Pest Analysis and Porter Five Forces Analysis of Burger King in Malaysia

2. Industry and market analysis

2.1 PEST Analysis

2.1.1 Political Factor

        The Human Resource Minister Datuk Seri Richard Riot announced the latest minimum wages for employee by 2nd of May, 2016. The latest minimum wages had been effective by 1st of June, 2016. The monthly wages was amended according to region, which are Rm 1,000 for Peninsular Malaysia and RM 920 for Sarawak, Sabah and Labuan. Besides, the minimum hourly wages for Peninsular Malaysia is Rm 4.81 and RM 4.42 for Sarawak, Sabah and Labuan. (The Malay Mail Online, 2016) Based on the information provided by Trading Economics, the minimum wages for 2017 were remain unchanged. (Trading Economics, 2017) Moreover, the Human Resource Ministry will announce a new minimum wages by 2018. (Hashini Kavishtri Kannan, 2017)

        Based on the financial budget 2018 of Malaysia, our Prime Minister Datuk Seri Najib Tun Razak announced the personal income tax rates of the individual whose income range between RM20, 000 to RM 70, 000 will be decreased for 2 percent. Appendix 1 shows the reduction of personal income rates. Besides, Malaysia is achieving Vision 2020. Vision 2020 will lead Malaysia to advance from a developing country to a developed country, Vision 2020 aimed to improve the economy, society, politic, standard of living as well. (Malaysian Digest.com, 2014)

        By 2016, a United State of America pretzel chain, Auntie Anne’s launched Pretzel Dog in Malaysia and the Malaysian Department of Islamic Development (JAKIM) denied to certify the Pretzel Dog as Halal due to the “Dog” wording. Based on the Islam culture, “dog” was deemed to be dirty and so JAKIM refused to certify Pretzel Dog as Halal. By the October of 2016, Auntie Anne’s announced that the product name of “Pretzel Dog” will be amended to “Pretzel Sausage” in order to comply with the Islam dietary laws. (Melati A. Jalil, 2016)

        Hence, Burger King should comply with the Malaysian government and adapt to Malaysian culture in order to avoid any lawsuits or issues and to prevent their reputation be defected. Besides, the deduction of income tax may influence Malaysians to have more income and the Vision 2020 would foster the betterment of different aspects of Malaysia.

2.1.2 Economical Factor

        In recent years, Ringgit Malaysia keep on declining and it bring a lot of negative effects to Malaysia and these effects may influence Malaysia’s economy indirectly. As the declining of Ringgit Malaysia, the cost for importing goods will be increased due to the currency issue. (Martin Khor, 2017) For those fast food franchise companies who need to import goods from overseas, the cost of importing goods will be increased. Besides, it may affect the price of food provided by the fast food companies.

        Other than that, Malaysian government had removed the subsidies for cooking oil by November of 2016. But, Malaysian government will continue to subsidies the 1kg polybag cooking oil. (Firdaous Fadzil, Hanis Zainal, Danial Albakri, and T. Avineshwaran, 2016) The removal of cooking oil subsidies brings a lot of consequences to Malaysia market as well as the fast food franchise companies. Most of the fast food sold in Malaysia were fried, so it usually consumes a lot of cooking oil. Besides, the Gross Domestic Product (GDP) of Malaysia was slightly increased from 296.28 USD billion in 2015 to 296.36 USD billion in 2016. (Trading Economics, 2017) Whereas the GDP growth rate of Malaysia in the third quarter of 2017 was recorded as the highest in Asia, which is 6.2%. (Azura Abas, 2017)

So, as the subsidies for cooking oil have been removed, the cost of fast food will be increased as the same time. Hence, the economy of a country will bring a lot of effects to the market, Burger King should be ready to face the economy of a country and sustain as long as possible. As the GDP of Malaysia was improved, the standard of living of Malaysians will be improved as well. Besides, the improvement of GDP may lead to Malaysians able to spend more.

2.1.3 Social Factor

        In recent years, Malaysia have been rated as the highest obesity rate country in South East Asia. Based on the news reported by New Straits Times, the percentage of obesity in Malaysia was 13.3% and the percentage of overweight in Malaysia was 38.5%. (Farezza Hanum Rashid, 2017) Besides that, based on the research done by Nielsen, 46% of Malaysians’ Body Mass Index (BMI) are higher than 25, which means that 46% of Malaysians are overweight. (Nielsen, 2016) Appendix 2 shows the statistics of BMI of various countries. Other than that, MIMS Today stated that the Nutrition Society of Malaysia done a study about the prevalence of obesity and overweight of teenagers and children. The study indicated that about 30% of teenagers or children were either suffering from overweight or obesity. (Dr. Caren Andexer, 2016) These data revealed the seriousness of Malaysians’ obesity and overweight problem.

        Moreover, there is a trend of vegetarianism is arising among Malaysia teenagers due to the increase of their health consciousness. Besides, some of the teenagers started to be a vegetarian were because of the increase of awareness about the environment and compassion towards poultry and livestock. Based on the information provided by Google Trends, there is 90% increase in ‘vegan’ searches in 2016. Appendix 3 shows the key terms searched statistics. Other than that, the society also contributed in increase the health consciousness of Malaysian. A non-profit program, named Nutrition Month Malaysia program was founded in 2002 with the purpose of increase the consciousness on healthy eating and active living by spreading the correct nutrition information to public. (Nutrition Month Malaysia, -) Hence, Malaysians were started to decrease the Body Mass Index (BMI) rate of Malaysia and tend to be healthier by practicing a healthy lifestyle. Burger King may accord with this healthy lifestyle and introduce some products that target on this group of consumers.

2.1.4 Technological Factor

        As the technology advancement improve in these recent years, consumers are seeking for the improvement for fast food ordering process as well. Consumers are dissatisfied and bored with the ordinary ordering process, which is order and collect through cashier counter. Consumers seek for a faster, better and customizable fast food ordering process or system.

Mc Donald’s fast food chain had launched the self-service kiosk by October of 2017. The self-service kiosk is currently available at two locations, which are Bukit Bintang Mc Donald’s branch and Bangsar Telawi Mc Donald’s branch. (marketing-interactive.com, 2017) The self-service kiosk enable the customers to customize their order, such as the vegetable, sauce, meat patty. Besides, after the customers order or customize their food, they can pay directly by the self-service kiosk either by VISA PayWave or pay by debit and credit card by insert their pin number. After the payment process, customers can collect their order at the counters.