Repositioning Strategy for
Malaysian Companies
Internationalization
ISMI RAJIANI
Universiti Teknikal Malaysia Melaka
Malaysia in Brief
Progressed socio
economically
Since 1957
First-class network of
infrastructure that is
comparable to those
in developed
countries
strategic location in
the fastest-growing
region with a strong
natural resource
endowment
Xavier, J. A and Ahmad, Z. U. (2012). Proposed scholarly research agenda for
transforming Malaysia into a model developing nation. International Journal
of Public Sector Management, 25 (3), 231 – 243.
Stuck in the middleincome trap
Cannot compete
with Vietnam and
Indonesia in lower
costs and labourintensive production
Unable to compete
with high valueadded economies
Will they all adopt
the Overall Cost
Leadership Product
Strategy co-aligning
with their local
competitive
advantage?
Going
Global
Proposition 1:
Malaysian exporting companies
have a different initial position
compared to that of Western
companies when starting their
export activities as form of
internationalization.
Uppsala model
“psychic
distance”
companies
expand first to
market which is
psychically close
move further as
their knowledge
well-developed
Uppsala’s model for Malaysia
culture
language,
religious
customs
close
distance
Indonesia
as
potential
market
Variables Definition
COI : buyer’s attitudes and feelings toward the country
, developed through contact, association, or past
experience with the country, its people, and its
products (Sahin, 2010).
Animosity: the remnants of antipathy related to
previous or ongoing military, political, or economic
events"(Klein et al, 1998).
Ethnocentrism: believe that buying a foreign product
or foreign brand is not patriotic, and they tend to
choose local products or local brands, regardless price
or quality considerations (Shankarmahesh, 2006).
Thus…
The case of Air Asia and
Proton (Ahmad and
Neal, 2006 ; Ahmed &
Humpreys, 2008), and
many firms believe that
a low-price strategy is
the main competitive
advantage (Young et
al., 1996, ; Ahmed &
Humpreys, 2008).
Preposition 2:
15 triggering cues for internationalization motives
1. Gain international experience
2. Explore own advantages on markets
abroad
3. Increase profit
4. Increase sales volume
5. Gain access to internationally
experienced management or skilled
human resources
15 triggering cues for internationalization motives
6. Gain international experience
7. Achieve international reputation and
brand recognition
8. Receive government support or finance
9. Improve own-product development and
innovation ratio
10.Increase technology content of own
products
15 triggering cues for internationalization motives
11.Improve customer service
12.Improve quality of products
13.Improve cost efficiency in production
14.Search efficient alliance
15.Maintain domestic positioning
Proposition 3:
The 15 triggering cues can be
allocated to and distributed
between four strategic
positions, based on expected
importance in securing
competitive advantage in
each position.
Four Strategic Position (Soderman et al.,
2008)
4. High Price
High Volume
2. Low Volume
Low Price
1.High volume
Low Price
PRICE
3. High Price
Low Volume
Volume
Four Strategic Position (Soderman et al.,
2008)
4. Focus on
Growth
2. Start up
company
1.Focus on
cost efficiency
PRICE
3. Focus on
innovation
Volume
Four Strategic Position (Soderman et al.,
2008)
4. Focus on
Growth
2. Start up
company
1.Focus on
cost efficiency
PRICE
3. Focus on
innovation
Volume
None will be willing to stay in position 2!
4. Focus on
Growth
2. Start up
company
1.Focus on
cost efficiency
PRICE
3. Focus on
innovation
Volume
1.Focus on cost efficiency
1.
2.
3.
4.
5.
6.
7.
Sales Volume
Cost Efficiency in Production
Explore own advantages
Profit
International Experience
Government Support
Opportunity
3.Focus on innovation
1.
2.
3.
4.
5.
6.
7.
8.
International Reputation & Brand Recognition
Product Development and Innovation Ratio
Technology Content of Product
Searching Efficient Alliance
Management and Skilled Human Resources
Internationally Experienced
Maintaining Domestic Position
Profit
4.Focus on Growth
1. Customer Service
2. Quality of Product
Proposition 4:
Most Malaysian companies will stay in position 1
because of their country-specific advantages, but
will reposition by leaving position 1 and aiming for
position 3, the high-price/low-volume segment.
Data and Methodology
• The research questions were operationalized
in a questionnaire adapted from Soderman et
al., (2008) .
• The target population of this study is
managers in manufacturing sectors in
Selangor, Negeri Sembilan, Malacca and
Johore Bahru states.
• The survey is targeted to obtain 100
respondents.
Conclusion
• Uppsala model concept of psychic distance by
preference to start exportation to neighboring
countries seems to apply also for Malaysian
companies
Conclusion
• As competition increases in their domestic
market, great numbers of Malaysian
companies will consider Western markets
attractive for their products and services thus
make the company reposition their strategy
Conclusion
• Europe does not represent a neighboring or
‘home’ market, as do markets in South-East
Asia making the Uppsala model concept of
psychic distance and Porter’s overall cost
leadership are no longer relevant.
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ATTENTIVE!