Malaysia Firms Analysis

Just finished my task in analyzing several Malaysia firms in conjunction with my university and ministry of trade. The project aims at identifying the strengths and weaknesses among Malaysia firms from a different perspectives, from the perspective of an economist.

In short, besides all the irrational determination of costs and lack of skilled labours, I found 2 major problems exist in Malaysia firms.

1. Although the concept of fordism has long been regarded as outdated and not suitable with the dynamic competition of today, I found that this is still being practised in most firms that I observed. Fordism assembly line production causes 1 major problem: difficulty in identifying problem. Since all the works are routinely done, problems are ignored. This cause major disruption in the process of economic value added and more importantly, have spill over effect that will lead to several problems. When such condition arise, the root of these problems is hard to identify, thus making the problem solving process irrelevant. Although most firms are good in problem solving, they are not at all good in identifying problems.

2. This is a major problem for Malaysia not only for firms but government as well. The problem is the problem of cost and benefit projection. Most firms do not scientifically estimate the costs (including opportunity cost) and benefit of a project, making any project irrelevant and insignificant. Of course they may still end up with positive net benefit but the unsystematic risk involved should not be borne and can easily be eliminated. Furthermore, the importance of opportunity cost is often ignored, making the projection of costs and benefit irrelevant. The clearest example of this second problem is marketing project. One of the firms I observed was planning to have a marketing plan to increase their revenue. They planned to have their labours involve in local community service (similar to project "anak angkat"). They wished to have their labours becoming foster children of local elders, gaining their confidence in the firms and increase the value of their brand. However, no proper estimation was done before the project. After 2 months of implementation, the project ended with insignificant increase in revenue. However, the management of this firm concluded that although the project did not produce significant increase in revenue, but the costs involved is minimal and they were satisfied with the project.

I don't think I have to justify what is wrong with this firm and their project. It may sound foolish and we may think we will never do such thing but in reality, most firms and even government do this all the time. Presumption is so routinely practised we are used to it. Presumption such as "if I spend more time study I will earn better grade", "If I invest more in marketing I will get greater revenue" and "1+1=2 so I don't have to know why it works that way" etc.

Problem of identification of problems and problem of scientific projection of costs and benefit are all around firms in Malaysia. They do not think these are problems and they do not take proper action to solve them. They deserve to fail.