TNA Company Analyses and Research - Case Study Example

TNA Company Analyses and Research Name Course Name and Code Date 1. Introduction 1.1. Company History TNA Pty. Ltd (TNA) was established in 1982 by Alf and Nadia Taylor. TNA supplied potato crisp maker Smiths in the 1980s and continued to develop and improve the design and technical conditions of the packaging machines. The ideology of TNA is the development of innovative packaging equipment, which incorporated rotary continuous motion jaws. Smith Crisps Company supported most of the prototyping and design of the products until 1989 when the prototype operated effectively. The company started as a packaging machine supplier and currently it is seen as a leader in the packaging technology and solutions. Currently, the company can integrate different processes which originally was installation, delivery, and design and these processes have expanded to include building design, wastewater management, voice and data cabling and power supply. Some of the products the company offers include metal detectors, case packers, multi head scales, checkweighers and date coders among others. 1.2. Reasons Why the Company Wants to Go Overseas According to the views of Taylor, the decision to pursue the international market was conceived after the rotary continuous motion jaws innovation. The view was it was easier to enter the international market because of the technological design and the uniqueness of the product. Since the time the company decided to enter the international market, TNA has offices in more than 24 countries around the world. The small Australia population of 20 million people at the time was also another factor influencing TNA to pursue the international market through establishing the first international offices in the UK in 1991. The company continued opening new offices in different continents and having agents due to the technical specifications and the need for expansion. Competition is also another component that influences TNA to enter the international markets because the company has many patents and technical specifications of its products and services. Hence, the factors driving TNA to enter the international market include the need for a larger market compared with the Australia market, the unique technology in terms of innovation, and to counter competition. 2. Country Analysis 2.1. Vietnam 2.1.1. Economic Situation The following table summarizes the economic situation of Vietnam: 2011 2012 2013 2014 2015 Population (million) 87.8 88.8 89.7 90.6 91.6 GDP per capita (USD) 1,373 1,754 1,894 2,032 2,036 GDP (USD bn) 121 156 170 184 186 Economic Growth (GDP) % 6.2 5.2 5.4 6.0 6.7 Consumption % 4.1 4.9 5.2 6.1 - Investment % -7.8 1.9 5.3 9.3 - Inflation % 18.1 6.8 6.0 1.8 0.6 Exports (USD bn) 95.4 114 133 150 162 Source: (Focus Economics, 2016) According to World Bank (2016), the economic situation is improving because of economic development, which was instituted in 1986. The economic growth averaged 6.4 percent in the 2000s, and macroeconomic fundamentals gave improved to spur economic development. Vietnam has improved the economic position through integration with international organizations such as the European Union, Eurasian Economic Union, and Trans Pacific Partnership. The country also continues to effect economic change through formulation and implementation of different developmental program and policies. 2.1.2. Political Situation Tensions are common in Vietnam especially in 2011 because of lack of reform and the effectiveness in leading the country by the elites. Fforde (2012) states that Vietnam faces macroeconomic imbalances and the position of the political leaders in leading the country. The political situations are worsened by the corruption and the perceptions of the public towards the role and negatives of the political elite in addressing the requirements of the public and private sector. BBC (2016) states the political situations is improving because of the few reforms implemented resulting in the country becoming among the fastest growing economies. BBC estimates that by 2020, the country will be developed and become among the leading developing countries in the Asian region. 2.2. Malaysia 2.2.1. Economic Situation The following table summarizes the economic situation of Malaysia 2011 2012 2013 2014 2015 Population (million) 29.1 29.5 29.9 30.3 30.8 GDP per capita (USD) 10,282 10,883 10,785 10,737 10,222 GDP (USD bn) 299 316 324 340 298 Economic Growth (GDP) % 5.3 5.5 4.7 6.0 5.0 Consumption % 6.9 8.4 7.3 7.0 6.0 Investment % 6.4 19.0 8.2 4.8 3.7 Inflation % 3.0 1.3 3.2 2.7 2.7 Exports (USD bn) 14.4 0.0 0.4 2.4 -14.6 Source: (Focus Economics, 2016) According to World Bank (2016b), the Malaysian economy grew by 5% in 2015 and it is expected the growth would decrease to 4.4% in 2016. Due to the nature of the world economy and less optimistic business sentiment in Malaysia, the economy would continue been stagnant or depreciate. World Bank estimates the economy would grow at 4.5% and 4.7% for 2017 and 2018 respectively. 