Ananas Anam is a UK based company. Pinatex is a innovative natural textile Which is made by pineapple leaf fiber. They basically produce artificial leather products and fashionable clothing products. They want to launch their products in different countries. And for this they want to conduct environmental analysis like economic environment, Competitive environment, legal environment and technological environment. Here we have analyzed economic environment on Malaysia and Singapore. We have analyzed about their GDP, per capital GDP, inflation rate, foreign exchange rate, balance of trade etc to understand their economic condition. Ananas anam has both foreign and local competitors in Singapore and Malaysia. Chinese market, other established foreign markets and as well as local market exist in both countries. So it will be challenging for Ananas Anam for conducting their business activities in both countries. Malaysian government is making their swing to set a uniform national and the most minimal pay allowed by law (“Malaysia”, 2018).As Malaysia is a gathering based country; it will be less difficult to set up plans in the country. The organization empowers remote associations and their interests in Malaysia with incredible fondness and pinatex can abuse setting up its business exercises in a country with creating economy. The organization’s demanding business compels on outside workers can make it difficult to gain work from various countries. Singapore giving more stress on technology and labor skills to make their country developed. As technology is vital to their development they increase R&D and also make them easily accessible to them. Piñatex™ can use this technological advantage and enter in the market and compete with the local market as well as international market. After analyzing the technological factor we can take decision that which technological environment will be more supportive for the business and how the market will be react under different circumstances. By using all these implications and possible scenario it will be helpful for us to choose the proper market by analyzing appropriate market entry strategy.
Pinatex is eco-friendly and sustainable natural leather alternative fiber that is extracted from pineapple leaves. Pinatex was invented by Dr Carmen Hijosa, a Spanish woman. The idea of developing a sustainable natural fiber came into her mind while she was working as a leather goods consultant in Philippine. The extensive use of chemicals to rectify animal leather to make it usable leather shocked her because it was hazardous for environment. As an environment conscious woman, Hijosa strived to develop something that would be environment friendly as well as sustainable in nature. Her rigorous research on pineapple leaves fiber result in the development of a new type of substance or material, Pinatex. After the development of Pinatex, she started Ananus Anam to introduce Pinatex in the market. Pinatex is mixture of pineapple leaves, polylactic acid (PLA), and petroleum-based resin. It is stretchable and flexible and used to manufacture footwear, clothes, wallets etc. We have chosen Malaysia and Singapore because both are very much lucrative to do business. Each country has potential real GDP growth rate. Inflation rate is relatively low in both countries. Currency exchange rate is relatively stable in terms of US dollar. Per capital GDP is higher in both countries. People of Singapore are concerned about quality. So Ananas Anam can provide good quality product at a higher price at singapore. Malaysia has sufficient agricultural land. So Ananas Anam can produce raw material in Malaysia. Both countries invite foreign investors to do business in their country. And they provide numerous facilities to foreign investors like free port facility, low tax rate, 100% ownership etc.
Economic environment of Singapore:
Singapore is a developed country. It has well established and free market economy. Singapore is a member of WTO, APEC, IOR-ARC, and ASEAN. Price is stable here. Unemployment rate of Singapore is very low and it has high GDP level. Its nominal GDP was US $349.7 billion and US $554.9 billion in terms of PPP in 2018. GDP per capital (Nominal) is US $61″,766. It is in 37th and 39th position in terms of nominal GDP and ppp in the world. GDP growth rate was 7.96 % in 2018 from 2017. Per capital GDP of Singapore was US $ 55235.51 in 2017 which has 3.53% increased from 2016. If we divide economic sector of Singapore in three sectors then .03%, 23.21% and 70.44% of total GDP came from agricultural, industry and service sector gradually in 2017. Inflation rate is .5% in 2019 and was .7% in 2018. 1SGD was exchanged for US $.74 in 28th March, 2019 and US $.73 in 27th December, 2018. So SGD has been appreciated by 1.36% in terms of US dollar from 2018. We know when one country’s currency is appreciated then it emphasizes on import. It imported USD $311 billion products and services in 2017 and USD $277 billion in 2016. Singapore imports more and exports less. It is a very small country. Agricultural land is .93089% of total land of Singapore. Only 1% of total GDP comes from agricultural sector.CPI was 100.50 index points in February, 2019 and was 99.8 index points in March, 2018. Singapore charges 17% flat tax rate for all local and foreign investors. Singapore’s regulatory body gives level playing field facility for foreign investors. Singapore allows 100% ownership of foreign company. Singapore has highly skilled and knowledgeable workforce. Foreign company may set up their branch office in Singapore to conduct their business. But at first it has to be registered with accounting and corporate regulatory authority of Singapore as a business entity. Temperature exists between 25 and 30 degree centigrade in Singapore. And soil condition is also good for growing pineapple. Singapore is a free port for foreign investors and 99% imported goods enter in Singapore without paying any duty.
