MBOC7143 Business Economics Assignment-02 SEPT 2025 Universiti Malaya Wales – Faculty of Business

TASK DESCRIPTION – ASSIGNMENT 2  (WRITTEN REPORT) (50%)

EcoBrew’s Strategic Dilemma in Malaysia’s Economy

In 2018, Jason Tan founded EcoBrew Sdn. Bhd., a boutique beverage company born from his passion for premium coffee and sustainable living. What began as a small operation brewing cold-brew coffee for friends and family quickly evolved into a business with both bottled cold-brew production and café-style service outlets. By 2025, EcoBrew was producing 30,000 bottles a month and ran four cafés across the Klang Valley, employing 85 people ranging from baristas to logistics staff.

Yet, despite this growth, Jason now faces a crossroads. He has ambitious plans extending bottled production to 50,000 units a month or opening 10 new cafés nationwide. Both choices promise growth, but the path ahead is filled with risks shaped by Malaysia’s evolving economy, changing consumer behaviour, and mounting competition.

The competitive environment is intense. On one side, international giant such as Starbrew and CaféLux dominate with economies of scale, extensive distribution networks, and aggressive marketing campaigns. On the other side, local artisanal players carve out their niche with unique flavours, loyalty programmes, and lifestyle branding. EcoBrew has tried to strike a balance between these extremes, offering high-quality products while maintaining its boutique identity. However, price competition has been fierce. Last year, EcoBrew cut the price of its bottled cold brew from RM10 to RM9, which increased monthly sales from 24,000 to 28,000 bottles. CaféLux responded swiftly with bundle promotions, creating a new dilemma for Jason: should EcoBrew compete on price, differentiate further, or shift its strategy altogether?

At the same time, financing the next stage of growth is not straightforward. Jason is weighing a RM5 million investment for expansion, but the financing landscape has shifted. Malaysia’s domestic savings rate currently stands at 26% of GDP, while investment levels are at 28%, creating a modest funding gap that pushes firms like EcoBrew to seek foreign inflows or bank loans. In an open economy, foreign direct investment is rising but borrowing costs have climbed after Bank Negara Malaysia raised the Overnight Policy Rate (OPR) from 2.75% to 3.25%. For a medium-sized player like EcoBrew, higher borrowing costs could erode already-thin margins.

Adding to the complexity is the broader economic climate. Malaysia’s GDP grew 4.2% in 2024, but forecasts for 2025 predict a slowdown to 3.8%. Unemployment stands at 4.1%, with youth unemployment at a troubling 11.5%. Inflation has crept up to 3.7%, and in the food and beverage sector, prices have risen even faster, 5.2% over the past year. For EcoBrew, this means rising input costs: the variable cost of producing a bottle increased from RM5.20 to RM5.60 within a year. Coffee beans, bottles, and labour are all more expensive, squeezing margins.

Government policy offers both relief and uncertainty. The Ministry of Finance recently announced tax incentives for SMEs adopting green technologies. EcoBrew, which is considering biodegradable bottles, could benefit from a 10% tax rebate. Yet analysts warn that fiscal support may shrink if slower GDP growth reduces government revenue. Meanwhile, Bank Negara’s monetary tightening raises borrowing costs and may deter SMEs from expanding. For Jason, this mix of policy support and macroeconomic pressure makes the decision more complex than ever. Table 1: Malaysia’s Selected Macroeconomic Indicators

Jason now finds himself facing a decision that will define EcoBrew’s future. Should he commit to expanding manufacturing capacity, scaling up café operations, or waiting for more stable conditions? Each path carries opportunities and risks, influenced by competition, financing, consumer demand, government policy, and broader economic forces. As he gathers input from his team, Jason realises this is not just a question of business strategy, it is a test of how well EcoBrew can navigate Malaysia’s economic reality.

ASSIGNMENT GUIDELINES

Based on the case study above, you are required to prepare a comprehensive report (maximum 5,000 words) and a recorded presentation (15–20 minutes).

1. Analyse EcoBrew’s competitive environment and pricing decisions. What strategic options should EcoBrew consider?
2. Evaluate the RM5 million expansion options (manufacturing vs. cafés). How do domestic savings, investment levels, and borrowing costs affect financing?
3. Examine how recent government incentives and monetary policy could shape EcoBrew’s expansion strategy.
4. Discuss how inflation, rising costs, and unemployment trends impact EcoBrew’s operations and labour market choices.
5. Evaluate EcoBrew’s contribution to Malaysia’s economic performance using GDP/GNP. What are the limitations of these measures in reflecting EcoBrew’s role?
6. Provide a final recommendation on EcoBrew’s strategic direction.

The Assignment Format and Guide

The students are required to follow the following assignment format:

7. Cover page
8. Table of contents
9. Body (sections as above)
10. Conclusion and reflection
11. References: use proper APA reference style
12. Appendices (where necessary)

Your WRITTEN REPORT must adhere to 5,000 words (excluding references).  General Criteria:

12. This is an individual assignment.
13. Utilize a minimum of 15 academic references. When referring to any sources for this project, please adhere strictly to the APA citation style. All references should be clearly cited within the text and included in a comprehensive reference list at the end of the document.
14. It is imperative that no generative AI tools are used in the creation or compilation of content. All work must be original and manually written, ensuring the authenticity and integrity of the project. This approach guarantees adherence to academic standards and the production of high-quality, credible work.
15. Maximum of 5,000 words. Word count exceeding it, if any, will NOT be read. The word count requirement is strictly on the essay only and does NOT include complementary sections such as Cover page, Table of Content, Reference, and Appendix, whichever is applicable.
16. Font Times New Roman 12, 1.5 spacing. The first paragraph NOT need to be indented. However, all proceeding paragraphs should be indented 1.2cm. The body of the text must be Justified throughout the essay.
17. Page margins: 2.5cm for top, right and left; 3.0 cm for bottom margin, footer 1.3 cm.
18. The page number must be centred on the text and placed at the bottom of the page. No dashes, periods, underlining, or other marks should appear before, after, or under the page number.
19. Additional marks shall be given for bringing in and discussing related concepts, theories, and issues from OTHER scholarly articles(s).
20. The submission deadline must have been adhered to. Penalties will be imposed for the late
21. PENALTY also applies to any issue of plagiarism in completing this assignment.
22. The submission is to be titled “MBOC7143_ASSIGNMENT2_STUDENT NAME_SEP2025”. Submission MUST BE in PDF file.

TASK DESCRIPTION – ASSIGNMENT 2  (RECORDED PRESENTATION) (20%)

Based on the case study above, you are required to record and submit a 15-20 minute video presentation summarizing the report findings.

Purpose:

To assess your ability to communicate complex economic analysis clearly, apply theory to practice, and defend strategic recommendations.

Answer

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