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REFLECTIVE PAPER (MKT542)

PAIR/TRIO ASSIGNMENT
REFLECTIVE PAPER:
“Marketing Channels:
The Impacts and Challenges of Covid 19
on the Environments of The Channel Participants
and
Facilitating Agencies in Malaysia.”

CHANNELS MANAGEMENT (MKT542)

FACULTY & PROGRAMME : FACULTY OF BUSINESS & MANAGEMENT


SEMESTER : 4
PREPARED BY :

NAME STUDENT ID CLASS/GROUP


MOHD SYAZMIR BIN OSMAN 2022972019 MKT5424G1
MUHAMMAD ARIF BILLAH BIN MOHD JAMIAN 2021601362 MKT5424G1
MUHAMMAD FAIZ BIN SYAHLAN 2022779693 MKT5424G1

PREPARED FOR : DR. MOHD. ADZWIN FARIS BIN NIASIN

MKT542: MARCH 2023 – AUG 2023


REFLECTIVE PAPER (MKT542)

ACKNOWLEDEMENT

Alhamdulillah and thanks be to Allah SWT, we were finally able to complete the MKT542
Reflective Paper Assignment, in the requirement set for the fourth semester entitled “Marketing
Channels: The Impacts and Challenges of Covid 19 on the Environments of The Channel
Participants and Facilitating Agencies in Malaysia.” This is a first for us, and we are grateful to Allah
SWT for allowing us to do it.

In that regard, we would like to express our deepest appreciation and gratitude to our lecturer, Dr.
Mohd Adzwin Fariz bin Niasin, for being a role model for us to follow, providing support, and
motivating us to observe this assignment until we had gained a positive impact.

In addition, we must not forget to express our gratitude to our teammates Mohd Syazmir, Muhammad
Arif Billah, and Mohd Faiz, all of whom have given a lot of guidance and helped each other in
completing this task together.

In conclusion, we sincerely hope that all the tasks that have been produced can give us the
opportunity to expand the knowledge that is useful to us and adapt it in our daily lives.

MKT542: MARCH 2023 – AUG 2023


REFLECTIVE PAPER (MKT542)

TABLE OF CONTENT

PAGE

TITLE PAGE i

ACKNOWLEDGEMENT ii

TABLE OF CONTENT iii

1. INTRODUCTION 1
2. ISSUES 3-10
3. CONCLUSION AND RECOMMENDATION 11-12
4. REFERENCES/BIBLIOGRAPHY 13
5. APPENDICES 14-18

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1.0 INTRODUCTION

Marketing channels are "The external contractual organization that management operates to
achieve its distribution objectives" (Rosenbloom, 2013), as stated in the definition that can be found
in Rosenbloom (2013). Rosenbloom's conventional definition concentrates on members (such as
wholesalers, retailers, distributors, and dealers) who compose marketing channels that operate
between the maker and the end user. This point of view is known as the institutional-oriented
approach (Anderson & Coughlan, 2002), and it centres on members of the distribution chain. It
consists of the people, organizations, and activities necessary to transfer the ownership of goods
from the point of production to the point of consumption.

In Marketing Channel, the word ‘external’ in the definition of marketing means the facilitating
agencies that exist outside the firm or not a part of the firm’s internal organizational structure.
Facilitating agencies are organizations that provide specialized services or resources to distribution
channel members. These organizations play a vital role in increasing the distribution channel's
efficiency and effectiveness. Examples of facilitating agencies include Market research firms,
Advertising and promotion agencies, Transportation and logistics provider, financial institution, and
Standards organization. Facilitating agencies play a significant role in the distribution process by
offering specialized services and materials to aid channel participants. Through their services, the
channel is made more effective and efficient, which ultimately improves client happiness.

By the meaning of ‘contractual organization’, in the definition of marketing, there are the
channel participants, or the firms and parties engaged in negotiatory function as a good or service
passes from the producer to the final consumer. The term "channel participants" refers to the various
organizations or people engaged in the distribution of a good or service from the producer or supplier
to the final consumer. These individuals consist of Manufacturer or supplier, Wholesaler, and
Retailer. Each participant's tasks and responsibilities may differ according to the nature of the product
or service, the market situation, and the unique channel design. Coordination of the activities and
interactions of various participants is required for efficient and successful distribution of the product
or service to the end user.

