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Malaysia’s Tourism Industry: An Analysis

1.0 Introduction

The Malaysian tourism industry seems to represent an increasingly important sector and it palys a major role within the Malaysian economy and has been responsible for the growth of the economy over the years. This industry has become a very important source of revenue for the overall economic development of the country. For an industry that is very important, it is empirical that the government take steps to make tourism a strategic economic and employment priority. Logistics is a practice that has been used in several other industries but now is appearing to be very helpful and applicable in the tourist and recreation sector. It is observed here that the travel and tourism industry in Malaysia has continued to improve over the years and this particular industry has managed to make a significant contribution to Malaysia’s revenue. What is known  here is that the Malaysian travel and tourism industry does continue to remain to be one of the main income earners that continue to help to strengthen Malaysia’s balance of payment. The tourism industry of Malaysia is capable of being classified into about seven categories ande these are as follows:

  1. Edu-tourism
  2. Domestic tourism
  3. Shopping tourism
  4. Medic-toursm
  5. Eco-tourism
  6. Agro-Tourism
  7. Sports tourism

In this research, there will be an examination of the issues and problems relating to the logistics practices by firms in various relevant industries that are related to the Malaysain tourism industry and the way that these firms carry out their logistics practices. In essence, the main focus would be on devising essential strategies that would enable these firms to be able to enahnce their practices relating to logistics for the benefit of all of the industry. There are a number of strategies that can be adopted by these firms in order to enhance their performance in this research will be concentrated on identifying one strategy that can help the firms in the tourist industry in Malaysia to enhance their logistics practices. In particular, the viability of the logistics cost analysis strategy will be examined here and a theorization will be made about the viability of the utilization of this strategy to enhance the performance of firms in the tourism industry in Malaysia and the performance of the industry itself.

This research will be capable of producing efficient outputs that will make it possible for conclusions to be drawn about the logistics efficiency of the firms operating within the tourism industry in Malaysia and the possible ways to increase the efficiency of a firms logistics operations in order to ensure enhanced and efficient performance within the industry. After all relevant matter has been factored in, the researcher will be able to highlight all the logistic factors affecting travel and tourism industry in Malaysia and would be able to arrive at a conclusion that can then be used to devise a strategy or framework that can be used by firms in the industry to perfect their logistics practices.

1.1 Problem Statement

As noted, there are a number of factors that have been identified as being factors that have caused for the tourism industry to experience setbacks and it is these kinds of setbacks thatt have the impact of reducing the performance of the firms within this industry. Logistical factors are the kinds of factors that could determine the efficiency at which the an organisation within the indsutry is able to operate at maximum efficiency. For a very profitable industry like the Malaysian tourism industry, it is very essential for any kind of factor within the industry that might cause for issues to be faced by the Malaysian tourism sector to be identified and addressed, in order to ensure that this industry continues to be a able to bring in revenue for Malaysia. Problems relating to logistics can always be an impediment to the progress of a firm and even an industry, if all the firms do not have an efficient logistics strategy. Among the relevant firms that are impacted by logistics in this industry include firms from the services, hospitality, tour operating, tourism oriented and recreation oriented firms. All of these firms are able to utlize various logistics strategies in order to reduce costs and improve their services. These firms are suffering from logistics management issues that are in turn reducing the performance of the entire industry and hence it is essential that these firms adopt a strategy that would improve logistics practices.

1.2 Significance of the Research

This research is signficant because it addresses a very essential issue relating to logistics and the way that the logistical practices of an organisation within the tourism industry can affect the way that the firm performs. This research will determine the state of the logistical practices of firms in the industry and the output will be used to determine if there is a deficiency in the logistics practices of firms in the industry. The research will then attempt to make a proposal of strategies in order to perfect the logistics practices of firms in the organisation through the use of strategies and frameworks.

1.3 Scope of Research

This research will be focused primarily on examining the logistics practices of firms in the Malaysian tourism industry and the efficiency at which they carry out their logistics practices. The scope would be on examining the logistics practices of firms only from the tourism industry in Malaysia and to propose a strategy within the sphere of logistics that is capable of solving these inefficiencies and issues faced by these firms.

1.4 Research Objectives

The main research objectives of the project will be outlined here. The main objective here will be to determine the logistic factors affecting travel and tourism industry in Malaysia. So as to be able. To be able to achieve the primary objective of this research paper, there are a few secondary objectives that have to be determined, among them are as follows:

  1. Examining the logistics performance of the tourism industry in Malaysia
  2. Determining if Malaysia firms in the tourism industry are suffering from a deficiency in logistcal performance
  3. Examining the strategies that can be adopted in order for logistics performance of to be capable of being enhanced in firms operating within the tourism industry, in order to enhance the overall performance of the Malaysian tourism industry.

