EXECUTIVE SUMMARY

Malaysia has emerged as a leading Asian economy where modern retail culture has gowned phenomenally, as a resulted attracted lots of foreign and local hypermarket brand in the market. MYDIN has emerged as one of the local dominant player in wholesale supermarket industry of Malaysia having significant market share over other local and foreign competitors. MYDIN has decided to become multinational because of highly saturated Malaysian market where a lot of competitors are operating. MYDIN has decided to invest in the small south Asian economies where consumerism is increasing at a rapid pace. Market selected is Sri Lanka which is a south Asian peninsula with the population of more than 20 million. External environment analysis of Sri Lanka has been conducted to analyze the driving and restricting forces of doing business in Sri lanka. Sri Lankan economy shows positive and favorable political, economical, social and technological trend which serve as opportunity for foreign investors to invest in the host country. Sri Lankan supermarket and retail industry is still immature and have a lot of potential to growth with the increasing trend of consumerism in Sri Lanka. Despite having a lot of competitors there is no large scale hypermarket mall concept in Sri Lanka providing service quality attributes to Sri Lanaka consumers. The statistics by Nelson on FMCG trend in south Asian market shows positive trend and great potential for consumerism in Sri Lanka. Lewin’s force field analysis has been conducted to analyze the driving and restraining forces of entering Sri Lankan market. By considering all pros and cons of doing business in Sri Lanka, the proposed mode of entry must be small scale to minimize the probability of risk of entering an unknown market with the traditional model of cost leadership. MYDIN must create appropriate training program prior entering the new market so their proposed plan and missions are contingent with their business philosophy.

1.0 CURRENT BUSINESS IN MALAYSIA
1.1 Malaysian Retail Industry
Modern retail and consumerism has attracted many domestic and international hypermarket stores, expanding swiftly in Asia pacific region because of the increase in the competition in European and American markets. By the rapid increase in the modern retail culture in Malaysia, many big domestic and international hypermarket stores are expanding swiftly. Many international chains want to come to Asia pacific region because of the increase in the competition in European and American markets. According to (Mui et al, 2003) there are more than 81 hypermarkets and supermarkets stores are operating in Malaysia. Foreign chains with limited local ownership includes Giant, Jaya Jusco, Carrefour, Tesco and Jusco on the other hand there are some local chain which includes The store, Parkson, Kee Corporation, Ocean Capital, Mydin, Bintang, Billion and Econ. Increase is consumerism has played significant role in the growth rate of local hypermarket chain in Malaysia, where domestic consumption constitutes 60 to 70% of Malaysian GDP. (Inside Malaysia, 2012)
1.2 Business Profile
More than seven big hypermarkets chains are operational in Malaysia, amongst all are competing to get the maximum share in the market. MYDIN has emerged as one of the largest hypermarket in Malaysian with the network of 12 wholesale hypermarkets chain, 18 emporiums, 3 bazaars, 53 minimarket, 10 convenience shops and 5 franchise outlets as shown in figure below.

MYDIN is famous in Malaysia amongst Malay Muslim population because its core competency is in selling “Halal” goods and services. MYDIN had operating revenue of 7 million Ringgits in 2007, which makes them biggest competitors of other international hypermarkets chains such as TESCO, GIANT, AEON and CAREFOUR. (Source: MYDIN website) MYDIN has emerged as a largest market player in hypermarket industry of Malaysia as it continues to grow in the local saturated market. (Vasantha, 2012).
1.3 Opportunities for Growth
MYDIN has an intention to go multinational by capturing new markets because of the saturated structure of Malaysian market serves as a bottleneck for their future growth and potential. Emerging Asian economies such as Sri Lanka, Bangladesh, India, Pakistan, Thailand, Vietnam and Indonesia have significant opportunities for hypermarket business growth, which creates opportunities for MYDIN to have significant presence in those countries.
1.4 Selected Market
Democratic socialist republic of Sri Lanka, is located in the South Asia neighboring with India with the area of 65,610 km2. Sri Lanka has a population of 20,277,597, which is the 57th largest population in the whole world. (DCS Sri Lanka, 2012)
2.0 PEST ANALYSIS OF SRI LANKA
2.1 POLITICAL
Government
Sri Lanka has a presidential government system where president is head of states. Sri Lanka has multi party democratic system where executive power is exercised by government and parliament. The judiciary of Sri Lanka is independent of the executive and legislation. Sri Lanka is the multi-ethnic country having two races which includes Sinhala in majority and Tamils in the minority.
Fiscal policies
Sri Lanka has emerged as an open economy by opening its door and borders allowing free trade by eliminating import tariffs and dismantling price control. Sri Lankan governments have recently introduced free trade zones and export processing zones to attract foreign investment in the country. The board of investment of Sri Lanka has created investor friendly environment engaging and assisting foreign investors by giving them licensing and modes of entry to invest in the local economy. The below figure shows the flow of foreign direct investment in Sri Lanka during its course of history, the current trend shows phenomenal growth in FDI reaching the figure of 9 billion USD.

