Abdul Rashid, Md. Zabid

Universiti Putra Malaysia Institutional Repository

FOR Category F20100: Social SciencesCOMPETITIVENESS OF PRIORITY INDUSTRIES gr?wth rate of 6-9% per annum and another one third per-ceived a growth rate of 9-12% per annum. The intensity ofcompetition among firms was quite high. Firms also consid-ered that their products had little substitutes. Buyers ap-pe~ed to have more bargaining power than .selling firm,while the bargaining power of suppliers or vendors were nothigh .as the purchasing firms had more power. The industry isconsidered to have medium range technology level, and therate of innovation in the industry is not so rapid. It was alsofound that the firms did not consider themselves competitiveat the international level or as compared to foreign firms inIntroduction the industry ..Most of the firms pursued a cost strategy (5The chemical industry is broad, ranging from household firms), differentiation (31 firms), and focus (10 firms) strate-items to material inputs for the resource-based industries. In gies. It was also found that the firms were mostly in the1995, the imports of chemical products amounted to RM13.8 growth and maturity stages. One firm was in the introductionbillion, while exports amounted to RM5.7 billion. Between stage and two firms were in the decline stage. This suggests1994 and 95, the chemical and petrochemical industry expe- that the firms are relatively new or young in the industry. Anrienced a growth rate of 41.6%, representing one of the fast analysis of the value chain showed that the primary activitygrowing industries in Malaysia. Considering the importance costs 75% (median) of the total costs while the support ac-of this industry, one of the key issues raised is to determine tivity accounts for 25% (median) of the total costs. In termsthe competitiveness of this industry. Consequently, this re- of primary activity costs, the largest component in the costsearch purports to examine the nature of the industry struc- structure were the purchases from suppliers and inbound 10-ture, stage of the life cycle of the industry, business strategies gistics. Operations activity cost was the second largest com-pursued by firms in the industry, and the value chain analysis ponent in the primary activity cost structure, With regards to. of the chemical industry. the secondary cost structure, the largest components were re-search and development, human resources and general ad-Materials and Methods ministration expenses. The profit margin in these costsBased on the work of Porter (1980); Bowman and Johnson, structures were only about 10% (median).(1992), a structured questionnaire was developed. A total of Conclusions180 firms was identified in the study, and 120 questionnaireswere distributed in the Klang Valley. A total of 46 usable The findings suggest that the chemical industry in Malaysiaquestionnaires were available for analysis. These firms were is still at its infancy stage. Many of the firms are small ininvolved in agricultural chemicals, other basic industry size, and do not have the capacity to compete with large in-chemicals, soap, detergents, cosmetics and toilets prepara- ternational chemical firms. Although the potential growthtions, synthetic resins, starch based and fermentation prod- rate is perceived to be relatively favourable, the intensity ofucts, pharmaceutical, paint and paint products, and plastic competition among the firms is quite intense. As a large pro-products. Data was analysed by using the SPSS programme. portion of the inputs required by the industry is imported, itDescriptive statistics were also used in the analysis. may not be wise to promote the growth and development ofthe industry without considering alternative sources of inputResults and Discussion supplies for the chemical industry.The results showed that the majority of these firms were ReferencesMalaysian owned. The majority was between 10-20 yearsold, and has l00-200employees. Almost 40% of the firms Bowman and Johnson. 1992. Surfacing competitive strategies, Euro-exported their products overseas. About 45% have annual .• pean Management Journal. 10(2): 210-219.sales of RM50-200 million. An analysis of the nature of in- Porter, M. 1979. How competitive forces shape strategy, Harvarddustry structure showed that it was not difficult to enter into Business Review, March-April, p.137-l45.the industry. About a third of the firms perceived a potentialMd. Zabid Abdul RashidFaculty of Economics and ManagementUniversiti Putra Malaysia, 43400 UPM, Serdang, Selangor,MalaysiaKeywords: competitive advantage, strategy, productiv-ity, technology, management.Supported by IRPA Grant 05-02-04-0003339

Competitiveness of priority industries

http://psasir.upm.edu.my/43093/1/Competitiveness%20of%20priority%20industries.pdf

Competitiveness of priority industries

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