2.2.2. Political Situation The political situation in Malaysia is stable and influenced mostly by the religious orientation: Muslim. The Muslim ethnic Malay benefit from positive discrimination in civil service, education and business but most of the economy power is held by ethnic Chinese (BBC, 2016b). The ethnic Chinese and the Muslim Malay coexist in relative harmony but religious divide and racial problems are common. The country benefits from tourist destination and manufacturing with major languages being Malay, Telugu, Tamil, English, and Chinese dialects. 3. Marketing Analysis (Tables and Figures) 3.1. Vietnam The printing and packaging industry has developed because of the economic growth and potential bilateral agreements. The following tables presents information on the number of printing enterprises from 2002 to 2006. Source (Anh, 2013) The printing industry can be divided into four segments, which are labels and packaging, books, economic documents and newspapers as presented in the following chart: Source (Anh, 2013) The packaging market can also be divided into cardboard and paper, plastic packaging, metal, glass, and others. The following chart summarizes the materials used in packaging requirements: Source (Anh, 2013); Vietnam Packaging Association (2016) Euro Monitor (2016) states that there was a positive development in 2015 in the packaging industry. Some of the industries such as the personal and beauty care, alcoholic drinks, non-alcoholic drinks and packaged food indicate positive growth. Euro Monitor (2016) also state the urbanization and the change of consumer behaviors towards packaged products contribute to increased demand for packaging technologies. Vietnam Packaging Association (2016) estimates the annual growth in the packaging industry is between 15 and 20 percent. Most of the packaging facilities are located in the southern region of the country, and the plastic packaging has been growing at an annual rate of 25 percent. Vietnam Packaging Association (2016) highlights the advanced technology and the need of modern technologies in the packaging industry push the demand for industrial development. These data indicates TNA has a potential market because the products and services that TNA offers targets these different markets. For example, in the printing industry, 50% are on labels and packaging, which is part of integral products of TNA. In addition, TNA develops packaging products that enable of a variety of raw materials including plastics. Therefore, the Vietnamese market is viable for TNA to invest. 3.2. Malaysia The common packaging material is plastic, and the government continues to support the packaging industry (Hill, Yean, and Zin, 2013). For example, in 2008, the government launched the Kertih Plastics Park to improve the production processes. The pharmaceutical industries, food and beverage industry, reported high demand for packaging materials. The strong development in these sectors reported high demands as illustrated by the following table: The following tables show the demand for the packaging materials and the requirement of advancing the packaging industry. 4. Competitors Analysis In Vietnam, Euro Monitor (2016) highlights the business changing dynamics and would affect the nature of operations and the presences of more competitors. Euro Monitor (2016) categorically points at the Trans-Pacific Partnership, which would allow foreign-owned business to establish a presence through mergers and acquisitions. These processes would increase or consolidate competition, affecting the general business environment. Vietnam Packaging Association (2016) states that market segmentation is a major issue in which some companies are targeting the small-scale customers while others are controlling the big companies. Some of the competitors in Vietnam include Rang Dong Plastic, Tan Tien Plastic, Bao Vam, and Ngoc Nghia, which produces environmentally friendly PET bottles. Companies such as Combibloc from Germany and Tetra Pak from Sweden produces the dairy products packaging because of the high technological requirements. Euro Monitor International (2016) states that the demand for packaging materials in Malaysia is associated with the demand for fast moving consumer goods. Different companies produces these different packaging requirements and the materials used comes in terms of liquid cartons, rigid plastic and metal. It means that numerous competing entities are involved in addressing the consumer demands. Some of the major competing companies include BP Plastics Holdings, Advanced Packaging Technology, Malaysia Packaging Industry, Tomypak Holdings and Daibochi Plastic Packaging Industry. The following table summarizes the market leaders in the Malaysian market. 