1.5 Research Questions

  1. What is the level of logistics performance of the tourism industry in Malaysia?
  2. Is firms in the Malaysian tourism industry suffering from a deficiency in logistcal performance?
  3. What are the strategies that can be adopted in order for logistics performance to be capable of being enhanced in firms operating within the tourism industry so as to enhance the overall performance of the Malaysian tourism industry?

2.0  Literature Review

In this chapter, there will be a literature review that will be carried out on this research topic and hence this means that there will be a review of literature relating tourism and logistical infrastructure. The review commences with an review of literature that relates to the description of the tourism product, the benefits of investing in tourism, a review of literature concerning tourism management, the charactertistics of the tourism industry, the opinions of past researchers about the strategies that can be used to enahnce the logistics practices within the industry to deliver value, the value chain of the tourism industry.

2.1 Characteristics of the Tourism Industy

According to

Dwyer and Forsyth, (1997),

the tourism industry does have a number of characteristics of a competitive market. Essentially, there are very few barriers to entry into the market, the market can be described as being a truly global market that have a few unnatural barriers to trade, there are a large number of firms within the industry and the prices are set on the sole basis of market expectations, essentially.

Within a highly competitive market like tourism, there does not seem to be any difference, when it comes to the yield from different types of tourists. Within this kind of a competitive market, resources have to be deployed at a level that does reflect their opportunity cost. What this mean here is that they will be employed at a level that makes it possible to provides a sufficient return to investors when talking in terms of the cost of capital. If there are resources which provide above normal profits they are bid up in price and any abnormal profit is dissipated into the cost of capital

(Dwyer and Forsyth, 1997).

2.2 The Tourism Product Described

2.2.1 Features of the Tourism Product

It has been stated that

Yilmaz and Bititci, (2006),

that the tourism product is said to carry the characteristics pertaining to the service product as well as the characteristics that are special to the tourism industry, and it is this that tends to make the  tourism product to be much different from physical goods. What can be said here is that these characteristics are very effective when it relates to the performance of the tourism establishments and they have to be taken into consideration when performance measurement and management systems are being designed. A very special and distinctive features of the tourism product can eb said as it being unable to be seen and touched physically before being purchased, and which means that it is intangible. It is appreicated here that this kind of intangibility does essentially make it harder to buy but easier to be able to distribute

(Evans et al., 2003).

It does also make tourism to be dependent on the representations as well as the descriptions that are within printed or audio-visual forms, and, hence, it is theorized here that information is the vital tool which makes it possible to bind producers within the travel industry

(Ujma, 2001).

The main role of travel information that is for consumers can be siad to be very significant as visitors tend become exposed to trhe risk in buying vacations that they believe to be able to satisfy their various needs and wants that are said to be very important to them

(Mill and Morrison, 2002) and (Yilmaz and Bititci, 2006).

The next feature of the tourism product is its perishability and what can be stated here is that the  tourism product, like an airplane seat or hotel bed, is incapable of being stored for future sale. This can be decribed as being a differences that is present between tourism and manufacturing products. It is this kind of characteristic of the tourism product that does haev an impact on the marketing efforts as well as the operations of the tourism businesses. The main marketing challenge here would be to operate at full capacity for as long as possible and the company would have to design various kinds of marketing strategies for the ultimate purpose of stimulating the demand

(Callaghan et al., 1994) and (Yilmaz and Bititci, 2006).

2.2.2 The Value Chain of the Tourism Industry

This industry is one that has been analysed in a holistic manner through a number of distribution channel perspective by a number of authors and researchers

(Middleton and Clark, 2001), (Mill and Morrison, 2002), (Halloway, 1998) and (Laws, 1997).

A common theme that has been noted among a number of researchers is that there seems to be a lack of customer-oriented approach within the end-to-end value chain. It is noted that customers tend to view the tourism product as something that is a seamless product and that needs to be handled from the view point of the customer in order to be able to measure the tourism value chain in an efficient way. There has been a great amount of emphasis that has been given to service, quality, and customer satisfaction issues, and within the connection to the business performance within the tourism industry, it is quite surprising not to find a customer-oriented approach present within the tourism value chain

(Yilmaz and Bititci, 2006).