The term "environmental factors" pertains to the external elements that have the potential to
impact the efficacy of a channel strategy. The aforementioned factors can be classified into five
overarching categories, namely economic, technological, social, legal, and political. Several
environmental factors can be identified, such as: The economic factors that influence a business can
be categorized into two groups: macroeconomic variables and industry-specific variables. The
former includes interest rates, inflation, and economic growth, while the latter encompasses market
size and competition. The alterations in consumer expenditure trends amidst an economic downturn
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can potentially exert an influence on the market demand for goods and services, thereby potentially
affecting the distribution tactics.

Technological factors encompass the emergence and integration of novel technologies, such
as e-commerce, mobile applications, and social media, that have the potential to disrupt established
channel frameworks and generate fresh prospects. The advent of e-commerce has facilitated the
circumvention of conventional intermediaries by manufacturers, thereby enabling them to directly
vend their products to consumers. This has consequently given rise to novel channel structures.

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2.0 MAIN ISSUE

ENVIRONMENT OF MARKETING CHANNEL IN MALAYSIA BEFORE COVID-19

A channel operator is forced to be prepared for the consequences and adjustment that
economic factors have upon the various channel participants in the distribution channel. Therefore,
whenever relating to channel management, the economic considerations which impact the actions
and outcomes of channel members are the most essential factors. As we realised, before COVID-
19 happened, the economic flow was in a stable and consistent situation because production and
business operations were running smoothly.

Before covid 19, as for the economic factors of the channel environment, the distribution
process was carried out smoothly including domestic and foreign distribution because there were no
restrictions or obstacles in this distribution process. Therefore, the distribution process from the
producer to the hands of the consumer can take place without any problems. In 2019, which is the
year before the spread of the COVID-19 epidemic, consumer purchasing power was in a consistent
state. According to the article by The Sun Daily in 2022, the amount that has been spent by
consumers in 2021 is expected to be RM855 billion, a 5.4% decline from the RM905 billion reported
in 2019.

The sociocultural environment is a factor that has an impact on marketing trends. These
trends are shaped by the sociocultural context in which they are established. In point of fact, there
are channel specialists who maintain that this is a significant factor in determining channel structure.
When a marketing channel extends into cultures that are not familiar to it, the channel administrator's
top priority is to be aware of as well as sensitive to the sociocultural environment of the channel.

In terms of the technology environment, it is the component of the environment that is


continually experiencing the most rapid change. The person in charge of the channel is responsible
for sorting out the new developments that are pertinent to their own company, and then determining
how the channel participants are likely to be impacted by these changes.

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Product Flow

Figure 1.0 Product Flow

As for the state of marketing channel flow before the COVID 19 pandemic occurred, all five
marketing channel flows consist of product flow, negotiation flow, ownership flow, information, and
promotion flow. Before the pandemic, the process of product flow in distributing the product can be
done without facing problems where the flow from the manufacturer and further allows the product
to reach the consumer and this causes the stock of the product to always be available for sale to the
consumer. As we know, during the pandemic the government implemented a Movement Control
Order (MCO) which at that time, people were not allowed to leave the house.

This caused many industries to be affected such as product manufacturers not being able to
operate fully because workers could not leave their homes, transport required clearance to pass
through the district, retailer operating hours were limited, and many consumers reduced spending or
did not dare to go out to buy products. Therefore, we can see that there are significant changes and
differences between the time before the pandemic and during the pandemic.

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IMPACT OF COVID-19 ON THE CHANNEL PARTICIPANTS.

Worldwide industry has been seriously affected by COVID-19, and the resulting effects have
been experienced by all parties in the distribution channel. This involves manufacturers, wholesalers,
retailers, and final users. The epidemic has generated interruptions in the distribution system,
changes in the demand for goods, and changes in the behavior of consumers as a result.