Political Turmoil
Sri Lanka has almost overcome the ongoing going turmoil of separatist movement of Tamil tigers, which was based upon the political disagreements between Tamils and Singhalese.
2.2 ECONOMICAL
Monetary policy
Sri Lanka has been struggling hard to achieve economic and price stability, with the legislation, under which Central bank provides wide range of monetary management instruments by emphasizing more on market based policy instruments and forces. Monetary program takes into account economic factors such as fiscal balance of payments, economic growth, credit policies and inflation. Open market operations are conducted by banks within corridors of interest rate, repurchase rates and reserve money target reviewed periodically by central banks.
Trade Policy
Sri Lanka is operating under unified exchange rates using managed float system, where trade integration is measured by GDP ratio. Tariff escalation has increased in Sri Lanka to protect their local agriculture and industrial commodities.
Financing Structure
Banking structure in Sri Lanka is owned by publically owned banks as compared to private banks providing financing needs to local and international investors. Corruption in financing government project is the biggest threat for international companies engaging in financing needs with government institutions.
Gross Domestic product
Sri Lanka has been growing phenomenally in purchasing power parity, GDP growth rate, GDP per Capita and GDP composition per sector. The following graph shows the statistics of economic growth in terms of gross domestic product.
The chart above shows the GDP growth rate from 2004 to 2005; from the period of 2010 the growth rate has been phenomenal at the average GDP growth rate of 6%.

The chart above shows the per capita income of Sri Lanka, per capita GDP depicts the gross value added by the resident producers plus taxes and minus subsidies paid by government. It depicts the increasing trend of consumer income of population in Sri Lanka.

The above figure shows the contribution of each sector in Sri Lankan GDP. Service industry which includes hospitality industry, IT industry, telecomm industry and retain industry plays a dominant role in overall GDP.

2.3 SOCIAL
Social indicators of Sri Lanka indicate positive development in social trends such as literacy, health, sex ratio, population and other social trends. Following graphs depicts the social trends in Sri Lanka.
Literacy

According to the census of 2012, literacy level in Sri Lanka is defined as individuals above age of 15 who can read and write. 90% of Sri Lankan population can read and write amongst which 92.3& are males and rest 89.1% are females.
Population
Total population of Sri Lanka is 21 million amongst which 69.1% are Buddhist, 7.6% are Muslims, 7.1% are Hindus, 10% are Christians and other 10% have unspecified religions are shows in graph below.

2.4 TECHNOLOGICAL
Infrastructure
Sri Lanka has a well developed infrastructure consists of 62140 miles of roads, 1208 miles of railway network. Sri Lankan government is actively engaged in improving, rehabilitating, and extending the existing network because of the increasing population creating traffic issues. Sri Lanka has 18 airfields supporting domestic and international flights. Hydropower is the major source of producing electricity in Sri Lanka whereas rest is produced by thermal and windmills.
Communication
Telecommunication industry is the largest and fastest growing industry in Sri Lanka, providing telephones services, cellular services, broadband services and other data communication services around the country. However transformation rate of technology is still slower than other countries such as Malaysia and Thailand.
3.0 BUSINESS ANALYSIS IN SRI LANKA
Hypermarkets and supermarkets are one of the fastest growing industries in Sri Lanka. Concept of supermarket in Sri Lanka was introduced in 80’s, since then they have captured large number of population to fulfill their shopping needs. There are more than 300 supermarkets outlets hold by foreign and local companies some of the leading companies are Cargills, John Keells Holdings, and Richard Pieris etc, while others are small scale supermarket chain such as Magna, Crystal, magna e.t.c.( Gajanayake et al, 2011) Despite increase in high intensity of competition amongst different supermarket chain in Sri Lanka, there is a very big vacuum existing which needs to be filled with some established name. (Gajanayake, 2007)

The above figure shows the trend of growth in fast moving consumer goods (FMCG) industry in Asia Pacific region. The Sri Lanka statistics shows positive trend of potential in FMCS’s
4.0 BENEFITS, COSTS AND RISKS IN THE BUSINESS ENDEAVOR
4.1 Driving forces to enter Sri Lankan Market * Most of the people in Sri Lanka still rely on wet markets, which mean that the culture of shopping from supermarket has not been penetrated into the market. * Increasing purchasing power of Sri Lankan consumers creates an opportunity for MYDIN to enter a new market segment with their offerings of consumer goods, shopping goods and specialty goods. * There is no concept of hypermarket mall in Sri Lanka, which provides opportunity for companies like MYDIN to create a new concept of hypermarket. * Muslim population comprises of 7.6% of Sri Lankans, no hypermarket is catering their need for Halal food where serves as driving force for MYDIN to enter Sri Lankan market. * The quality of food and beverages offered in the local supermarkets does not meet high standards of hygiene and safety. MyDIn with their philosophy of safe and healthy food can create new horizon to attract higher behavioral segment of customers. * MyDIN can utilize their business model to achieve high economies of scale while providing much lower price to consumers to create cost leadership in Sri Lankan market. * MyDIN has experience in providing high quality service attributes and loyalty attributes to attract new segment of customers in Sri Lankan market. * MyDIN can provide all shopping needs under one roof, which is not tradition in other Sri Lankan stores. * MyDIN can provide employment opportunities for local skilled and semi skilled labor in the market. * The cost of labor in Sri Lanka is very cheap as compared to Malaysia, which will phenomenally reduce cost of operations.
4.2 Restraining Forces to enter Sri Lankan Market * Arrangement with supplier will be the biggest challenge for MYDIN, as supermarket model requires high proximity with suppliers to create best business model. * Changes in law and FDI regulation will affect the operations and result in hedging dilemma. * Exchange rate issues between Malaysian and Sri Lankan authorities might create problems for MyDin in the long run. * The law and order situation in the country might result is unanticipated consequences for MyDIN as some regions of Sri Lanka are still under civil war. * Lack of understanding of cultural and retail pattern might affect sustainability of MYDIN in Sri Lanka.