The tourism value chain is noted to commence with the customer order and more often than not, customers or tourists do have a few alternatives when it comes to purchasing the tourism product and it is noted here that they are capable of either arranging their travel plan with the assistence of tour operators or even outbound travel agents, which does have an advantage of taking professional advice in relation to all of the holiday package without any kind of thinking; or arranging it themselves and this permits them to be very flexible when it comes to their travel experience. It can be said here that incoming travel agents is capable of being used to make transfer arrangements from/to the airport to/from the hotel and for daily excursions as well as  other activities that are normally held at the destination

(Yilmaz and Bititci, 2006).

The delivery of the services is capable of being dvided into three sub sectors and these include accommodation, transportation and incoming travel services. The performance of the delivery stage is one that is affected by the various relations between these main industry players. Hence, it can be said here that performance measures would be required to reflect the interdependency features of the industry

(Yilmaz and Bititci, 2006).

The transportation part of the service is where logistics really come into play and the existance of bad infrastructure would damage the entire service offering.

2.3 The Concept of Tourism Yield

Dwyer and Forsyth, (1997)

state here that tourism yield can be said to be the net benefit that accrues to the host country from international visitors and this means that it is the benefits minus the costs of tourism activity. This particular definition does believe the complexity of identifying, at the national level, all of the costs and the benefits of tourism, and every one of these has different kinds of patterns of activity and impact

At the firm level, a measure like this is very critically important as it is a measure of survival. In essence,

Tisdell (1993)

has provided a list of target variables of possible importance to governments when it comes to formulating policy in terms of foreign tourism and these are listed out below:

  1. foreign exchange earnings
  2. net national economic benefits that are obatined from foreign tourists as being measured by changes that take place within the economic surpluses
  3. employment generation;
  4. cultural and sociological impact in regards to the host population
  5. conservational or environmental impact
  6. promotion of international understanding and co-operation
  7. income distribution consequences.

(Dwyer andForsyth, 1997)

2.4 Market for Tourism and Recreational Services

It is noted here that the market of tourist and recreational services is composed of the following:

  1. hospitality services
  2. catering services
  3. tour operating services
  4. tourism oriented services
  5. recreation oriented services

(Kordel, 2008)

It is these segments of the market where a large number of firms, business entities and also

incorporated companies are said to operate easily and are able to successfully adopt the concept of logistics. Essentially speaking, the science of logistics is said to combine theoretical and

practical issues and each and every one of its theories is capable of being easily implemented as well as confronted with realityfor the purposes of verifying that they are efficient and applicable in real life

(Kordel, 2008)

2.5 Logistics and Cost Analysis Issues

For instance, taking into account the hospitality services sector, it is noted that  there are some areas where logistics play a vital role and it is noted here that the efficiency as well as the quality of hospitality services is capable of being improved via efficient logistics management of the following:

  1. hotel management
  2. quality management
  3. information management
  4. marketing

(Kordel, 2008)

In looking at the hospitality sector from a very comprehensive point of view, a number of different processes are observed to take place and these include the following:

  1. supply processes
  2. service production processes
  3. distribution processes
  4. storage and warehousing processes
  5. information transmission processes

(Kordel, 2008)

2.5.1 Minimalization of Costs

These areas that have been outlined above have to be referred to when it comes to searching for minimalization of costs as well as to locate the most appropriate solutions that are possible for the purposes of gaining a strong, a very competitive and very leading position within the market

(Kordel, 2008)

. All of these processes have to be examined from the view point of costs that they are bringing about  and then be classified according to genre and amount. This would permit for the calculation of total and unit logistics cost, and these are noted to be very essential factors that impact the competitiveness of companies. Total logistics costs analysis can be described as being the main key to managing the logistics function and this is why it is essential that the management take into consideration all logistics cost

(Kordel, 2008)

With the hotel industry, for instance, the total amount of logistics cost is said to include the following:

  1. cost of supply activities
  2. cost of information
  3. cost of operation
  4. cost of marketing
  5. cost of distribution
  6. cost of additional services
  7. cost of insurance
  8. cost of transport activities
  9. cost of personnel
  10. other financial costs

(Kordel, 2008)

2.5.2 Utilization of Costs Analysis to Improve Logistics Practices

In essence, the issue of costs is said to be an essential problem and due to the fact that its role in today’s economy can be said to continue to grow, they have to be brought up to everyone’s attention, they have to be properly classified, diagnosed, analyzed and then utilized for the purposes of decision making process. However, most of the companies can be said to be fitted with basic financial and accounting systems and it is noted here that these do not register the logistics costs and it makes it hard to which makes it difficult to diagnose and

analyze them

(Kordel, 2008).

