MBSA 2313

New Venture Creation (NVC)

SEMESTER I, 2015/2016

Siam Canadian Foods Co., LTD.

Lecturer

: Dr. Adriana Mohd Rizal

Student Name

: Teo Yin Cheng

Matric Number : MBS141153

Questions:
1. In considering his Burmese investment decision, Gulkin had to consider several trade-offs.
Could he afford to take a wait and see approach to Burma while other Asian firms started
to tap into the market?
Gulkin may not able to afford to take a wait and see approach to Burma while other Asian
firms started to tap into the market. As Burma was the largest mainland country in Southeast
Asia with a population of 47 million, it could be a large potential market for SC. The long
coastline of total 2,830 had created abundant natural resources like seafood. As one of the
poorest country in the world, SC could save the operation cost by hiring low cost labor,
production cost and other lower cost of manufacturing. With the lower manufacturing cost,
SC could have a better competitive edge to compete with others competitors in Thailand or
other global competitors.
Besides that, Gulkin should not hesitate from tapping into Burma market even their potential
or direct competitors had been established in the region. Even PL Corporation, Sun Wah
Trading Company, Mitsui had been setting up in Burma, SC should have figure some plan
and strategy for not competing with those strong competitors head on. Recognizing an
opportunity is a very important criteria for a new entrepreneur to start-up business and also
existing entrepreneur to expand their business. Definitely there are some risk and factor for
the investment in Burma, but after witness and analyzing the improvement of Burma political
and economic development, SC should had taken this brave move to tap in the market. If
Burma market was limited and unstable for a business, SCs competitos will not have set up
in the region. SC may have late for penetrating Burma market compared with PL
Corporation, Sunwah Trading Company and Mitsui, but Burma still considered as an
undeveloped market which have a large business potential.
SC should take this timing as a breakthrough before more Asian firms started to tap into the
market. With the establishment of SCs network in Thailand, Vietnam and the next Burma,
SC could be able to expand his business and achieve a better sustainability.

2. Similarly, could he afford to allow this opportunity to pass him by given that other seafood
exporting opportunities in the region were quite limited?
Gulkins business philosophy was developing and managing diverse supply sources and
products ranges. As Burma considered as undeveloped market, SC should identify the
opportunity and do not let the chance pass him. At this point of time, Gulkin had considered
the Thai seafood market was simultaneously experiencing increased levels of competitions as
well as dwindling supplied of raw material. He also estimated that the seafood industry in
Thailand had reached the saturation point in terms of number of processor operating and that
raw material supply levels would gradually deplete to the point where the industry would be
in definite decline within ten years. It is very important that a company have a strategic
planning of what the company could achieve in a short and long term period so they could
cope with any problems or crisis that occur. If Gulkin do not foresee the potential risk of
saturation of the raw material supply in Thailand, SC may experiencing a serious downturn
when the raw material supplied in Thailand achieve a critical low point. SC may need to
reject any large contract if they have no enough supply to support on those contract which
could cause a low profitability to the company in a long run. SC may not able to sustain the
operation cost of different region plant and eventually may cause to downsizing or even close
down of the plant.
Although the seafood resource of Burma was not as rich as Thailand, but the fishing industry
still considered new compared to other economic resource in Burma, According to exhibit 2,
livestock or fishing only contribute to 7.2 % of the GDP area of economic activity. We can
recognize this figure as the new and undeveloped sector for government compared to other
sector like agriculture, trade, manufacturing, etc. By knowing the limited resource in the
region, Gulkin could have planned for the operation in Burma in a short or long term period.
By forecasting the resource available in the region, Gulkin can make the decision of
investment and also resource allocation in Burma. Before the deplete of the resource in the
region, SC could have identify another potential location for continuing the material supply
so the business sustainability could be achieved.

3. Alternatively, if Gulkin entered Burma, could he be assured that his investment was secure
given the state of political governance in the country?
There is no investment which can get a 100% secure or insecure return. Although Gulkin had
a bad experience of net loss of US$ 30,000 in 1994 when he invested in Burma, but the
improved political situation and some new law and regulation in Burma had increase the
confident of foreign investor to invest in Burma. From the experienced SC had gained
through the cooperation with non-politically connected business people in Burma on 1994,
Gulkin had a better understanding of how the people behave and the way of Burma business
was conducted. He could utilized the past experience in better decision making which fit
local culture.
Given that state of political governance in Burma had been improved from the previous year,
Gulkin should be more confident to invest in Burma. We can also realize that Burma had
been putting effort in changing their economic policy and law to attract more foreign
investment to the region. One of the example was the Foreign Investment law in 1988 which
was designed to attract foreign capital to industries which would promote exports and
provide for the acquisition of new technologies. Gulkin could have a tax holiday period of
three consecutive years inclusive of the year of start-up with a possible extension if the
Myanmar Investment Commission deemed it appropriate. Besides that, exemption or relief of
tax paid on profits which were held in reserve and re-invested into the firm within one year.
These tax exemption policy could greatly reduce the operation cost of setting up SC
operation in Burma. The money saved by the exemption could be used for other business
activities.
Every country would have their own political stability or governance issue, SC should be
involved in the country and understand the culture so they could better adapt themselves in
the region. If the state of political government in Burma was non-acceptable, the foreign
investor including Bangladesh, U.S.A, Thailand, Japan, Singapore and Hong Kong would not
been investing in Burma for setting up different fisheries joint venture business.

4. At the same time, would he run the risk of losing some key clients who would discontinue
doing business with him because of his involvement in Burma?
As Burma was involved in an economic isolation recently, Gulkin needed to consider the
view of is overseas customers. He remained cautiously optimistic that his customers would
not view his possible foray into Burma as unduly harmful. Although Gulkin had to run the
risk that some key clients may concern on the involvement if SC in Burma, Gulkin will need
to cope with the perception and doubt from the clients from other country and make some
explanation if necessary. Considering the risk of losing some key clients and also the
business sustainability of SC in a long run, Gulkin should still go with the investment to
setting up the office in Burma. As Asia and Western countries have a different view of Burma
economic and political situation, different explanation and position should be taken to
address different concern due to different culture, point of view and value proposition.
Despite the perception of other countries toward Burma for their political and economic
situation, Gulkin shall prioritize the material supply to the client. Without a continuous raw
material supply, the SC may not fulfilling customer requirement especially when there is a
large order received by SC. The impact of the company when it unable to meet client
requirement could be negative and affect the reputation of SC in the global market. So,
maintaining the continuous supply of materials from different country including Burma was
very crucial to ensure the business philosophy are obeyed.

5. What are the reflections that you gain from the case?

From the case I can observe that every business decision should be taken after consideration
from different aspect. When a company are deciding to invest on a new facilities especially
oversea, we have to analyze from the aspect of political stability, economic situation, law and
regulation for foreign investor, infrastructure development, etc. Different countries had a
different way of governance and regulation which all the companies have to obey if they decided
to base in the region. Outsourcing to another countries could be benefiting if all the consideration
are taken and performs within the expectation. It is also a must-do practice for a company to
increase its competitive edge in the local or global competitors. The decision of outsource are
closely related with the PESTLE analysis and any mistake in the analysis could cause a loss to
the company.
Besides that, we must be brave and possess entrepreneurship in making the business decision.
Like Gulkin, he was stepping out from his comfort zone by starting up his business at a place
which have a totally different culture of what he used to be. He was also non-stop in expanding
and extending his network in different countries aggressively.