Question

International Investment & Economic Development

2,Supposed that you have a business selling layer cakes (“kek lapis’) in Kuching and you are considering expend your business in a neighbouring country.  Select a country of  your choice.  Briefly explain the reason for your choice of country and explain the possible risk facing you.      ((2+4) marks)

Explain using Michael Porter’s diamond model, how the model is applied to your business plan in Question 2.                                                                                                                                                             

Answer 1

Kuching is in Malaysia ans Malaysia is called the economic miracle of South East Asia. Now if I want to expand my business to a neighbouring country, then my first option would be Singapore.

Singapore is a financial hub which attracts the entrepreneurs. According to research, I found that the economy of Singapore is the most stable one and has no foreign debt of its own along with high government income causing an overall positive surplus. It is one of the best places preferred by entrepreneurs as it has a wide and flexible market that helps the business grow. The economy is potential with all opportunities and innovations.

But before making any major business decision, it is very essential to study the risks related to this decision. There is always a risk of market adaption. Although the area is highly business friendly, it has its risk of whether it will sustain in the high competition in market. A good amount of time and efforts must be invested along with money to make the product popular.

Then there is also the financial risk with any business decision. Enough fund must be there to face any internal or external risks. Though the business is profitable in Malaysia, there is always a chance of facing loss if the business is not accepted by the local people there.

Thus, sufficient surplus funds is necessary to overcome the risks and with more marketing, the product can be made better than the competitors. The product related risk is also there. There is a large competitive market in Singapore. To make our product better than the existing products in the market is sure a risk. Other than that, I must have good knowledge about the country's government and laws for smooth expansion.

The basic idea of Micheal Porter's diamond model is,

Michael Porter’s diamond model factors for your understanding are,