The processes noted above have to eb examined from the point of view of costs. The utlization of cost analysis is noted to be carried out accroding to these above specifications and could help when it comes to calculating all of the logistics cost concerning the particular firm in the tourism industry and it will also indicate the kind of components that are able to generate the most costs and hence are required to be minimized. It is appreciated here that companies can easily enhance their market competitiveness by reducing their logistics costs abnd this eventually results in lowering the total costs of goods and services

(Kordel, 2008).

Because it might be hard to make a determination of the individual component of

logistics costs that have to be reduced, companies need to make attempts to integrate the

logistics system as opposed to lowering total logistics costs. This kind of solution can be said to be very safe especially that wrong diagnosis of individual costs may lead to an increase of total

logistics costs. Hence, it is essential to remember that in tourism and hospitality business, the effective cost reduction as well as the ability to manage the total logistics costs in the right way can be said to be very helpful when it comes to building a strong position in the market

(Kordel, 2008).

In essence, keeping track of all logistics costs that are said to be borne by companies from tourist and recreation sector could be easier if only these companies are equipped with additional software that are dedicated towards logistics costs registration and these companies are able to carry out regular research by themselves concerning their very own initial costs.m In general terms, for the hospitality sector to be capable of operating properly and without any sort of objections, there are some issues that have to be taken into account and these are as follows:

  1. Modern logistics solutions have to be constantly updated and implemented
  2. There needs to be an analysis of supply chain costs
  3. There has to be a much wider spectrum of controlling system that has to be implemented
  4. Essential decisions that are made have to be consulted with professionals.

(Kordel, 2008)

For the purposes of having a better understand of the concept that is trying to be presented here, the following matters need attention:

  1. Services that are provided by these firms need to meet certain quality standards.
  2. Customer are to be considered as being merchandise and all the costs that are borne need to be  classified as being according to the logistics processes.
  3. Realization costs related to controlling systems that are orne in logistics processes need to be implemented
  4. There has to be accurate and prompt decisions that need to be made in relation to logistics
  5. processes being executed.

(Kordel, 2008)

2.6 The Role of Information Technology in the Tourism Industry and its Impact of Logistics

The information technologies are said to play a very significant role within the tourism industry and it is appreicated here that the impacts of the internet

(Wynee et al., 2001) and (D’ambro and Wilson, 2004)

and the computer reservation systems

(Duliba and Kauffman, 2001) and (Alamdari, 2002)

within the distribution value channel of tourism are subjects of thorough discussion. Information technologies do permit the suppliers, like the  airlines and hotels, to be capable of monitoring, managing and controling their capacity via communicating with the intermediaries together with the end consumers. For instance, it is noted here that authorized tour operators are able to access a dedicated part of a hotel company’s intranet in order to be able to view room rates and the availability of these rooms for their customers. Such kind of transparency as well as interactivity makes it possible to increases the efficiency as well as the productivity of all of the value chain (Buhalis, 2003).

It can be theorized here that IT does enhance logistics very well and it enhanced speed, efficiency and dependability within the entire tourism industry.

3.0 Methodology

In this chapter, the methodology of the research will be outlined very comprehensively. This means that there will be an elaboration of the various methodological tools that will be used in this research for the purposes of collecting data. These are the tools that will be used to gather information that will then be subjected to analysis and for conclusions to be drawn. For this research, there would be the use of primary and secondary research tools that will be utilized in conjunction with each other. The use of both these tools will ensure that quality data will be obtained for the puposes of the research. The research design and the theoretical framework for the research will also be outlined in this chapter.

3.1 Methodological Tools Utlized

As noted previously, the methodological tools that will be utlized here will comprise of a combination of primary and secondary research tools. Below will be an identification and description of the types of tools that are to be used.

3.1.1 Primary Research Tools

Primary research does essentially involves the collection of data concerning a given subject directly from the real world. Here, there will be a description of what primary research is, the ethics that are involved with primary research and different types of research that can be done

(Driscoll and Brizee, 2010).

In essence, primary research is any sort of research that can be done through the use of surveys and interviews. A researcher that is very talented will be one that will be able to use both primary and secondary research sources and to be able to integrate them in a very cohesive fashion. The ability to perform primary research can be said to be a useful skill as it is able to acquire information that can supplement ones research in secondary sources

(Purdue.Edu -Primary Research, 2010).

It is appreicated here that the primary data that has been collected via the methods that have been described above are generally qualitative in nature or in some cases, quantitative

(TVU.AC.UK  -Primar Research Methodologies, 2010).

