Business Analysis of Cosway Company

This assignment is the analysis and researches about COSWAY SdnBerhad. It will not be completed successfully if not for the concerted efforts of various individuals and we give my heartfelt thanks to our lecturer, friends, and family members. First of all, we would like to give our highest gratitude to Dr. Yusliza MohdYusof, Dr. Shankar Chelliah and Dr. KhairulAnuar B. Mohammad Shahour International Business (ATW 395_ATP 393) lecturers who taught and gave invaluable guidance on completing this report.

Without our Lecturers help and guidance, this assignment will not meet its completion deadline. Heartfelt thanks to our family members for providing help, support and guidance while completing this assignment. They kept us motivated all the time which made it possible for us to complete our assignment with full commitment.

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We also feel it is important to acknowledge and thank our group members for providing us with the help we needed all the while. A special thanks to Abdul HadiMansor our group leader, RuuhulAzmanniahBTYusof, NorIzianieBinti Abdul Halim, Xiao Yan and Song Xueliang. Last but not least, we would like to thank God for his blessings and for blessing all that are directly and indirectly involved in the completion of this assignment. Again, thank you to all individuals and organizations that made this assignment possible, without your cooperation, this assignment might not be successful.

BACKGROUND OF COMPANY

COSWAY (M) is one of the pioneers in the direct selling industry in Malaysia. Since 1979, Cosway (M) has established a significant presence in Malaysia and has also grown into a regional player notably in Taiwan, Hong Kong, South Korea, Indonesia, Thailand, Australia, Brunei, Macau and Singapore. The Group adopts a unique business model by establishing a vast and efficient distribution network comprising a membership of some 870,000 independent business owners who are supported by more than 1,500 stores and stokist centers.

This makes its range of over 1,400 personal care, health and nutrition, skin care, cosmetics, household and car, food and beverage, kitchenware and other consumer products within easy reach of customers. Mr. ChuahChoongHeong has been appointed as Executive Chairman of the Board, Chief Executive Officer of Cosway Corporation Limited with effect from 17 March 2010. He is the founder of Cosway (M) Sdn. Bhd. and is currently the managing director of Cosway (M) Sdn. Bhd. and a director of eCosway. com Sdn. Bhd.. Both Cosway (M) Sdn. Bhd. and eCosway. com Sdn. Bhd. became the company’s wholly-owned subsidiaries in 2009. Mr.

Chuah is also currently the Chief Executive Officer of Cosway Corporation Berhad, chairman of Singer (Malaysia) Sdn. Bhd. and holds directorship in various other subsidiaries of Berjaya Corporation Berhad, a substantial shareholder of the Company. Prior to that, he was the General Development Manager of Sterling Drugs (M) Sdn. Bhd. and General Sales Manager of Warner Lambert (M) Sdn. Bhd. He holds a Diploma in Marketing from Australia and has experience in the marketing of pharmaceuticals and consumer products. Under Al’s leadership and Berjaya’s financial strength and Networking experience, Cosway has grown by leaps and bounds.

Cosway began operations in December 1979, with a simple concept of distributing quality products at highly competitive prices through a unique Network Marketing system. Today, it has grown to become one of Asia’s largest Network Marketing companies. The COSWAY formula has helped thousands of members to achieve tremendous financial success. COSWAY distributes a wide range of exclusive, quality products from established manufacturers all over the world. What is Network Marketing? Network Marketing is a business that has evolved since the early 1950s into a multi-billion dollar industry.

Today, millions of people worldwide are involved in this business, regardless of age, sex, education or past business experience. Some facts about Cosway are,COSWAY brings together the 5 Principles of Marketing in a unique, mutually supportive system that has proven to be highly successful in helping thebusiness efforts such as Product, Price, Promotion, Physical Distribution, and Plan.

PROFILE OF COMPANY

The firm was established in 1979 in industry of direct sales as consumer marketing. The people that involved in the internationalization decision is 2 person.

That person is EngCheow Fern and her husband, Than Ah Hock. The Coswaybranchlocationat Bukit Gambir, Pulau Pinang near to theUniversitySainsMalaysia. She said the direct selling companies emphasize the uniqueness of the merchandise, from that we can find the similar products and the price is cheaper by a mile. Consumers to families buy “cheap” goods, consumption rates are used as points to redeem for free or low-cost in exchange for thousands of gifts, natural to become loyal customers, so the performance of the company increased year after year, is now number one in Malaysia Discount stores.

According to her, the company must have rich business experience, international experience and postgraduate highest level of education because that the key decision making team had at the time the firm started to international. The firms begin to enter the international market over 10 years. In term of laborer, 500-999 people at the time the firm began to enter the international market, but in term of capital, over 50 million enter the international market.

Before internationalizing the firm, every week they did the key decision makers scan for international market information. The percentage of information used in the internationalization decision making process come from each of the following sources like family of 5%, business partners of 15%, newspapers, magazines, radio, and television of 5%, friends of 5%, internet of 5%, trade fair and business associations of 15%, acquaintances 15%, government of 20%, scientific reports and journals of 10% and other of 5%.