5.0 PROPOSED MODE OF ENTRY
MYDIN, looking to become multinational need to adapt small scale modes of entry with minimum risks despite large scale entrance has its own benefits of attracting customers, distribution and deterring potential competitors but the cost of failure is very high. A small size with little strategic commitment will allow MYD to learn about foreign market with minimal risk. (Liu, 2007) Strategic option available for MYDIN is in the form of 6 modes of entry

Companies going multinational must decide that they have to enter a new market via green field investment or by acquisition of assets in the host country. Each strategy effect market structure, green field strategy adds production capacity while acquisition strategy effects change ownership and control over assets. Cross border mergers and acquisitions are mostly received using these two FDI modes. Empirical evidence in his research in Norwegian firm reveals Greenfield as a successful strategy. (Balsviky and Halle, 2009)
The best option for the mode of entry for MYDIN is joint venture with local companies to better understand the business environment, market and customers. MYDIN must also cater that venture firm strategy is consistent, as MYDIN engages in multidomestic strategy by customizing their products, offerings, marketing and other business strategy to adapt foreign business conditions with high responsiveness.

6.0 RECOMMENDATIONS
Despite having a successful orientation of business operations in Malaysia, MYDIN intending to become multinational needs to consider all the restraining forces by devising proper contingency plans and strategies prior entering Sri Lankan market. If their generic business strategy such as being a cost leader is consistent with the market structure only then they should enter a market. Supermarket business requires high reliance on negotiation with suppliers, manufacturers, distributions and customers which can serve as a threat for MYDIN to sustain as a cost leader in Sri Lankan market. MYDIN should arrange regular training and development programs for both expatriates and local employees to understand the vision and philosophy of MYDIN. Cross cultural training sessions can also be organized to better understand the local culture, tradition and purchasing patterns.
SUMMARY
MYDIN has emerged as a biggest hypermarket wholesale chain in Malaysia having significant market share in Malaysia. MYDIN plans to become multinational by having significant presence in Asia. The selected country for entry is Sri Lanka, which is one of the emerging growing south Asian country with the population of more than 20 million. PEST analysis of Sri Lanka reveals the potential of Sri Lanka to attract foreign direct investment from overseas. Consumerism has been increasing at a rapid pace in Sri Lanka attracting foreign chain of hypermarkets. Despite high competition of supermarket, there is no company providing high quality supermarket mall experience in Sri Lanka. The proposed strategy is to enter Sri Lankan market with the joint venture emphasizing more on learning the new market to generate local responsiveness and sustain as a cost leader.

REFFERENCES
Agarwal, S., & Ramaswani, S. M. (1992). Choice of Foreign Entry market Mode: Impact of Ownership, Location and Internationalization. Journal of International business Studies.

Bogahawatte, N., & Balamurali, C. (2004). Foreign Direct Investment and Economic Growth in Sri Lanka. Sri Lankan Journal of Agricultural Economics, 6(1).

Balsviky , R., & Haller, S. A. (2009). Foreign Firms and Host-Country Productivity: Does the Mode of Entry Matter?¤. Norwegian School of Economics and Business Administration.

Department of Census and Statistics ? Sri Lanka. (2012). Concensus of housing and Population 2012. United Nation Development Project.

Gajanayake, R., Gajanayake, S., & Surange, H. (2011). The impact of selected visual merchandising techniques on patronage intentions in supermarkets. 2nd international conference on business and economic research (2nd icber 2011) proceeding.

Inside malaysia, July (2012). Wholesale & Retail. Retrieved from http://etp.pemandu.gov.my/upload/Inside%20Investor%20-%20Wholesale%20and%20Retail.pdf

Sri Lanka - Foreign direct investment. (2012). Retrieved from http://www.indexmundi.com/facts/sri-lanka/foreign-direct-investment

Trading Economies (2013, May). Sri Lanka GDP Growth Rate. Retrieved July 10, 2013, from http://www.tradingeconomics.com/sri-lanka/gdp-growth