5. Environment Analysis for the Packaging Business (Critical/Non-Critical Factors) 5.1. Vietnam Vietnam is seen as an important market for doing business, and the World Bank has ranked Vietnam in the top 100 in ease of doing a business index. Some of the problems associated with doing business in Vietnam includes paying taxes, resolving insolvency and protecting investors (Hasegawa and Noronha, 2014). The strengths/benefits of doing business in Vietnam include enforcing contracts, getting credit and dealing with construction permits. The business environment is subject to numerous regulatory issues including the governmental influence (Hill, Yean, and Zin, 2013). Nevertheless, the government has continued undertaking numerous steps such as improving laws regarding intellectual property and favorable treatment of the foreign investors (Khan, 2013). Risks and issues are inevitable, and Vietnam faces numerous challenges and problems. The common problem and risk are the cumbersome administrative procedures. Other risks and problems are the inadequate basic infrastructure such as difficulties concerning communication, bad transportation conditions, and electrical power problems while other problems are associated with macroeconomic policies such as foreign exchange rate. These risks and problems can be avoided by implementing effective due diligence and incorporating mitigation strategies. 5.2. Malaysia Corruption is a common problem in different countries in the world and corruption exist in Malaysia. It is a barrier to the foreign businesses trying to invest in the country because it increases the cost of operations and also associated with causing other problems (Hasegawa and Noronha, 2014). Malaysia appreciates the importance of technological advancement has the country has invested heavily in training and development of technological experts. The country has continued to develop the infrastructure and also in the creation of a new city called Cyberjaya, which offers outsourcing services and business support services. The legal framework is favorable because it borrows heavily from the British system meaning an individual having an understanding of the British legal system can do business easily. Environmental degradation is a major problem because the governmental institutions do not implement conclusively environmental protection mechanisms and processes (Hasegawa and Noronha, 2014). The argument from the Malaysia government when discussing the environmental protection issues is accusing the Western countries of manipulation and conspiracy. The solution is for any foreign country to uphold environmental sustainability measures rather than taking the angle of Malaysia of not protecting the environment. 6. Comparison: Malaysia vs. Vietnam The political situation in both countries can be seen as similar because of minor instability problems. In Malaysia, positive discrimination favoring the Malay ethnic community is common in terms of education and doing business while the ethnic Chinese controls the economy (Khan, 2013). In Vietnam, there is not favoritism meaning ethnicity, and associated variables do not guide day to day business activities. It is imperative to note the political system influences the legal operations and instances of corruption and poor business governance is reported in both countries (Hill, Yean, and Zin, 2013). These countries appreciate the foreign direct investment and the systems are tuned in a manner that embraces foreign investments. The difference in economy is evident. For example, the GDP in Vietnam is growing while the economy in Malaysia is facing challenges. The average growth in Vietnam is approximately 6% while in Malaysia is approximately 5%, an average for the periods 2011 to 2105. It means that it is prudent to invest in the Vietnamese economy because of the economic growth. Market size in terms of the population also favors Vietnam because the Vietnamese population grows faster than Malaysia. For example, in 2011, the Vietnamese population was 87.8 million and grew to 91.6 million people by 2015. During the same period, the Malaysia population changed by around 1.7 million. Without