SWINBURNE VIETNAM

HO CHI MINH CAMPUS

Course: INB10002-International Business Operations

Word count: 2650 excluding references

Semester 3, 2023.
Assignment 1: A Brief to CEO on proposed project INB10002-International Business Operation
Date of Submission: 7/6/2024
Name: Huynh Phuong Nghi
Student ID: SWS00645- 104971731

Title
Prepare brief for the CEO of an Australian owned luxury perfumery, 'Fragrance Ambrosia' which
intends to enter three foreign markets in the not-so-distant future (2022/23). Investigate the
different markets by reflecting on your learnings throughout the course and identify key issues
and make recommendations for consideration by the CEO.

The CEO has expressed interest to launch the Australian perfume brand in Malaysia, Brazil and
USA. You must choose two of the markets and prepare a report for the CEO. In doing so,
consider the following as relevant to your chosen markets and make recommendations:
Abstract:
Our Australian-owned luxury perfume brand, Fragrance Ambrosia, intends to enter two potential
markets in 2022 and 2023. Therefore, market research is necessary to determine the main
problems. That is the main objective of this report. This study will address issues affecting the
perfume market's promotion. This report looks at two markets: Malaysia and the USA using a
combination of established international business theories, relevant concepts, and empirical data,
the research provides a well-rounded perspective on the intricacies of these markets. It also
drawing information from many relevant peer reviewed academic journals along with some
website such as Market & Data, Statista, United States Archives and etc. Each country market
will have its own section of the study. It will be made clear which weaknesses and strengths need
to be overcome or developed. Additionally, The research goes beyond a thorough market
analysis to include recommendations.

Table of content
Title..................................................................................................................................................1
Abstract............................................................................................................................................1
Table of content...............................................................................................................................2
Introduction:.....................................................................................................................................2
Body.................................................................................................................................................2
Malaysia.......................................................................................................................................2
Legal, economic, political & cultural environment..................................................................3
Home and host nation relations................................................................................................3
Market entry, growth, barriers and enablers.............................................................................4
Staffing considerations in the foreign markets.........................................................................4
Marketing strategy....................................................................................................................4
Sustainability related considerations and Risk factors.............................................................5
Business forms..........................................................................................................................5
USA..............................................................................................................................................5
Legal, economic, political & cultural environment..................................................................5
Home and host nation relations................................................................................................6
Market entry, growth, barriers and enablers.............................................................................6
Staffing considerations in the foreign markets.........................................................................6
 Marketing strategy....................................................................................................................6
Sustainability related considerations and Risk factors.............................................................7
Business forms..........................................................................................................................7
Conclusion and recommendations...................................................................................................7
References........................................................................................................................................8

Introduction:
It makes sense that companies would want to grow in the realm of international business. The
purpose of this research is to offer a strategic road map for the successful entry of 'Fragrance
Ambrosia,' an Australian luxury perfumery, into the markets of Malaysia and USA. This analysis
will help 'Fragrance Ambrosia' navigate the challenges of international expansion by carefully
examining the political, legal, economic, and cultural landscape of each market. This is
accomplished by carefully reviewing data from international financial repositories, cultural
evaluation instruments, and publications with an industry focus, guaranteeing a combination of
macro and micro insights. Furthermore, we would also perform a comprehensive analysis of the
relationship between Australia, the home country of "Fragrance Ambrosia," and Malaysia and
USA, the possible host nations, in this research. Next, we will examine and share details about
what it takes to get into the markets, potential obstacles for our brand, potential benefits, and
how our targeted market is expanding inside the selected countries. Research has also been
conducted on sustainability and personnel considerations and the risks the brand would have to
put in mind when it decided to be a part of the new markets. And with the above facts in hand,
we can finally discuss and devise tactics to target those markets and suggest the business
structure that the brand should adopt in each market in order to survive and thrive which are the
final purpose of this essay.