Critical rating of variables (Singapore):
1. Singapore has higher per capital nominal GDP(US $61766). 5 1. Amont of agricultural land is very low in Singapore, only .93089% of total land.
2. Singapore has Skilled labor force 3 2. Labor costs are high in Singapore. 4
3. Allows 100%ownership. 5
4. Inflation is very low, .5%. 5
5. level playing field facility exists in Singapore. 5
6. Government charges low tax rate. 5
Singapore has higher per capital nominal GDP(US $61766). So it can easily target upper class and upper middle class people including middle class people. Singapore has skilled labor force. It helps to reduce defection in production. Inflation is very low, .5%.so Ananas Anam will be able to predict exact future costs and prices. It will also help Ananas Anam to increase their investment. Government charges low tax rate. So Ananas Anam can enjoy high profit margin.
Regulatory body of Singapore ensures level playing field for foreign investor with the local companies. So Ananas Anam can easily compete with local companies.
Singaporer is a very small country. It’s total agricultural land amount is very low (.93089). So Ananas Anam has to import raw material from other countries and Labor costs are high in Singapore. So these will increase the total production costs of Ananas Anam.
That will ultimately increase production cost.
Economic environment of Malaysia:
Malaysia is a developing country. Malaysia is 4th largest economy in Southeast Asia and 38th largest economy in the world. It is a member of APEC, ASEAN, IOR-ARC, WTO, TPP. Malaysia has high skilled labor because it has lots of knowledge based industries. Malaysian people lead affluent lifestyle like upper middle income countries. For example, Brazil, Mexico, Turkey. This has become possible due to low national income tax, household necessities, low cost of food, fuel etc. The Economic growth of Malaysia is 4.6% in 2019 but it will be 4.8% in 2020 estimated by IMF and World Bank. Total nominal GDP of Malaysia was USD $347.29 bn in 2018 and USD $999.83 bn (adjusted with PPP) in 2018. Per capital nominal GDP was USD $10″,703 in 2018 and was USD $30″,815(Adjusted with PPP) in 2018. GDP growth rate was 4.7% in 2018. Total labor force was 15.03 million in June, 2017. Malaysia has robust and diversified emerging industrialized market economy. Basically it exports high-tech products. Malaysia’s total imports and exports were US $193″,855″,940.67 and US $216″,428″,429.22 in 2017. So total trade balance was US $22″,572″,488.55 in 2017. If we divide economic sector of Malaysia in three sectors then 11.1%, 36% and 53% of total GDP came from agricultural, industry and service sector gradually in 2017. Total Land area of Malaysia is 329″,847 square km and 33.3 % is being used for agricultural purpose. Weather and soil condition of Malaysia are good to cultivate crops. It has peat soil and temperature exists between 20to30 degree centigrade. Pineapple especially josapine pineapple grows better in this kind of soil and weather condition. Inflation rate has 3.8% increased in 2017 and real GDP has 5.9% increased in 2017. Inflation rate and real GDP growth rate were 2.1% and 4.2% respectively in 2016. Currency exchange rate of Malaysia in terms of dollar is relatively stable like 1MYR=.26 USD $ was in 1 April, 2018 and 1MYR=.24USD $ was in 31 March, 2019. Foreign direct invest is allowed in Malaysia. Malaysian government allows 100% ownership of property for foreign investor. Malaysia allows joint venture business. All partnerships have to be registered with company commission of Malaysia (CCM) under the registration of business audience 1956.The governor of Bank Negara of Malaysia acts as a controller of foreign exchange control under the exchange control act of 1953. There are no restrictions for foreign investors to purchase ringgit assets like landed property. Malaysia charges lowest tax rate on corporate sectors among the world. It wants to attract foreign investors to invest in Malaysia for developing its national economy. It provides tax incentives to the foreign company. It charges 24% standard tax rate. But sometimes foreign companies pay below this standard level.
