TO ANALYSE THE INTENSITY OF COMPETITION IN

COOLING TOWER INDUSTRY IN MALAYSIA

By

DANIEL CHEE SHEN ONN

ABSTRACT

Malaysia has been hit by a financial crisis since third quarter of 1997. The economies of Asian countries have progressively deteriorated. Construction growth is slowing down emerged amidst the wide spreading financial crisis regionally. As cooling tower industry is directly involved with construction a study had been carried out to analyze the intensity of competition in cooling tower industry in Malaysia. Michael E. Porter’s “Five Competition Focus” as the theoretical basis is used to analyze two cooling tower companies, namely, Marley Waterline Sdn Bhd and Linear Cooling Tower Sdn Bhd. Research was conducted in three ways. Questionnaire surveys of 52 cooling tower workers, 15 buyers and material suppliers determined the intensity of the competition. Other techniques used for data collection were structured interviews and observation. The project concluded the structure of this industry is clearly “attractive” from a profit-making standpoint. High entry barriers are preventing new rivals to gain a market foothold, competition from substitutes is weak. As the suppliers are mostly from overseas, they are able to exercise considerable bargaining leverage. The bargaining power of buyers is consider relatively low. Recommendations includes the existing firms should keep themselves on par with the current trend and improve in the state of technology. Potential entrants should consider the positioning of product differentiation in order to get into the market. The acquired data/observations of this project directly effect the cooling tower industry (including the potential entrants). The incumbents can try to maintain low intensity of competition in order to enjoy the remarkable profitability of the market. Whilst, the potential entrants may consider the conclusions and recommendations discussed above before entering into this industry.

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Bachelor of Arts (Hons) In Marketing

August 1998

Number 5