Body
Malaysia
Legal, economic, political & cultural environment
Relationship-based political systems are frequently the source of opposition to reforms in
Malaysia intended to strengthen corporate governance and safeguard shareholders' interests
(Jamil, 2017). The blending of politics and business can affect a company's profitability and
governance frameworks, among other things (Saba et al., 2016; Ng & Yeoh, 2012). Furthermore,
the fight against unethical behaviors in Malaysia is complicated by the existence of cronyism and
corruption, which are supported by money politics (Jones, 2022; Azmi & Zainudin, 2020).
Businesses that operate in the nation may suffer if the political will to combat corruption issues
wanes.

cultural perspectives are essential in the context of service quality and customer satisfaction in
Malaysia. Studies have shown that cultural differences can influence perceptions of service
quality and customer loyalty in Malaysian e-commerce settings (Kassim & Abdullah, 2010).
Malaysia's diverse society, which includes Malay, Chinese, Indian, and indigenous communities,
contributes to a rich tapestry of cultural norms, values, and practices that impact business
dynamics.

Malaysia's legal environment is characterized by a mixed legal system that includes Islamic law,
customary law, and civil law (Satrio Abdillah et al., 2023). This diverse legal system can present
challenges and opportunities for businesses entering the market. One crucial aspect that
Fragrance Ambrosia needs to consider is the regulatory framework for Islamic financial
transactions in Malaysia. The country has been positioning itself as a hub for Islamic finance,
with significant policy initiatives and legal reforms aimed at promoting local and cross-border
transactions in this sector (Engku Ali & Oseni, 2017). Understanding and complying with the
legal and regulatory requirements specific to Islamic finance will be essential for Fragrance
Ambrosia if it plans to engage in financial transactions within this framework.

Malaysia is a rising Asian nation that has done a great job of diversifying its economy in the last
several years from being a raw material exporter. In contrast to original and market predictions
of 3.9%, Malaysia's GDP increased by 4.2% year over year in the first quarter of 2024. This was
an acceleration from the downwardly revised 2.9% growth in the previous three months. With
positive contributions from nearly every sector, the construction sector led the way (11.9% vs
3.6%), followed by mining & quarrying (5.7% vs 3.5% in Q4) and services (4.7% vs 4.1%). This
was the quickest economic increase in exactly a year (trading economics, 2019).

Home and host nation relations

Australia and Malaysia have a strong economic relationship with significant trade ties. The
Regional Comprehensive Economic Partnership (RCEP) has played a crucial role in influencing
Malaysia's manufacturing industries Rahman & Sharma (2023). Additionally, issues related to
illegal trade at the border of East Kalimantan-Malaysia have implications for the ASEAN
Economic Community (AEC) (Asri, 2017). Furthermore, defense cooperation in the Free and
Open Indo-Pacific region, involving countries like Indonesia and Australia, underscores the
broader strategic partnerships that influence economic and security dynamics in the region
(Soedarman et al., 2020). These references collectively shed light on the multifaceted nature of
Australia and Malaysia's economic relations, encompassing trade agreements, regional economic
partnerships, and the intersection of economic and security considerations in the Indo-Pacific
region.
Market entry, growth, barriers and enablers
Despite obstacles faced by other businesses, like as the effects of the Covid-19 pandemic,
Malaysia's perfume industry has demonstrated development and resilience (Nazri et al., 2020).
The number of new fragrances hitting the market each year is steadily rising, and in an effort to
improve the shopping experience for consumers, there is increasing interest in creating systems
for classifying perfumes according to their olfactory profiles (Veramendi et al., 2013). The
emphasis on enhancing the customer experience is in line with the requirement for efficient
analysis to verify the genuineness and caliber of perfume goods (Gebicki et al., 2015). It is
anticipated that Malaysia's fragrances sector will bring in US$0.38 billion in sales by 2024
(STATISTA, n.d.). The Fragrances market is also expected to generate US$169.5 million in
eCommerce revenue, with a projected growth rate of 20% from 2023 to 2024 (ECDB, n.d.). The
Malaysia perfume market is a highly attractive one for "Fragrance Ambrosia," as this shows. But,
according to Lim there isn't a certain market leader in terms of brand share due to Malaysia's
fragmented fragrances industry. This is a chance for foreign companies and internet retailers to
join this market (2020).

