International Business Report
Batik and its painting is a unique craft; therefore this is the reason why Batik is the selected product. However, the age old unique craft of Batik refers to a technique of printing n cloth using molten wax. Though the motifs traditionally used In Batik have undergone a change over time, the method of printing remains the same (Batik printing – the unique craft, 2003). However, a special type of resist-dyeing technique is used for Batik printing. Under this technique, parts of plain cloth are covered by wax and then the cloth is dyed. Original color, thus creating beautiful designs.
Cracks are developed in the wax by crumpling the cloth, leading to seepage of the dye into the area covered by wax. This is one of the distinguishing features of batik printing (Batik printing – the unique craft, 2003). One distinct feature of Malaysian batik is the modern, unrestrained motifs which often draw from local cultural expressions. Colors too, in many instances tend to be bold and varied. While floral themes abound, more abstract forms are taking forms on the canvas of the batik fabric. This unique combination of features makes batik appealing beyond the Malaysian borders (Malaysian Culture: Malaysia’s Batik, 2008). Batik is a traditional craft, it can be different and some of the excellent contemporary pieces can attest to batik’s vibrancy and splendor that transcends cultural esthetics and borders. Malaysian Batik is generally a textile with the patterns of leaves and flowers on it. Apart from using an exceptional quality of cloth, Batik is also very famous for its geometrical designs, with its Spirals or Butterfly themes. However, since the technology become sophisticated, batik tend to merged with modern technology by using high-tech digital systems for printing.
Therefore, when going internationally Batik tend to capture the attractiveness of it modern designs and the demand of Batik from overseas will also increase. As such, with its traditional and odder design of Batik that introduce to the international market can actually compete with those branded products. The country selected is Singapore. The reason why this country is selected are relocating our business to Singapore is its convenient location. Singapore is situated in the heart of Southeast Asia, making it possible for your business to access a market of 2. 8 billion people within a few hours flight.
Singapore is known for its pro- business environment, capable of attracting sizable foreign investments and business entrepreneurs. In Singapore, you can turn your ideas into businesses with ease, and achieve significant profits. In stark contrast to many Western nations, it only takes about 1-2 days to incorporate a company in Singapore, with the government providing assistance along the way. Simply stated, Singapore is the easiest place in the world to set up and manage a business (Rogers J, 2013). Therefore, Barabbas Holdings Sad Bad is the selected company that start up it Batik business in Singapore. . 1 PESTLE ANALYSIS Political and Legal -Tax Goods that exported into Singapore are subject to prevailing Goods and Services Tax (SST) which is currently at 7%, if the goods are meant for local consumption Impact on Barabbas Holdings Sad Bad It is a threat for the company as there is an increase on the cost of goods when export from Malaysia to Singapore. Thus, the profit will be also lower. -Import Tariff Singapore is generally a free port and an open economy. More than 99% of all imports into Singapore enter the country duty-free (Export. Gob – Singapore – Trade Regulations, 2000).
A Free Trade Agreement (FAT) is a legally binding agreement between two or more countries to reduce or eliminate barriers to trade, and facilitate he cross border movement of goods and services between the territories of the Parties. Singapore Fats have been instrumental in helping Singapore-based businesses strengthen cross-border trade by eliminating or reducing import tariff rates (Welcome to Singapore FAT Network, 1993). It is an opportunity for company because imports of goods subjected to lower or zero customs duties. Hence, the company can enjoy benefits of earn profits.
Economic -Exchange and inflation rate Economic factors include economic growth, interest rates, exchange rates and the inflation rate These factors have major impacts on how businesses operate and make sections. For example, the exchange rate is of Malaysia Ringing is RAM. 49 to $ 1. 00 Singapore Dollar. Therefore, the exchange rate is affect by global economy. Besides that, if there is inflation happen, the inflation rate also will be affect and the price of goods will also increase. If the exchange rate increases, it will then affect the profit of company. Thus, it is a threat for the company.
On the other hand, if the exchange rate becomes lower then there is opportunity for the company. If inflation happens, it will affect the sales of batik because of increase on price. This s because customers are not willing buy expensive goods or products; hence it is a threat for the company. -Economic growth of Singapore Singapore is a developed country, Singapore have a stable and successful market economy. Therefore, the purchasing power of customer is Singapore is high. Since Singapore is a successful market economy, it is an advantage to start up business and export goods to their country.
Exporting Batik into high economic growth of Singapore and customers has higher company can enjoy benefits on sales increase as well as earning profit. Social and Cultural -Culture taste Singapore is near to Malaysia thus the culture taste of people in Singapore is nearly with Malaysian. Batik is a traditional made clothes, Singapore is a multicultural country that nearly close to Malaysia. Hence, their demand on Batik will be high. Population of Singapore growing and it will then lead to demand of batik also increases. Hence, the sales of products will be increase and the numbers of goods expect to produce larger to Singapore. Multiracial and multicultural country Singapore is a multiracial and multicultural country with a majority population of Chinese, with substantial Malay and Indian minorities. Besides that, there are also other population in Singapore such as Baby Anyone. Origin of Batik can be traced back to Asian or Indians. Since Singapore is a multiracial and multicultural country, the preference of Batik will be increase. Preference of Batik increase and thus the demand of Batik will also increase. Therefore, the company will enjoy benefits on sales increases and also profit earning.
Technological -Internet Internet compare with Malaysia, the internet speed of Singapore is faster and easy to accessible. Barabbas is available in online ordering, if there are customers who want o online take order, it is benefit for them. With online order, it can be a direct marketing towards their customer. Hence, it is an opportunity to the company as the demand of batik will be increase since customer can order through online. Environment -Weather Weather of Singapore is the same like Malaysia, and it is not a four seasons countries.