During the pandemic, manufacturers are facing problems in ensuring that product production
operations run smoothly due to the movement control order implemented by the government.
Therefore, many factory workers have obstacles to work and there are also a few manufacturers
who are forced to stop operations. As an example, according to the article by Nikkei Asia in 2021,
Honda and Toyota, which are two of the largest businesses in automotives industry in the world, had
to stop production operations during Malaysia's lockdown. Therefore, the pandemic has resulted in
an interruption in the worldwide supply chain, which has led to manufacturing and distribution
limitations, which in turn has caused a lack of products and supplies of raw materials. There have
been delays in manufacturing as a result of the struggles that manufacturers and suppliers faced in
trying to sustain their operations.

In addition, wholesalers were also affected by the pandemic because they had to follow
drastic changes in consumer demand. The pandemic has created swings in demand, with products
getting higher demand while others experiencing decreased demand as a direct result of an
outbreak. According to the Malaysian Investment Development Authority in 2020, based on
estimates made by the Malaysian Rubber Glove Manufacturers Association (Margma), the total
quantity of rubber gloves that are demanded on an international basis is around 330 billion units.
This proved that there was a significant increase in the demand for multiple healthcare products,
such as personal protective equipment (PPE) and medical technology. On the other hand, according
to The Malaysian Reserve in 2023, It seems that consumer demands have shifted, as a result of
individuals' growing demand for personal well-being in all aspects of physical, emotional, and
financial health and security. Self-reflection has improved individuals' demands towards personal
well-being. For example, the industry of luxury goods suffered losses due to this pandemic. As such,
this has caused a few wholesalers to experience struggle and many also experience losses due to
changes in consumer demand resulting from the COVID-19 pandemic.

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IMPACT OF COVID-19 ON THE FACILITATING AGENCIES

Facilitating agencies are an important component of the marketing channel since they provide
essential services including transportation and logistics as well as advertising, market research,
insurance, and financial firms. These agencies have been severely impacted by the COVID-19
pandemic, which has resulted in significant disruptions to their operations and a number of new
issues.

The interruption of transport and logistics is one of the key issues that the transportation firms
are facing. As an immediate impact of the pandemic, there has been a major decline in the number
of available transport services due to the closing of borders and the interruption of international
flights. Because of this, the ability of agencies that facilitate the movement of products and services
across international borders and within countries has been restricted, which has led to increased
costs and delays. In addition to this, the pandemic has caused a change in the behavior of
consumers, which has led to variations in the demand for various goods and services. As a result of
people being forced to work from home and reducing the number of social connections they have,
an increase in the number of people purchasing online has occurred, leading to a growth in sales
generated by online retailers. Because of this, facilitating agencies are under increased pressure to
modify their logistics and delivery services in order to satisfy the requirements of online retailers and
customers.

As advertising and marketing research agencies, the epidemic has led to changes in
consumer behavior, with many customers adjusting their buying habits to involve internet purchases
more often. This has resulted in a rise in demand for digital marketing services, but at the same time,
many businesses have been forced to cut their marketing budgets due to limited financial resources.
In addition, advertising and market research firms have been influenced as a result of this as well.
Because of the epidemic, numerous events, conferences, and business shows have been canceled.
These are important opportunities for these organizations to display their services and engage with
potential consumers. Moving away from offline events to online ones has not been as successful as
expected, and as a result, several agencies have witnessed a drop in business.

Insurance coverage during COVID-19 could be different for every policyholder and each
insurance provider. Despite this, some insurance policies have been revised to account for the
changes brought on by the pandemic. Insurance for business interruption is a type of coverage that
can offer financial protection if your company suffers a loss of income as a direct result of
interruptions caused by the pandemic. These types of interruptions include disruptions in the supply
chain as well as forced shutdowns.

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Liability insurance can cover your company if a client or employee makes a claim that they
became infected with COVID-19 on your property or because of the operations of your business. As
for the workers' compensation insurance, employees who have suffered injury because of their work,
particularly if they contract COVID-19 while on the job, may be eligible for payments under workers'
compensation insurance.

For cyber insurance, during the pandemic, many firms relied on remote workers and digital
operations. Cyber insurance can give security against cyber-attacks and data breaches, which was
necessary because of this dependency. Perhaps because of this, a number of agencies have
reported a decrease in customers. Therefore, insurance agencies are also greatly affected because
when pandemic happens, many organizations or individuals need to claim the losses they have
suffered from the insurance to help their hardships.

