INDUSTRY ANALYSIS

Malaysia boasts one of south East Asia’s most vibrant economies, fruit of decades of industrial growth and political stability. Its multi-ethnic, multi religious society encompasses a majority Muslim population  in most of its states  and an economically powerful Chinese community.

Overview

Ø  Consisting of two regions separated by some 640 miles of the South China Sea, Malaysia is a federation of 13 states and three  federal territories.

Ø  It is one of the region’s key tourist destinations, offering excellent beaches and brilliant scenery. Dense rainforest in the eastern state of Sarawak and Sabah, on the island of Borneo, are a refuge for wildlife and tribal traditions.

Ø  Ethic Malays comprise some 60 percent of the population. Chinese constitute around 26 percent, Indians and indigenous people make up the rest. The communities coexist in relative harmony, although there is little racial interaction.

Ø  Although since Malays have benefited from positive discrimination business, education and the civil service, ethnic Chinese continue to hold economic power and the wealthiest community. The Malays remain the dominant group in politics while the Indians are among the poorest.

Ø  Malaysia ‘s economic prospect remain healthy ,although it faces fierce competition from its neighbors  ,and from china and India.

Ø  The country is among the world’s biggest producers of computer disk drivers, palm oil, rubber and timber. It has a state –controlled car maker, Proton, and tourism has considerable room for expansion.

Ø  But it also faces serious challenges- politically, in the form of sustaining stability in the face of religious diff erences and the ethnic wealth gap, and environmentally in preserving its valuable forests.

Ø  Malaysia human rights record has come in for international criticism. Internal security laws allow suspects to be detained without charge or  trial.

Facts

Ø  Full name                 :Federation of Malaysia

Ø  Populations                 : 28 310,00 million

Ø  Capital                         : Kuala Lumpur

Ø  Area                            :329,847 sq km (127,355 sq miles )

Ø  Major languages         : Malay (official ), English , Chinese   dialect, Tamil ,Telugu, Malayalam    

Ø  Major religious           : Islam, Buddhism, Taoism, Hinduism, Christianity,                                                         Sikhisim

Ø  Life expectancy      : 72 years (men), 77 years (women)

Ø  Monetary unit         : Ringgit Malaysia 1 = 100 cents

Ø  Main exports     : Electronic equipment, petroleum and liquefied natural gas , chemicals ,palm oil, wood and wood product, rubber, textile

Ø  Internet domain        : .my

Ø  International dialing code  : +60

Ø  Population growth rate       : 1.742% (2008,EST)

Ø  Birth rate                             : 22.44 births / 1000 populations (2008, EST)

Ø  Death rate                            : 5.02 deaths /1000 populations (2008 ,EST)

Ø  GDP real growth rate           :5.5 % (2008, EST )

Ø  Unemployment rate              : 3.7% (2008, EST )

REGION /LOCALITY ATTRACTIVENESS

 Rivalry among existing firms

After we do a research about our company, we know that we have a competitor which is located near in our office. The company is a Asia Travel Mart.This is a travel agency company who are have their own product and service such as airlines booking, travel & tours arrangement, airline ticketing services, tour package and tour consultation. But as we know that kl sentral is the hub of the transportation and also the places that tourist or local people get their transportation. Our competitor has been coming out with their own package but their package is more to leisure activities. We know that we are the new company of travel agency are open in that place but we have our own major product that can attract more tourist to use our travel agency. it is because our company want to promote a Malaysian forest and also beach with a variety of activity that our customer can explore our country. Furthermore, we also want to promote our cultural and custom to tourist who is come to our country. In the surrounding of our office also have a air Asia, sky bus and others but the company is only selling a ticket to people who want to go travel. The service that our company provides is similarly with other travel agency.

Threat of new entrants

Although our company is the first companies who are have a outdoor extreme activities as our major product, we are still facing threat of new entrants that might give slight. The new entrants might get a attractive to our government incentives. It will help us to give more competitive advantage to the existing firms. That is the only positive part. Other than that, this company also needs to work hard to attract customers .The perception towards the new product or service has been taken in the consideration. Customer can show aggressive reaction to new entrants. The other factor is our company existing product or service can be highly differentiated.

 Bargaining power of customer(buyers)

In order to attract customer to use our service, we have coming out with our own package and variety of outdoor extreme activities that can attract tourist, local people to use our  travel agency. Furthermore we are also promote a Malaysian cultural and custom like a home stay program that our customer can learn  about Malaysia cultural. Tourism industry also can be increase because we are stress more about 5 states in Malaysia such as Kedah, Johor, Perak, Negeri Sembilan and Terengganu. Every month we are coming out with 2 packages with different activities and places. Maximum satisfaction of the customers is highly important. It is because they can easily switch to other travel agency and find new product. The new package and places that we want to promote also will attract people to use our service. Price also will play a main role. With a reasonable price and variety of activities that include in our package will be ensuring that the customer will use our service.

