protection rights that do not necessarily protect the innovator of a product if he or she was not the first to file for the products. 40. Recommendation Malaysia is the main market that provides the best option for TNA due to the availability of many opportunities. Unlike Vietnam where though there is a high market due to the population, there are many barriers. Malaysia has many opportunities that will help TNA succeed such as the numerous markets it offers as a key trading hub. Thus, its operations will not be delayed as the infrastructure can handle the demand the company encounters. Additionally, the availability of natural resources that support the economy’s performance will ensure the business is successful in the country. The resources are highly exploited and ensure the economy of the country performs well in the target markets. In Malaysia, TNA will not face major barriers such as language, and religion. Thus, negotiations, transactions, and marketing of its products will occur easily and reach a large market leading to the attainability of potential customers. Consequently, the financial performance of the business in the country will improve. To improve sales, the project recommends TNA include employees from Malaysia and its home country. The process will ensure the employees learn the Malaysian language, which will help them to understand how to market their products to both large and small markets/companies in the country. That is; the English language will only benefit them by winning the markets in large cities where it is highly spoken. However, to embrace even the small cities where the Malay language is, the employees need to learn the language, and TNA has to employ Malaysians to improve these processes. 41. Conclusion Malaysia and Vietnam are countries with potentials for foreign investments. However, in Vietnam, the language barrier may create challenges in negotiations and transactions, which influences the performance of the business. Malaysia has the best prospects for TNA based on its economic performance, and minimal barriers. Malaysia is a country that possess the threat of unstable political systems. However, the risk is worth facing based on the opportunities it provides to the TNA and fewer barriers compared to the key barrier of language in Vietnamese. In Malaysia, the company will perform its operations more easily as compared to Vietnam as presented in the project. References Trade econ, 2016. Vietnam Gross National Income. [Online] Available at: http://www.tradingeconomics.com/vietnam/gross-national-product [Accessed 2 5 2016]. Bayntun-Lees, A., 2015. South-East Asia IPR Basics Series: Patent Protection in Vietnam. [Online] Available at: http://www.youripinsider.eu/southeast-asia-ipr-series-patent-protection-vietnam/ [Accessed 1 5 2016]. BBC News, 2016. 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