For this research, the types of primary research that will be carried out will be as follows:

1. Interviews

2. Questionnaires

3.1.2 Primary Research Tool 1 – Interviews

Interviews can be described as being one-on-one or small group question and answer sessions that will be carried out by the researcher and the interviewees. These interviews will be abel to provide a great amount of information from a few persons and they are essential when it comes to getting expert or knowledgeable opinion in relation to a particular subject, like logistics in the Malaysian tourism industry

(Purdue.Edu -Primary Research, 2010) and (Driscoll and Brizee, 2010).

The advantages of interviews are as follows:

  1. Able to get accurate information.
  2. High response rate.
  3. Able to be completed immediately
  4. Ability for interviewer to help if they is problems
  5. Ability to investigate motives and feelings.
  6. Ability to use recording equipment

(TVU.AC.UK  -Primar Research Methodologies, 2010)

In essence,  a total of 5 interviews will be carried out with managers from firms within the tourism industry in Malaysia. The researcher aims to get a wealth of information from these managers about their thoughts and perspectives about the performance of the firms in the tourism industry in Malaysia, the issues that are reducing its performance and the strategies that can be used to improve its performance. These interviews will be vital towards the satisfying of the research objectives.

3.1.3 Primary Research Tool 2- Questionnaire

Questionnaires will be the next kind of primary research source that will be utilized here and in this questionnaire can be described as a type of questioning that is far more rigid as opposed to interviews and it also tends to involve much larger groups of people. In essence, these surveys are likely to  provide a limited amount of information from a very large group of persons but they are very useful when it comes to having an understanding about what a larger population thinks about the issue concerned

(Purdue.Edu -Primary Research, 2010) and (Driscoll and Brizee, 2010).

The main advantages of using questionnaires are as follows:

  1. Able to be used in its own right
  2. Able to be posted, e-mailed or faxed and this increases speed and saves time
  3. Able to cover a large number of persons
  4. Very wide geographic coverage.
  5. Inexpensive
  6. Respondent has the chance to consider responses.
  7. There is anonymity of respondent.
  8. Absence of interviewer bias

(TVU.AC.UK  -Primar Research Methodologies, 2010)

A total of 110 questionnaires will be distributed to members of the target group and these essentiall comprise of persons from firms within the tourism industry in Malaysia. The researcher proposes to collect a large amount of information from this target group in order to determine the issues facing the tourism industry, the practices of these firms, what they are doing to improve themselves and the strategies that they can adopt in order to improve their practices for the benefit of their firm as well as the industry.

3.1.4 Secondary Research Tools

Secondary research methods are research methods that are used to collect information from sources that have already been researched on before. Secondary research would involve the processing of data that has already been collected by researcher previously and it makes reference to the consultation of previous studies as well as findings and these include reports, press articles as well as previous market research projects so as to be able to reach a conclusion.

A secondary research method would be premised on information that has been collected from studies previously performed and hence it is a reseaerch method that is not very expensive in contrast to primary research because it does not require new research methods. The main disadvantage of this research type is that the information that has been collected might be old and obsolete and this might mean that the results of analysis could be inaccurate

(Business Teacher -Primary-Secondary Market Research, 2010).

There are a number of secondary research sources that can be used to collect information and the ones that will be utlized for this research invovle the following below:

  1. Published texts concerning theoretical work and aslo secondary analyses that have been carried out by ‘experts’ and reports
  2. Various media like the internet, television and radio that act as sources of information

(Secondary Research Methods, 2010)

Below would be the main advantages of secondary reseaerch:

  1. Inexpensive and highly accessible


  • Only method of examining large-scale trends



  • Abilit to gather a large amount of date especially from the internet


(Secondary Research Methods, 2010)

3.2 Research Design

In relation to to reseach design for this project, this relates to the decision making selections that are rational and here there will be an elaboration of the type of study that will be carried out, the level of control and other issues related to the project. This research typically involves making a research of the logistics practices and conditions in the Malaysia tourism industry and what improvements that need to be made to enhance the logistics so as to bring positive enhancements to the industry.

Concerning the kind of study invovled, this will be an exploratory study as they has been very little research that has been carried out on the logistics of the Malaysian tourism industry and the approaches that have been taken by the Malaysian government to improve it. The level of interference by the researcher was kept minimal so as to ensure that it does not have a bad impact on the research and that the completion of the project is not delayed.

Practically, there are a number of sampling techniques that can be used for a research like this and these are discussed now. The first of these is cluster sampling and this is the kind of sampling that can be used where the larger population has been divided into much smaller clusters and they are selected randomly for the study. The next type of sampling is systematic sampling and this is a technique whereby the researcher is able to sele

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