THE IMPACT OF COVID 19 ON THE ENVIRONMENT OF MARKETING CHANNELS IN


MALAYSIA

Surely Covid-19 has affected the economic environment marketing channel in Malaysia. The
global spread of the 2019 coronavirus (Covid-19) pandemic represents the most recent threat to
Malaysia's GDP growth. DOSM reports that as a result of the epidemic, Malaysia's GDP index will
fall from 2019 to 2020, from 4.3% to -5.6%. Malaysia's economy took a major hit during the outbreak,
as evidenced by the rapid decline. Because of that, Covid-19 has the most significant influence on
workers in the aviation, hospitality, and tourist industries, where the Human Resources Ministry
estimates that approximately 100,000 Malaysians have lost their jobs since the beginning of MCO.
On top of that, average food prices rise, the cost of living rises alongside them, and the loss of
hundreds of thousands of jobs worsens the low-income families. Multiple factors contribute to the
increase in the cost of living. This cost consists of the acquisition of raw materials, wages,
maintenance, and other overhead expenses.

The competition environment has changed as well as Covid-19 amid. They are forced to take
crucial action to stay competitive in the business and to survive. The year 2020 will be the worst for
Malaysian retailers since 1987. The restrictions on movement reduced consumption and investment.
When the government eased restrictions on the number of passengers in a vehicle and the maximum
distance travelled in 2021. Shopping traffic in the shopping centers gradually shows a decrease. The
food and beverage industry experienced a 0.8% decline in growth rate. Similarly, food and beverage
kiosk and stall operators anticipate a 20.5% increase in their businesses by mid-2021. The
department store and hypermarket sub-sectors suffered a drop in retail sales of 41.9% and 43.6%
in the middle of 2021. Mini-markets, convenience stores, and cooperatives experienced a modest
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growth rate of 2.6% during the quarter, making them the best performing retail segment. Retailers in
the fashion and fashion accessories sector anticipate a robust recovery of 50.4% for their
businesses. The Covid-19 has affected the competition environment drastically.

The technological environment changed as well. The MCO ordered the temporary closure of
all non-essential businesses and banned the nationwide movement of large groups of people.
Seventy percent of SMEs said their revenue dropped by half within a week. COVID-19 has prevented
small and medium-sized enterprises (SMEs) from making sales and earning a profit, as the outbreak
has had a direct impact on their income, thereby affecting the country's GDP. Numerous SMEs,
including restaurants, grocers, supermarket chains, and sellers of all types of consumer goods and
services, now have an online presence, granting them access to a market that is even larger and
more extensive. The SMEs business owners have made a different step by doing e-commerce using
Lazada, Shoppe and other online marketplaces. Meanwhile restaurants use food delivery services
such as Food Panda, Grab Food and LaLa Move to reach the end users. The demand for food during
MCO eventually spikes. Eventually, technology-based marketing represents a new platform for
delivering goods and services to consumers. SMEs utilize the use of the Internet as a platform for
product promotion by providing information on product offerings to get revenue as much as possible.

Last but not least, Covid-19 also affected Malaysia’s Political and Legal environment. The
Ministry of Health (MOH) has emphasized that the use of face masks in public and social distancing
measures could significantly reduce the spread of the virus daily. The demand for surgical face
masks and hand sanitizers skyrocketed. The situation worsened after the shortage of face masks in
the country because of both panics buying in response to the 2019-nCoV outbreak and the closure
of manufacturing facilities. It is resulting in a spike in the price of a box of face mask and hand
sanitiser. The price of both items is uncontrollable because there are no ceiling prices set. Many
irresponsible parties put ridiculous prices by selling it for RM100 or more for a box. The prices were
set after the ministry considered a rise in the price of imported materials used to make face masks,
according to Domestic Trade and Consumer Affairs Minister Datuk Alexander Nanta Linggi. On
March 20 the Price Control and Anti-Profiteering (Determination of Maximum Price) Order 2020 was
gazetted, setting the ceiling prices. Face mask export was also prohibited, as stated in the Customs
(Prohibition of Export) (No. 2) Order 2020, which was published on March 20 under the Customs Act
1967.