Bargaining power of suppliers

Suppliers are also a major factor in determining the success of the business. Suppliers are not only the party who supplies product, but they are also the ones who produce service to the customer. The labors are also considered as suppliers. They face the customer each and every day. Their commitment to work hard is the key to success. Committed to excellence will portray the organization as a whole. Material suppliers are widely available. It will help boost smooth transaction of the business. Finding the right suppliers is an important thing to consider.

 Threats of substitute products

We are involved in the tourism industry. There are many factors that can lead to the downfall of the business. Although we are the new of the travel agent, the customer has the power to switch to other similar service and package that are offer in another travel agency. We must have our own special package that is also with a variety of activities which is included in the package to promote our travel agency. From the customer ‘point of view’ they have alternative products or service. It will be their gain. If the other substitute product can attract more customers, then they will cause a decrease in customers ‘volume of business.

Level of government support

The factors that show the government:

Ø  The government has keen interest in the industry development. Tourism is one of the economy’s contributors to the country. Therefore, the government has allocated a large budget to the tourism industry.

Ø  Government incentives have contributed to our organizational growth.

Ø  The government will be our major customer. Its provide support and strength to the business.

Ø  Government agencies will be our major supplier.

HOSPITALITY/TOURISM INDUSTRY SECTOR

Tourism is becoming increasingly important sector of Malaysia economy. Together with the retail sector, it provides employment for almost 1.57 million people, or around 17 percent of the labor force. Roughly 7.5 million tourist visited the country in 1999,contributing RM 10 billion to the national economy. This makes tourism one of Malaysia’s top foreign exchange earners. According to the national authorities, the country has 1,426 hotels, the total room capacity which almost doubled during the 1990s to about 110,000 in 2000. Most visitors have been Singapore, Thailand, Indonesia, Japan, China, the United Kingdom and Australia.

In order to developed tourism, Malaysia has promoted its diverse cultural environment, hosting number of cultural festivals and performances. It has also publicized its rich natural heritage, which includes tropical forests, coral reefs, unspoiled mountain ranges, rivers, and national parks. The country offers tax-free bargain shopping and excellent service ,with top class hotels such as Royal Bintang, Hilton and other well-established international chains opening branches. It offers a wide variety of activities, from eco-friendly and adventure tourism to scuba diving and relaxed family holidays on the numerous Malaysian island and beaches. Additionally, Malaysia has signed visa-free regimes with most countries in Asia, the Americas and Europe, Enabling international tourist to travel to Malaysia without obtaining entry visas. In 1997, however tourism suffered from the regional financial crisis and by the smog caused by several months of forest fires in Indonesia. The number of tourist arrivals declines significantly in 1997 and 1998 however there was a strong recovery in arrivals in 1999 and 2000.

(PLAN BAJET 20011)

Ø  RM85 million to provide infrastructure facilities to facilitate construction of hotels and resorts in remote areas with the potential to attract tourists.

Ø  RM50 million to construct several shaded walkways in the KLCC-Bukit Bintang vicinity.

Ø  Development of world’s first integrated eco-nature resort at a cost of RM3 billion by Nexus Karambunai in Sabah to commence next year.

Ø  Abolishing of import duty on 300 goods preferred by tourists and locals, at 5 to 30 per cent, to promote Malaysia as a shopping heaven in Asia

4.3.1 Sales Volume

TOURIST ARRIVALS &RECEIPTS TO MALAYSIA
YEAR	ARRIVALS	RECEIPTS (RM)
2008	22.0 Million	49,561.2 Million
2007	20.9 Million	46,070.7 Million
2006	17.45Million	36,271.1 Million
2005	16.4 Million	31,954.1 Million
2004	15.7 Million	29,651.4 Million
2003	10.5 Million	21,291.1 Million
2002	13.2 Million	25,781.1 Million
2001	12.7 Million	24,221.5 Million
2000	10.2 Million	17,335.4 Million
1999	7.9 Million	12,321.2 Million
1998	5.5 Million	8,580.5 Million

Tourist arrival from 1998-2008

Employment

Opportunities in employment are ascertained to attain a figure of 1217000 thereby contributing 11.6 percent of total employment.

Tourism Multiplier Effects

Tourism not only creates jobs in the tertiary sector, it also encourages growth in the primary and secondary sectors of industry. This is known as a multiplier effect which in its simplest form is how many times money spent by a tourist circulates through a country’s economy.