Therefore, Batik clothing is best suit the people there as it is light weight. Besides that, the design of Batik is quite trend, thus people there can accept it easily. There would be an opportunity to the company because of the demand of Batik looting will be increase. Hence, company may enjoy a benefit of sales increases as well as profit earning Force Rating Explanation 1) Existing Rivalry 2 1. Few competitor in batik industry 2. The categories of batik products are lesser 3. High switching cost 2) New Entrants 1. Not really a well-known business 2. Difficult to start up the business 3.
High entry barriers 4. Special technical or technology needed 3) Buyer Power 5 1 . Many choices for buyers 2. Close substitutes 3. Low switching cost 4. Product is not ‘critical’ 4) Substitutes 1 . Many available good quality and cheap clothes 2. Substitutes are easy to find 5) Supplier Bargain Power 1. Many suppliers of raw materials 2. Switching cost of supplier is low 3. Product is non-critical 4. Raw materials has close substitute There is less of rivalry and competition within the Batik industry in Singapore, thus Barabbas Holdings Sad Bad has the advantage against its competitor.
Although there are a lot of clothing industry, but the categories of Batik goods and products are lesser. Besides that, the switching cost is high where customers have to go Indonesia for example for purchase Batik products. However, this is a low threat to Barabbas Holdings Sad Bad which ranked at 2. In Singapore, there are lesser new entrants in the Batik Industry because it is not really a well-known business. It is difficult to start up a business as it needs a large amount of capital for advertising.
Besides that, special technical and technological are needed for the Batik industry, hence the entry barriers will be high. Meanwhile, this is a low threat against Barabbas Holdings Sad Bad which ranked at only 2. 3) Buyer Power Buyers not necessary have to choose for Batik, however, there are many close substitutes to Batik clothing and there are many choices for buyers. For examples, buyers can go for other substitute such as ‘ball kebabs’ or ‘share’. Since there are plenty of substitute products thus there is a low switching cost to these substitutes.
Besides that, Batik is also a non-critical product; hence there is a very high threat against Barabbas Holdings Sad Bad which ranked at approximately 5. 4) Substitutes The substitute products for Batik can be any brand of clothes. In Singapore, there are many available good quality and cheap clothes as well as low switching cost. Therefore, the substitute products are easily to find and hence customer can easily witch to those substitute product. Since that, it is a very high threat against Barabbas Holdings Sad Bad which ranked at 5. 5) Suppliers Bargain Power There are different suppliers of raw materials to Barabbas Holdings Sad Bad.
In addition, the switching cost of suppliers could be low because there are plenty of raw materials that are close substitute. Moreover, the product is also non-critical; therefore there is a very low threat against Barabbas Holdings Sad Bad which ranked at approximately . 5. 0 PROPOSED GENERIC STRATEGY It is proposed Barabbas Holdings Sad Bad has apply the Differentiation generic tragedy to Singapore gain the profit and sales. Using generic strategy is to help the Barabbas Holdings Sad Bad fully utilize the strength to eliminate competitor and achieve the objective.
A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The value added by the uniqueness of the product may allow the firm to charge a premium price for it. So, Barabbas Holdings Sad Bad would like to improve the quality ND design as a unique product, and it will allow to charge a premium price to gain the market share in Singapore.
In addition, our firm hopes that the higher price will the product’s unique attributes, if suppliers increase their prices the firm may be able to pass along the cost to its customers. Other than that, in the part of service our firm focuses on give unique services to each customer, such as on-time sales services, and after sales services. The quality of services also will help to attract customer and the image of our firm. These two ways will add value to customer. Differentiation also targeted a broad market, which means serves all the segments. Misaims Company has to set up the product entire hypermarket in the Singapore. . 0 PROPOSED ENTRY MODE By choosing a correct market entry strategy is critical to our long-term success. So in order to expand our batik market in Singapore, it is proposed that Barabbas Holdings Sad Bad uses direct exporting entry mode. Direct exporting is the most basic entry into international markets. It means that a producer or supplier directly sells its product to an international market, either through intermediaries (Whether J, 1998). For example: sales representatives, distributors, foreign retailers, or directly selling the product to the end user.
Direct exporting requires market research to locate markets for the product, international distribution of the product, creating a link to the consumers, and collections. The reason we choose direct exporting is because with direct exporting, we can handle every aspect of the exporting process, such as market research, foreign distribution and collections. By using direct exporting, we able to know who is our target market which is Indonesia batik industry. Next, our customer can provides aster and more direct feedback on our product and its performance in the market.
Besides that, it gives us a closer relationship to the overseas market. So, if next time we decided to entry another international market, it will be easier for us. Furthermore, as our business develops in the foreign market, we have more flexibility to improve or direct our marketing efforts. This mean we have the ability whether to increase or decrease the number of export (Delaney L, n. D). In addition, we get better protection of our trademark, patents, goodwill and other intangible property. We also have greater sales if compare to indirect exporting.
Lastly, our business trips are more efficient and effective because we can meet directly with the customer responsible for selling our product which is batik (Delaney L, n. D). 7. 0 CONCLUSION As a conclusion from the factors analyzed above, we can conclude that Batik tend to introduce and expand its business in the international market. However, base on the PESTLE analysis, it shows that there are different opportunities against Barabbas Holdings Sad Bad and Batik if introduce the business in Singapore. This is because Singapore is a developed country and higher growth of economics.
Besides that, against Batik industry could be lower. This is because there is lesser of competitors of Batik industry in Singapore. By dealing with the vision of Barabbas Holdings Sad Bad, Batik tends to further expand their business to international market. However, the success of domestic business will ensure its competitiveness in the international era. Since that, Batik industry will be leader in the market if it continue expand their business internationally.