Staffing considerations in the foreign markets

When Fragrance Ambrosia enters the Malaysian market, it should take the following personnel
factors into account:

Local Knowledge: To better grasp the needs of the target market, use staff who are acquainted
with Malaysian preferences and the country's competitive landscape.

Cultural Adaptation: In account of Malaysia cultural diversity, it would be wise for the brand to
train staff members or select a varied workforce to ensure they are sensitive to local customs and
habits (BRITANNICA, n.d.).

Language Proficiency: To facilitate efficient communication and operations management, make

sure every employee is fluent in Malay, English, and Chinese (BRITANNICA, n.d.).

Marketing strategy
In terms of a variety of characteristics, Gen Z over-indexes in comparison to those who wear
fragrances exclusively. One reason is that, compared to Millennials, customers between the ages
of 13 and 26 are more engaged with the fragrance sector and score best when it comes to heavy
consumption, or wearing scent at least three times a week (Albrizio, 2023). In Malaysia, youth
purchasing intentions can be influenced by digital marketing techniques, especially those
including social media (Shien et al., 2023). In order to interact with tech-savvy Malaysian
consumers and establish a strong online presence that influences purchases, Fragrance Ambrosia
ought to investigate digital marketing avenues.
Sustainability related considerations and Risk factors
In order to preserve ecosystems and biodiversity, the sourcing of raw materials for fragrances,
including essential oils, needs to follow sustainable procedures (Sharmeen et al., 2021). The
utilization and extraction of essential oils may have an impact on the environment, thus it's
critical to address concerns about safety, market demand, and authenticity (Sharmeen et al.,
2021). For handling and industrial processing, scent encapsulation is advised in order to improve
stability, minimize evaporation, and guarantee regulated release (Perinelli et al., 2020; Russell &
Bruns, 2023; Wu et al., 2023).

Business forms
There are a few things to consider while figuring out what business structure Fragrance
Ambrosia would take when it enters Malaysia. For international businesses wishing to create a
foothold in Malaysia, there are a number of choices available in the country's business
environment. Fragrance Ambrosia may want to think about forming a joint venture with a nearby
Malaysian business. Joint ventures can help navigate the complexity of the Malaysian market by
giving access to local distribution networks, resources, and market knowledge (Abdullah &
Kadir, 2019).

USA
Legal, economic, political & cultural environment
The United States' cultural landscape is broad and complex, with different groups being
influenced by it in different ways. This would undoubtedly have an impact on the brand's
decision regarding which market group to target when entering the country. Furthermore,
individualism is a defining feature of American culture, in contrast to cultures such as Chinese
culture, which places a higher priority on the "greater good" (Bouvain et al., 2013). Numerous
facets of American society, such as social relationships, attitudes, and habits, are influenced by
this emphasis on individualism. Furthermore, societal standards and expectations are greatly
influenced by American cultural ideals including freedom, transparency, and honesty (Delani,
2019). These principles would eventually affect Fragrance Ambrosia’s customers’ choices.

The US political environment is notorious for its unpredictability and volatility, which can
undermine investors' and entrepreneurs' confidence. It can be difficult for new businesses to
navigate and make long-term plans because of this uncertainty, which can result in a lack of
clarity on tax laws, regulatory regulations, and other business-related matters (Disrupt
International, 2023). So, it is no doubt the brand needs to put this in mind when entering the new
market.

With respect to nominal GDP, the US economy is the largest in the world and is distinguished by
high levels of productivity, technological innovation, and competitiveness. It is diverse, highly
developed, and driven by the private sector. The US economy is performing well. The US
reported 2.1% real GDP growth in the ten years leading up to 2022, which was significantly
higher than the G7 average of 1.7% (United States Archives, 2024). Such advanced economic
growth would allow the people of the USA to have more disposable income to spend on
Fragrance Ambrosia’s products.

The legal environment in the USA can significantly impact Fragrance Ambrosia's market entry.
With more than 1300 regulations affecting organizations and industries at the municipal, state,
and federal levels, the US regulatory system is renowned for its complexity (Senten & Engle,
2017). So, it is important for Fragrance Ambrosia to conduct thorough research about all these
regulations.