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IMPACT OF COVID-19 ON THE CHANNEL DESIGN AND CHANNEL STRUCTURES

The supply, demand, and daily operations of the retail sector have been directly impacted by
the mitigation measures taken over the past few months to slow the novel coronavirus Covid-19
pandemic. All resale activities of new and used goods excluding motor vehicles and motorcycles that
are primarily made available to the public for personal or household consumption or use are included
in the retail sector. The supply, demand, and daily operations of the retail sector have been directly
impacted by the mitigation of Covid-19 pandemic. All resale activities of new and used goods that
are primarily made available to the general public for personal or household consumption or use are
included in the retail sector.

Food shortage in Malaysia as a result of a sharp increase in Covid-19 cases. Food supply
chains were severely disrupted during this pandemic as a result of decreased agricultural production,
delivery problems, panic buying, and falling storage levels. As a result, there are food shortage that
occurred during COVID-19 in Malaysia. The food supply is impacted by issues with limited demand,
transportation and distribution, higher marketing management costs, delayed orders, and inventory
storage. Land transportation, like lorries, is heavily reliant on Malaysia's ability to get food from farms,
which are typically found outside of cities.

Both the supply-side and demand-side of Malaysia's eCommerce industry have been
severely disrupted by COVID-19. Since China's extension of the Chinese New Year into February
caused delays to eCommerce orders placed in January, there have been disruptions on the supply
side. Many international eCommerce sellers with China-based supply chains experienced inventory
shortages as a result of the delays, which had an impact on their revenue and cash flows. After that,
as airlines started to cancel flights as a result of the travel restrictions put in place by many countries
in March, there was a dramatic decrease in the supply of air freight. Only essential businesses and
organizations could operate after the Movement Control Order was implemented in March.
Manufacturers of non-essential goods are prohiited from operating in Malaysia during the MCO.
Additionally, the Malaysian Ministry of International Trade and Industry (MITI) must approve
producers of basic goods. Their operations must be carried out in accordance with the approved
conditions once they have received this approval. According to Lazada, MITI stopped processing
approvals on March 25, 2020.

Deliveries continue to be delayed through the end of 2020 and the first half of 2021. Delivery
delays amounted to about five days. International deliveries are impacted by the lack of international
air travel. This is due to the fact that a sizable portion of air freight shipments are transported in
passenger planes' belly holds. Increased roadblocks between states and districts, manpower

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restrictions, increased operations related to sanitizing the premises and safe distancing
requirements, and potential split work arrangements all have an impact on local deliveries in
Malaysia. Malaysia's eCommerce experiences were impacted by the disruption in China as well,
particularly in the first quarter of 2020. Delays may result from a labor shortage at manufacturing
firms, warehouses, and transportation companies brought on by the outbreak. Many of them were
not getting adequate justifications for the delays in their deliveries, and some even canceled their
orders as a result of excessively long deliveries.

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3.0 CONCLUSION AND RECOMMENDATION

The marketing channels in Malaysia have been greatly affected by the COVID-19 pandemic.
This is due to the disruption of supply chains, decrease in consumer demand, and the need for
companies to implement new business strategies. COVID-19 has had various impacts and
presented challenges for marketing channels in Malaysia.

Firstly, the COVID-19 pandemic had caused significant disruptions to supply chains, resulting
in challenges for businesses to obtain necessary raw materials, produce goods, and deliver them to
consumers. The outcome of this situation is a decrease in product availability and a rise in expenses
for businesses. Secondly, the pandemic has had a significant impact on consumer behavior. With
people spending more time at home and prioritizing their health and safety, there has been a
noticeable shift in how consumers approach their purchasing decisions. The current market trend
has resulted in a change in consumer preference towards necessary goods and online shopping
platforms.

Due to the pandemic, companies have had to implement new channel structures since the
conventional brick-and-mortar retail channels have been disturbed. In order to effectively connect
with customers, companies have found it necessary to allocate resources towards e-commerce and
omnichannel approaches. In order to tackle these difficulties, it is recommended that those involved
in the channels and organizations responsible for facilitating them in Malaysia implement the
following measures:

Firstly, to effectively reach customers who are currently staying at home, it is recommended
that companies increase their investment in e-commerce and omnichannel strategies. By utilizing
multiple channels, businesses can effectively connect with their customers and ensure a smooth and
consistent customer experience. Secondly, to enhance supply chain efficiency and lower expenses,
it is recommended that businesses partner with logistics and transportation providers. By acquiring
this skill, individuals can effectively handle supply chain disruptions and guarantee prompt delivery
of goods.