The reasons that her make decision for internationalization is effective supply chain management for the firm like to find new markets, to fill market niche, to keep current customers, to better manage cash flows, to get better finance, to lower tax payment, to fulfill the government’s plans, to improve brand equity (image), and to try new business model. In addition, for the manager is to gain fame and reputation.

ENVIRONMENT FACTOR

As known to us, environmental factors are factors that exist in the physical surrounding around us which affects us, either positively or negatively. As well as environmental factors includes that like culture, political stability, education and so on. Culture Culture is a system of values and norms that are shared among a group of people and that when taken together constitute a design for living.

Religion: The most of Malaysians are Muslim. Islam is the world’s second largest religion. People do not own property, but only act as stewards for Allah. Supportive of business, but the way business is practiced is prescribed. For their own culture, their religious practices include daily prayers (solat), fasting during Ramadan, almsgiving (zakat), and the pilgrimage to Mecca (hajj) at least once in a lifetime.

Other important concepts include jihad, Islamic law and jurisprudence. The countries such as Australia, Britain, and the United States of America religion is Christians. Christianity is the world’s largest religion. It can be found throughout Europe, the Americas, and other countries settled by Europeans.

Education: Malaysia has both public and private education systems. Education in Malaysia is overseen by two government ministries. The Ministry of Education (KementerianPelajaran) handles matters pertaining to pre-school, primary school, secondary school and post-secondary school. Matters regarding tertiary education are dealt with by the Ministry of Higher Education (KementerianPengajianTinggi). Although education is the responsibility of the federal government, each state has an Education Department to coordinate educational matters in its territory. The main legislation governing education is the Education Act of 1996.

Formal education is the medium through which individuals learn many of the language, conceptual, and mathematical skills that are indispensable in a modern society. Compulsory education in Western countries is 11years, and is divided into five stages: kindergarten (scholar maternal), elementary school (scholar elementary), middle school(scholar medium, )high school (scholar superior), and college school (scholarship).

The politics of Malaysia takes place in the framework of a federal constitutional monarchy, in which the Yang di-PertuanAgong is the head of state and the Prime Minister of Malaysia is the head of government. Executive power is exercised by the federal government and the 13 state governments. Federal legislative power is vested in the federal parliament and the 13 state assemblies. The judiciary is independent of the executive and the legislature, though the executive maintains a certain level of influence in the appointment of judges to the courts. The Constitution of Malaysia is codified and the system of government is based on the Westminster system. Both of two countries belong to the individualism. Individualism refers to philosophy that an individual should have freedom in his own economic and political pursuits.

A political system is a system of politics and government. It is usually compared to the legal system, economic system, cultural system, and other social systems. The politics of Western countries, South Korea and Japanare conducted through a parliamentary, democratic republic with a multi-party system. Executive power is exercised collectively by the Council of Ministers, which is led by the President of the Council, in jargon referred to as “premier”, “primo ministry” or “prime minister” in English. Legislative power is vested in the two houses of parliament primarily and secondarily on the Council of Ministers. The judiciary is independent of the executive and the legislative branches.

Because of different living standards between targeted countries and Malaysia, that is must be some difference in purchasing goods. Living standards reflect the consumer attitude. So, something sells in two counties, there are different sales quantity happened. And when we sell the goods into the different living standards, we have to consider the local living standards for different selling strategy.

Regulatory costs and rules: we need a set of common rules, which to improve work efficiency, as well as reduce cost through the common rules. In international business, we also need to pay attention to tariff. Under a tariff rate quota, a lower tariff rate is applied to imports within the quota than those over the quota. So reduce costs that achieve the business advantage. Obviously, common rules how important for company. Of course, there are different rules in different countries. However, no matter where, every one of the company should strictly abide by the rules.

DISCUSSION

COSWAY brings together the 5 Principles of Marketing in a unique, mutually supportive system that has proven to be highly successful in helping thebusiness efforts such as Product, Price, Promotion, Physical Distribution, and Plan. Extensive range of quality products to meet every need such as Healthcare, Personal Care, Home Care, Auto Care, Food, Fashion and Apparel. These products are readily in demand as they fulfill the everyday needs of customers. Many possess unique features that distinguish them from other products in the market. Together, they ensure repeat sales and growing customer base.

Dynamic New Product Introduction -COSWAY listens to its customers and analyses current market trends to understand their changing needs to continuously develop and introduce exciting value-for-money products and services throughout the year. COSWAY’s ever-expanding product range is its way of boosting and maintaining product demand and sales growth. Great-Value Pricing to retain customer loyalty. Known for providing great value-for-money products, COSWAY’s pricing strategy allows its quality products to be more affordable and appealing to a wider range of people.

COSWAY achieves this by purchasing in large quantities directly from manufacturers, and then passing on the big-volume discounts to its members and customers. All-year-round excitement makes recruitment and selling easier. COSWAY believes in proactive, aggressive, exciting promotions to help members recruit more members, attract customers and retain customer loyalty. Monthly Promotions – Members can look forward to exciting offers and bargain buys all-year-round. In addition to COSWAY’s regular products, these promotions also include gift, food items and innovative products at lower-than-retail prices.