Money spent in a hotel helps to create jobs directly in the hotel, but it also creates jobs indirectly elsewhere in the economy. The hotel for example, has buy food from local farmers, who may spend some of this money on fertilizer or clothes. The demand for local products increases as tourist often buy souvenirs, which increases secondary employment.

The multiplier effect continues until the money eventually ‘leaks’ from the economy through imports- the purchase of goods from other countries.

Contribution to the national economy

Today, the tourism industry has a experience the rapid growth and gained an importance in the Malaysia economy. It is the second largest foreign exchange earner, after manufacturing. This is in line with the governments objectives to accelerate the domestic private sector and stimulate the services sector to spearhead economic growth.

In the context of tourism receipts, the contribution from this sector has been very encouraging. For instance, the Malaysia economy registered RM 17.40 billion in receipts from 10.22 million visitors in 2000(just a year after implementing the three pronged action). This constituted a 28.9 percent increase between 1999 and 2000.With the exception of 2003 (SARS & Gulf War), this upward trend continue until today.

From the tourism receipts (tourism revenue) contribution, there exists a steady growth. From example, tourism receipts increased from RM17.40 billion in 2000 and to RM24.20 billion a year later and then increased further to RM 25.80 billion (2002), RM 29.7 billion (2004) and RM 32.00 billion in 2005.

CUSTOMER BEHAVIOR AND TRENDS

Tourists who visit Malaysia are interested in the cultures diversity shown by Malaysians. As we all know, Malaysia has a multi races and religions. The main reason why they are attracted to visit Malaysia because of the rich of culture and heritage. The ecotourism factor introduced by the government is the main reason why tourists are interested in visiting Malaysia. Tourists will visit Malaysia if there are nationwide sales. Foreigners especially from the Middle East will be seen all over the country. The other factor why the visitors love Malaysia is because, Malaysia is considered as food heaven. These tourist are interested in trying new dishes that portray Malaysian diversity. School holidays, festive seasons and year-end period will be favorable dates for the tourists to spend their leisure time.

Decision Making – Process

Tourism is one of growing industries that have taken big strides in promoting Malaysia locally and abroad. This paper attempted to determine tourism activities among Malaysian families. It sought to find out there are :

 (1) Frequency of family travel in a year

(2) Place of travel

(3)  Activities that local tourist or tourist want to participant

(4) Amount spent for local and overseas travel

(5) Extent of decision making involvement in tourism

The study also aimed at identifying the factors that influence adult, workers people and also family to make a decision making in tourism. They are joint decision making regarding the need to spend their leisure time in a outdoor extreme activities because they can learn many things from participant this activities such as love our nature, can be more independent and others. The top five perceived factors that influence decision of them to go travel with a several of activities, safety, and new environment.

Changes in taste and preferences

Many factors that can influence the tourist ‘decision making. They also have their own taste and preference. For example our country was once hit by the H1N1 virus. These factors have kept the tourist away for quite a while. They prefer to visit a safer country. Current country economy also plays an important role. The tourist will want to visit a stable country with safe environment. Malaysia has to produce more attractions that are unique and in a world class quality.

Spending power

Tourist from Middle East is flocking to Malaysia thereby improving the industry earnings. Some experts predict that the tourism industry will achieve a 4.5 inflation-adjusted growth rate. However, the government’s fiscal problems still adversely impact the country economy.

FUTURE INDUSTRY TRENDS

Factors influencing growth in Malaysia

Ø  International Market  Advertisement

Ø  Organizing International Events in Malaysia

Ø  Long Public Holidays

Ø  Special flight frequency

Ø  Tourism Promotional Activities

Expected growth rate in tourism industry

According to RNCOS reports “ Opportunities in Malaysia Tourism Industry (2007-2009) it has been found that the industry in Malaysia has seen tremendous growth in both domestic in both domestic and inbounds tourism.  It is expected that Malaysia tourist influx will increase at a CAGR value of around 6.5% during next time five years (Period spanning 2007-2011)

As of 10 May 2007, tourist arrivals in Malaysia had already touched 8.9 million, indicating that the country may easily exceed its target of bringing 20.1 million tourist and RM 44.5 billion as revenues for its visits Malaysia Year 2007 as published by New Straits Times on 19 May 2007.

Malaysia is fast emerging as a favorite destination among the tourist from Asia as well as world. Almost 68,461 visitors arrive Malaysia daily, as per latest data. However, this data doesn’t include day trippers or those making an overnight halt. If the country is able to maintain this number, it is expected to attract around 24.99 million visitors and earn RM 55.3 billion as revenues from accommodation and shopping, transportation, food and beverage.