Thirdly, gaining a better understanding of changes in consumer behavior and preferences. It


is recommended that companies utilize market research and consumer insights. This can help
companies leverage valuable information to inform their decision-making processes. By tailoring
marketing and channel strategies, businesses can effectively meet the needs of their customers.
Fourthly, investing in technology and automation can enhance supply chain efficiency and decrease
expenses. It is recommended that companies consider this strategy to achieve these benefits. By

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implementing this, organizations can optimize their processes and minimize the need for manual
labor.

Finally, one potential solution for companies facing financial challenges during the pandemic
is to seek government support and incentives. During challenging times, governments may provide
financial aid, tax exemptions, or other forms of encouragement to support businesses and prevent
them from going bankrupt.

To summarize, the Pandemic of COVID-19 has posed considerable obstacles for marketing
channels operating in Malaysia. Through the implementation of innovative techniques and
advancements in technology, those involved in the distribution process and organizations that aid in
its facilitation can enhance their circumstances and achieve success within the current commercial
landscape. (Ain Umaira Md Shah, 2020)

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4.0 REFERENCE

Ain Umaira Md Shah, S. N. (2020). COVID-19 outbreak in Malaysia: Actions taken by the Malaysian
government. 97: 108–116. Retrieved from
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7264933/
Alex Abdernour. “COVID-19 Crisis: How Distributors Can Emerge Stronger than before |
McKinsey.” Www.mckinsey.com, 2 Oct. 2022, www.mckinsey.com/industries/industrials-
and-electronics/our-insights/covid-19-crisis-how-distributors-can-emerge-stronger-than-
before.
Debadyuti Das, A. S. (2022). Impact of COVID‐19 on changing consumer behaviour: Lessons from
an emerging economy. Int J Consum Stud., 692–715.
“Household Spending in Malaysia to Swing to 5.1% Real Growth next Year: Fitch Solutions.”
Www.thesundaily.my, 21 Oct. 2021, www.thesundaily.my/business/household-spending-in-
malaysia-to-swing-to-51-real-growth-next-year-fitch-solutions-GH8485686.
Keane, J. (n.d.). As The Pandemic Evolves, Foodpanda Says Delivery Is “More Prominent In
Everybody’s Thinking.” Forbes. Retrieved May 7, 2023, from
https://www.forbes.com/sites/jonathankeane/2020/11/17/as-the-pandemic-evolves-
foodpanda-says-delivery-is-more-prominent-in-everybodys-thinking/.

Merritt, J. A. (2010-2012). Marketing Channels: A Content Analysis of Recent. Scott College of


Business, Indiana State University,, 224-230. Retrieved from
http://dx.doi.org/10.1080/1046669X.2013.803425

Nikkei Staff. “Toyota and Honda Shut Production as Malaysia Enters Lockdown.” Nikkei Asia, 1
June2021,https://asia.nikkei.com/Spotlight/Coronavirus/Toyota-and-Honda-shut-production-
as-Malaysia-enters-lockdown
Povera, A. (2020, March 21). Covid-19: Govt sets new face mask ceiling price, bans export | New
Straits Times. NST Online. https://www.nst.com.my/news/nation/2020/03/576681/covid-19-
govt-sets-new-face-mask-ceiling-price-bans-export

Rosenbloom, B. (2013). Marketing Channel 8th Edition. Philadelphia, Pennsylvania, United States:
Thomson South-Western.

Unknown. “Rise of the PPE Industry.” MIDA | Malaysian Investment Development Authority, 21
June 2020, www.mida.gov.my/mida-news/rise-of-the-ppe-industry/.
Six key trends impacting global supply chains in 2022 - KPMG Singapore. (2022, July 26). KPMG.
https://kpmg.com/sg/en/home/insights/2022/03/six-key-trends-impacting-global-supply-
chains-in-2022.html

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5.0 APPENDICES

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