Great Redemption Programmer – Members simply love this! Hundreds of valuable gifts can be redeemed for totally free or at below-cost prices by collecting Redemption Coupons when they purchase COSWAY products. Redemption Point (RP) – Special price reductions on COSWAY products for members. Training and Product Demonstrations – Conducted regularly throughout the country to help members train their network of downline members. PHYSICAL DISTRIBUTION-COSWAY products are made available wherever we are. COSWAY products are available at hundreds of easily accessible sales centers located throughout the country.

This ensures that there will always be a centre close to where we or they downline members work or live. This gives us great advantages examples, no keeping of stocks for our down line members. We buy only what we need. No delivery of products to our downline members because they can buy directly from the sales centers too. Also lets our recruit members anywhere, everywhere. The sales centers are present at every part of the country, next to where you work or live and also in shopping complexes. PLAN-A lifetime of income earnings.

The COSWAY Bonus Plan is an amazing compensation plan with unlimited income potential. Its unique “No Breakaway” feature ensures that the income we build today lasts well into the future. We can even will our income to our children. Build Our Group And Keep It Forever! That’s mean; everyone you introduce into COSWAY becomes a branch of your network. Everyone that these new members and their downline members subsequently introduce, become branches of your network too. There is no ‘breakaway’ in the COSWAY system.

This means that COSWAY does not limit the number of branches or levels, or set a certain sales volume after which a branch of your network is separated from you. In COSWAY, the members in your network will always remain with you. You are thus assured of continuous and unlimited growth. COSWAY products are made available through a vast and efficient network of Stockiest and Redemption Centers located throughout the country – placing you within easy reach of our range of quality products. External factors Cosway has taken its competitors very seriously.

They have analyzed their competitors in Malaysia such as 7-Eleven and Watson. They have also analyzed their competitor in their targeted countries and the world as a whole. The customers have been given top priorities by Cosway. Such in Malaysia, they make sure that their product is halal and can be consumed by the people of Malaysia. This is because the majority of Malaysian people are Muslim. It is the same for the targeted countries like in Brunei and Indonesia. The suppliers of Cosway are thoroughly picked so the product that they are selling is the best and are in top notch condition.

The price is made sure to be available for all kind of people of living standards and is made sure it is affordable for them. Political The politics must be taken into consideration in order to be successful. In Malaysia Yang di-PertuanAgong is the head of state and the Prime Minister of Malaysia is the head of government. The ruling party in Malaysia is BarisanNasional. To make sure the business is in order and safe, Cosway follows the rules in Malaysia. Their also follow the business ethics in Malaysia such as selling halal products. It is the same when they are doing business in other countries.

Living standards Because of different living standards between targeted countries and Malaysia, there must be some difference in purchasing goods. Living standards reflect the consumer attitude. So, something sells in two counties, there are different sales quantity happened. And when Cosway sells the goods into the different living standards, Cosway have to consider the local living standards for different selling strategy. Internal factors Coswayhas a set of common rules, which to improve work efficiency, as well as reduce cost through the common rules.

To go international, Cosway pays attention barriers such as tariff. Under a tariff rate quota, a lower tariff rate is applied to imports within the quota than those over the quota. So reduce costs that achieve the business advantage. Technology is the soul of a company. So, Cosway is very particular of this as they wish to internationalize their products such as skincare and household products. Shortening period of product life cycle requires Cosway to accelerate their technological upgrading. As an international firm, Cosway has contacts all over the world.

Cosway owns 100% of the venture. By green field investment, it means Cosway starts a new venture in a foreign country by constructing new operational facilities from the ground up. In addition to building new facilities, E-cosway also creates new long-term jobs in the foreign country by hiring new employees. It has used this method of entry to go international.

Cosway is currently using this entry to go to their targeted countries such as Singapore, Brunei, Thailand, Indonesia, Taiwan, Hong Kong, Australia, Korea, Japan, New Zealand, United Kingdom, and United States of America. Cosway also acts as franchisor and franchisee. Cosway goes international by franchising its company to others in different countries. As a franchisor, it helps its franchisee by assisting with the condition the franchisee must abide by the rules how the franchisor does the business. Cosway exports its product to internationalize them.

Among their products are household, skincare, personal care, cosmetic, organic food, car care and health and beauty products. Cosway way of exporting is direct export without foreign partner. Besides exporting, Cosway also imports products from other countries to internationalize their product. They import the products and introduce and sell it to the home country. Coswayway of importing is through import through cooperative (non-equity) partner (s). The principal reason is usually to avoid slicing the profit pie into more, and possibly smaller, pieces to maintain a high net income.

Outsourcing is also one the way entry uses by Cosway to go international. Outsourcing is when a company contracts with another company to provide services that might otherwise be performed by in-house employees. Outsourcing reduces the cost of operation. So, it is a very good way to be successful without using a lot of cost. Cosway acts as both outsourcer and outsource. Cosway outsources people from another country to do the task for them. They took this approach as this approach has lower cost instead using people from their own region.

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Business Analysis of Cosway Company. (2016, Dec 12). Retrieved from https://graduateway.com/cosway-berhad/