Critical rating of variables(Malaysia):
opportunities Ratings Threats Ratings
1. Malaysia has highly skilled labor force. 3 1. Inflation rate in Malaysia is increasing.
2.Malaysia allows 100% ownership . 5 2. Bribery and corruption exists in Malaysia. 4
3. Provides tax incentives to foreign company. 5 3. No freedom of expression. 3
4.soil and weather condition of Malaysia is suitable for pineapple cultivation. 5
5. Growth rate of real GDP is higher than inflation rate. 3
Malaysia has highly skilled labor force that helps to do production effectively. Malaysia allows 100% ownership .So Ananas Anam can obtain 100% control on their business. Malaysian government Provides tax incentives to foreign company. It will help Ananas Anam to grow their rapidly. soil and weather condition of Malaysia is suitable for pineapple cultivation. It will help Ananas Anam to produce raw material in host country. Growth rate of real GDP is higher than inflation rate.
Inflation rate in Malaysia is increasing. So production cost of Ananas Anam will increase. Bribery and corruption exists in Malaysia. It will reduce profit of Ananas Anam. No freedom of expression. Most of the media agencies are government controlled. So they do not publish anything against government. So if Ananas Anam faces any problem due to government while conducting business in Malaysia then it will be in trouble.
Economic differences between Malaysia and Singapore:
Per capital nominal GDP(in 2018) US $10″,703 US $61″,766
Economic growth rate(in 2018) 4.7% 3.3%
Real GDP Growth rate(in 2017) 5.4% 2.5%
Inflation rate(in 2018&2019) 1%(in 2018)”,2.29%(in 2019) .7% (in 2018)”,.5%(in 2019)
Foreign exchange rate 1MYR=USD $.24 (in 31 March, 2019) 1SGD=.74(in 28 March, 2019)
Reserve of foreign exchange and gold USD $97.44 billion (in 31 December, 2017) USD $266.3 billion (in 31 December, 2017)
Stock of direct foreign investment at home USD $137.9 Billion(in 31 December, 2017) USD $1.158 trillion(in 31 December, 2017)
Prime lending rate of commercial bank 4.5%(in 31 December, 2017) 5.4%(in 31 December, 2017)
Gross national savings(in 2017) 28% of GDP 45% of GDP
Revenue and taxes 16.5 of GDP (in 2017) 17.54 of GDP(in 2017)
Import and export Import=US $163.4billion(in 2017)Export=US$188.2billion(in 2017) Import=US $309.7(in 2017)Export=US $396.4 billion(in 2017)
Labor force 14.94 million(in 2017) 3.668 million(Exclude non resendentials)
Poverty line 3.8%(2009) NA%
Industrial production growth 4.6%(in 2017) 3%(in 2017)
After discussing all the issues about economic environment we can say that Singapore is in good position than Malaysia regarding standard of living, per capital income, savings etc. Malaysia is also in good position regarding real GDP growth rate, labor force, and industrial production growth rate. Malaysia has sufficient land for cultivation. So Ananas Anam can produce their raw material in Malaysia which will reduce their production cost. So Ananas Anam can provide good quality at a low price to Malaysian people. The amount of agricultural land is very little in Singapore. So Singapore will have to import raw material from other country. Which ultimately increase the production cost. But per capital income of Singapore is very high. So they are not concerned about price but quality. So Ananas Anam can choose both Malaysia and Singapore.