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    400 405 PDF

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    ‘The Social Sciences 12 (3): 400-408, 201 ISSN: 1818-5800 © Medwell Journals, 2017 Business Strategy of Small Medium Enterprises (SMEs): A Case Study among Selected Chinese SMEs in Malaysia ‘Wan Fauziah Wan Yusoff, Loh Chee fia, Anim Zalina Azizan and Ahmad Kaseri Ramin Faculty of Technology Management and Business, University Tun Hussein Onn Malay'sia, Parit Raja, Malaysia Abstract: Small and Medium Enlerprises (SMES) in Malaysia parGcularly deminated by Chinese SMES is acknowledged as a drive for economic growth and industrial development of the country, Despite the contributions mace by the Chinese SMEs to Malaysian economic, very few studies, especialy in relation to business strategy have conducted involving the Chinese SMEs. This study is therefore was embarked to explore busines strategies of Chinese SMEs. Using Parte’s five forces model, qualitative methodology in particular personal interviews have been conducted involving (15) owners of Chinese food manufacturing ‘SMEs in Penang, Responses were analysed using MS Excel based on Miles and Huberman model. This study revealed that majority of the Chinese SMBs involved in this stady have adopted mote than ane Porter's ‘components as their business strategies, In fact, Porter's component found to be a complex framework and each ‘component is interrelated from one to another. Among the five Porter's components, the substitution produet found to be the most important component, followed by buyer's component. From this study. it can be concluded that the relative strength of Porter’s comportents support in improving competitive advantage and identifying the optimal strategy under this competitive market. This study has provided better understanding con business strategy of SMEs in particular the Chinese SMEs in Malaysia, Key words: Business strategy, Chinese SMBs, Porter's five force model, competitive advantage, optimal strategy INTRODUCTION ‘The roles of Small and Medium Enterprises (SMES) are significant in realization of long torm business and industrial competitiveness of a country. According to United Nation's report on world economic situation and Prospects SMEs remain ax one of the significant econemtic contributors in global. SMEs make up 99.8% of non-financial Enterprises, contributing 58% of region's Gross Value Added (GVA) and provided almost 67% of jobs. In Malaysia, the SMEs contribute a significant ‘amount to economic development. Eeonomically, in 2013 SMEs contribute 6.3% of Gross Domestic Product (GDP) compared to only 6% in 2012 (SME, 2013). As the SMEs become @ major concem by mest countzies many strategies regard to the performance of the SMBs have been studies. For example a study from Bangladesh by Philip (2011) found that strategy has interelation with business success, However, it was argued that although ways of doing business have significant positive impact of business success strategies do not have significant influence to the success of any’ business (Chittthawom ef af, 2011). In fact, many SMEs have not given attentions in developing effective strategies and most of the strategies formulated as short term goals or localized in functioning (Singh et al, 2008), In Malaysia to date very few studies that focusing on business strategy of the SMES, As a consequences lack of an appropriate model that able to determine business strategy of the SMEs in Malaysia (Small, 2013), In fact to date no comprehensive framework in terms of policies and strategies towards SMEs development especially involving the Chinese SMEs in Malaysia (Saleh and ‘Ndubisi, 2006), Therefore, it is valuable to explore this issue which can be adopted by new entrepreneurs to enhance their business. In addition, this study is also ‘important for students professional and researchers to increase their knowledge on the related field. Literature review SMEs definition and development in Malaysia: In Malaysia, SMEs are grouped into three ax Micro, Small Correspoding Author: Wan Fauiah Wan Yusoff Faculty of Tee Universiti Tun Hussein Onn Malaysia, Pa 400 Sinology Management and Business| rit Raja, Malaysia The Se “Table: Deft of SMEs in Malas 2 Sei, 12 (3): 400-405, 2017 Mantra Sale meer oP RNGDGOH or Sales sores RNISDD.OOOTO| Sales ion om RAIS aa employer of 5 ERMIS ml oremplyessfom Sto<7S exceeding RMS mil or eloysee Series note Ses toe of RM. 08 oF employes af =RME Sales uover fom RMSID 10 t0 fr enplyees tam $030 fiom 75 tn exces 200 Ses unser fom RAIS ito not exceeding RMD alo enlaces fom Oinnet exces 15 and Medium. The latest SMEs definition launched on ‘st April 2015 is based on twa category, manufaetnring and services and other sector according to the three sroups, total sales tumoveritovenve by a business in a year ormumber of fulltime employers. The manufacturing sector SMEs for example is defined according to salex tumover not exceeding RMSO milion of full-time employees not exceeding 200 (Table 1) ‘The development of Malaysian SMEs has been started as early a8 1970s especialy after the introduction ofthe New Boonomie Poliey (NEP) in 1991. The NEP was aimed to improve tho wolfare and restructured the imbalance of economics within the ethnic groups in Malaysia, Ava result of NEP a significant improvement of income distribution fas been seen since 1990, The proportion of households incomes bolow the poverty line have been declined from 49.3% in 1970 to 16.58% in year 1990 and further decreased 5.1% in 2002 (Eeanomie Plonning Unit, 2014, The stablishment of Small Medium Industrial Development Corporation (SME Corp) on 2nd May 1996 was the main effort by the government that focus on SMBs development of the country. SME Corp suggested five strategic thrusts that concerned about SMEs

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