Home and host nation relations

As a friend, partner, and ally of the United States of America, Australia is very important. The
United States and Australia enjoy close ties because of their similar cultures, shared principles as
democracies, and common interests. These two countries have a number of alliances, including
the Australia-United States Free Trade Agreement (AUSFTA), which went into effect on
January 1, 2005. In the fifteen years since it was implemented, commerce in products and
services between the two nations has nearly doubled (DFAT, 2021). This would facilitate
Fragrance Ambrosia's entry into the American market.

Market entry, growth, barriers and enablers

In 2022, the US fragrance market was estimated to be worth USD 6.14 billion. By 2030, the
market is expected to be worth USD 10.27 billion, expanding at a compound annual growth rate
(CAGR) of 6.2% (Market & Data, n.d.) Furthermore, the industry is expanding due to the
increased influence of social media and influencer marketing among Americans, particularly
among adults. In addition, as more men show an interest in grooming and self-care, the market
for men's fragrances is growing. Because of that it is no doubt that the USA market will bring a
lot of profit to the brand if they participate. The US perfume market is fiercely competitive,
dominated by well-known names like Calvin Klein, Chanel, and Dior. To stand out, new
competitors must set themselves apart with distinctive scents, packaging, or marketing
techniques (Technavio, 2023).

Staffing considerations in the foreign markets

Australian and American cultures seem to be very similar on the outside. Both have a common
English heritage and language and are primarily of Caucasian/Anglo-Saxon ancestry (Guest
Author, 2011). So, it would be easier for the brand to have some Australian to control the brand
in the USA. However, it is still essential for the brand to have American partner because it would
help the brand more information about the locals and adjust their brand more precisely.
Marketing strategy
After China and India, the United States had the third-largest global social media readership as of
2022. With over 91 percent of Americans using social media, the country is home to over 302
million social media users (Statista, 2022). Eight hours a day, or about twice as much time, are
spent with digital media by American consumers as with traditional formats. In the nation, there
has been a steady increase in the use of digital media since it began in 2018 (Statista, 2023). So,
to attract consumers and thrive in the USA’s perfume market, Fragrance Ambrosia need to invest
in the digital marketing.

Sustainability related considerations and Risk factors

As mentioned before, The US perfume business is very competitive because there are a number
of well-known perfume companies like Calvin Klein, Chanel, and Dior that have been there for a
while (Technavio, 2023). There could be intense rivalry that hinders our penetration and
expansion. because Americans have a wide range of hobbies and fashion preferences. If
Fragrance Ambrosia perfume company does not make a lot of changes and improvements, it will
be difficult for it to build a name in the US market.

Business forms
A foreign manufacturing subsidiary would be the best corporate structure for Fragrance
Ambrosia to choose if it decides to join the American market. This option gives Fragrance
Ambrosia the best long-term chances of success in the fiercely competitive and tightly regulated
US perfume sector, even if it necessitates more capital and dedication than other entry strategies.

Conclusion and recommendations

In conclusion, Fragrance Ambrosia must adjust to the particular demands of each country due to
its distinct environment. Investigating these scent markets yields important information about
buying patterns and the age group that makes the greatest purchases. It's critical to adjust to
global conditions. In order to connect with international markets, Australian businesses need to
obey legislation and modify their plans. Gaining insight into these markets facilitates the creation
of winning marketing plans that raise sales and consumption.

After conducting a through and through research of each market, I come up with
recommendations for the brand for each new market:

Malaysia: Fragrance Ambrosia would need to employ the locals in order to have a better gasp of
the market. Australian perfumery owners can simply open this perfumery since flowery incense
is similar. Beyond fragrances, the marketing approach needs to be dynamic to appeal to the 25–
34-year-old demographic, which makes up 30% of the eCommerce personal care market (Lim,
2020). Ambrosia Fragrance can easily reach its target audience by using social media to create
online stores and ads.

United States: Trade and exports are booming as a result of the friendly relations between the
two nations and the Australia-United States Free Trade Agreement (AUSFTA). The most crucial
thing to keep in mind when joining this market is how crucial a well-thought-out marketing
approach is. Fragrance Ambrosia must be cautious while creating a market plan to compete with
other international fragrance brands because brand rivalry is strong.

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