introducing the aspects of the percentage of growth in population, the large Vietnamese population is appropriate for investment because the demand for products increases with time. Another economic factor also favors the Vietnamese economy. For example, the consumption rate is higher in Vietnam compared with the Malaysia economy and also the investments value is higher in Vietnam. Other factors such as exportation and inflation are favorable to investing in Malaysia (Khan, 2013). The Malaysian economy is affected by frequent political instability and with poor structures to sustain business development and attraction of foreign investments (Hasegawa and Noronha, 2014). For instances, Malaysia has not entered into numerous bilateral trade and unions compared with Vietnam (Hill, Yean, and Zin, 2013). It means the benefits of bilateral agreements and trade are not common in Malaysia, which inhibits the effectiveness of implementation of business requirements and strategies. Thus, numerous factors favor Vietnam as an investment hub. 7. Conclusion TNA was established in the early 1980s and throughout the 1980s, the company improved its packaging line by receiving support from Smith. The decision to enter the international market include the need to access more markets, the innovative requirements and to counter competition. TNA current thinks of either entering Vietnam or Malaysia. Both of these countries have unique features, which may contribute to formulation and implementation of the business requirements. However, viewed from the economic perspective, Vietnam is a favorable market because of the inflation rates, GDP growth, population growth and numerous bilateral agreements. 8. Recommendation Both countries are viable for investment but based on the political and economic variables; TNA should invest in Vietnam. It is attributed to the large population and the economic development such as low inflation rates and increasing consumer consumption. The political system is stable, and the government continues to enter into bilateral agreements with different entities, which contributes to the easiness of doing business. In entering the market, TNA has to introduce strategies to address corruption, infrastructure problems, and administrative challenges. These can be achieved through having a strategic plan with solutions mitigating these problems. References Anh, M. 2013. Printing and packaging industry in Vietnam. Available at: http://vtown.vn/en/articles/printing-packaging-vietnam.html [Accessed on September 29, 2016] BBC. 2016. Vietnam country profile. Available at: http://www.bbc.com/news/world-asia-pacific-16567315 [Accessed on September 29, 2016] BBC. 2016b. Malaysia country profile. Available at: http://www.bbc.com/news/world-asia-pacific-15356257 [Accessed on September 29, 2016] Euro Monitor International. 2016. Packaging Industry in Malaysia. Available at: http://www.euromonitor.com/packaging-industry-in-malaysia/report [Accessed on September 29, 2016] Euro Monitor. 2016. Packaging Industry in Vietnam. Available at: http://www.euromonitor.com/packaging-industry-in-vietnam/report [Accessed on September 29, 2016] Fforde, A. 2012. The Political Situation in Vietnam. EU-ASIA Centre. Available at: http://eu-asiacentre.eu/pub_details.php?pub_id=57 [Accessed on September 29, 2016] Focus Economics. 2016a. Vietnam Economic Outlook. Available at: http://www.focus-economics.com/countries/vietnam [Accessed on September 29, 2016] Focus Economics. 2016b. Malaysia Economic Outlook. Available at: http://www.focus-economics.com/countries/malaysia [Accessed on September 29, 2016] Hasegawa, H. and Noronha, C. 2014. Asian business and management: Theory, practice and perspectives. Palgrave Macmillan. Hill, H., Yean, T.S. and Zin, R.H.M. 2013. Malaysia's development challenges: Graduating from the middle (Vol. 11). Routledge. Khan, H.A., 2013. Development strategies: lessons from the experiences of South Korea, Malaysia, Thailand and Vietnam. Achieving Development Success: Strategies and Lessons from the Developing World, pp.119-130. Vietnam Packaging Association. 2016. Homepage. Available at: http://www.vinpas.vn/Default.aspx [Accessed on September 29, 2016] World Bank Grouped., 2013. Doing Business 2014: understanding regulations for small and medium-size enterprises (Vol. 11). World Bank Publications. World Bank. 2016a. Vietnam Overview. Available at: http://www.worldbank.org/en/country/vietnam/overview [Accessed on September 29, 2016] World Bank. 2016b. Malaysia Overview. Available at: http://www.worldbank.org/en/country/malaysia/publication/malaysia-economic-monitor-june-2016 [Accessed on September 29, 2016] Read More