CHAPTER 1

1.0 INTRODUCTION
In this chapter will be explain more about background of study, company
background, vision, mission, company structure of SGS, problem statement of the study,
research objective, research question, significant of study, limitation of study, scope of
study and definition of term.

1.1 BACKGROUND OF STUDY

The service industry is the most important pillar of the global economy (Lee et al.,
2007). An inspection services is, most generally, a sorted out examination or formal
assessment work out. In engineering activities, inspection usually come out with
measurements, tests, and gauges applied to certain characteristics in regard to an
object or activity. The results are usually compared to specified requirements and
standards for determining whether the item or activity is in line with these targets,
regularly with a Standard Inspection Procedure set up to guarantee reliable checking.

Based on (Testing, Inspection and Certification (T.I.C.) Market - Global Industry

Analysis, Size, Share, Growth, Trends and Forecast 2016 2024). Retrieved September
13, 2016, from https://globenewswire.com/news-release/2016/09/13/871438/0/en/ stated
that the essential part of testing, inspection, and certification companies is to ensure the
maintenance of health, safety, and quality requirements of their clients products. Testing,
inspection, and certification companies are engaged in inspection, verification, testing
and certification services wherein the significant intention is to help build the efficiency
and furthermore help nearby producers to conform to the worldwide guidelines.

Usually the inspection services carry out by Third Party Company. The owner of
the product or can be called as the purchaser will make a contract with third party
company to do inspection work base on an agreed inspection and test plan. After finish
the inspection, the Third Party Company will issue a report to the purchaser.

As a company that provides inspection services, the demand towards their

services is very important in order to growth in business. To maintain the business
become growth, the company need to increase their sales and demand from customer.
From that, the company will gain more profit.

In this context, this study tries to explore which factor that contributes to the
declination of sales and demand in inspection services. SGS is well known and
established company that provide inspection services in many lines of business such as
industry, oil and gas, and so on. This study is focus on price, technology, and economy.
1.2 BACKGORUND OF COMPANY

SGS is the worlds leading inspection, verification, testing and certification

company. SGS are recognized as the global benchmark for quality and integrity.
Established in 1878, SGS transformed grain trading in Europe by offering innovative
agricultural inspection services. From those early beginnings, SGS steadily grew in size
and scope as agricultural inspection services spread around the world. During the mid
20th century, the company began to diversify and started offering inspection, testing and
verification services across a variety of sectors, including industrial, minerals, oil, gas,
and chemicals. In 1981, SGS was listed on the Swiss Stock Exchange and forged an
unrivalled reputation as the industry leader in finding solutions to the complex challenges
faced every day by organizations.

Today, SGS operates across a wide variety of industry sectors, employs more
than 90,000 people across 2,000 offices and laboratories and is active in nearly every
country in the world. The company has steadily grown to become the industry leader it is
today. It has done this through continual improvement and innovation and by reducing
risk and improving the productivity and efficiency of its customers operations. Moving
forward, SGS is well positioned for growth and will continue to look beyond customers
and societys expectations in order to deliver market leading services wherever they are
needed.
 In Malaysia, SGS (Malaysia) Sdn Bhd was established in Malaysia in 1971. With
over four decades of experience, SGS provide a wide range of services and specialized
solutions for all sectors of Malaysian industry. Our extensive network of offices and
laboratories, which is supported by highly trained professionals, covers Peninsular
Malaysia, Sabah and Sarawak. Through Petrotechnical Inspection (M) Sdn Bhd, a
PETRONAS licensed company established in 1981, SGS offer the petroleum industry a
wide range of services, including subsurface consulting, well site testing, advanced
reservoir fluids analysis, inspection of bulk petroleum products and environmental and
industrial related services

1.2.2 Corporate Values of SGS (M) Sdn Bhd

We seek to be epitomized by our passion, integrity, entrepreneurialism

and our innovative spirit, as we continually strive to fulfill our vision.
These values guide us in all that we do and are the bedrock upon
which our organization is built.

1.2.3 Corporate Mission of SGS (M) Sdn Bhd

We aim to be the most competitive and the most productive service organization in the
world. Our core competencies in inspection, verification, testing and certification are
being continuously improved to be best-in-class. They are at the heart of what we are.
Our chosen markets will be solely determined by our ability to be the most competitive
and to consistently deliver unequalled service to our customers all over the world.
1.3 RESEARCH PROBLEM

According to Sundram et al., 2016, research problem means a clear statement of

issue that need be investigated in order to find a solution or ways to improve. Based on
the management meeting on February 2017 at SGS (M) Sdn Bhd, they highlighted
issues about the declining of sales and demand in business. During the meeting, the
Manager of Sales Department shows the report about the sales and its clear state that
the company has a problem regarding the demand from customer. Due to this issue, the
company unable to earn more profit and tend to have financial problem because the
company need to expense more money into operation cost such as for worker, facilities,
equipment, and etc.

After the discussion with the management team, the researcher has founded that
there are several factor contributes to the declination of sales and demand such as
price, technology and economy. Based on that, this research is conduct to investigate
which main factor that contributes to the declination of sales and demand in inspection
services.

Declination of sales and demand is very crucial problem to the company that
provides services or product. As we know, SGS (M) Sdn Bhd is a company that provides
services to customer or client in many sectors such as industry, oil and gas,
environmental and many more. One of the factors that arises is price. The company likes
SGS (M) Sdn Bhd usually proposes a price to client before secure the contract. Even
SGS (M) Sdn Bhd is worldwide company, they still need to compete with local and other
competitor in inspection market services. Basically price is important during propose a
tender and quotation to the potential customer or client, Here, the potential customer or
client will analyze which one price that offer more affordable for them. According to
Groth. J, (1995) state that experiencing an "over-value", the client may have rejected a
supplier and then will find another supplier who has offer a low price. If the price that
offers is too high or not meet potential client or customer demand, the declination of
sales and demand will occur and naturally effect to the profit of company.

Second is regarding, the issues that arises is technology. The capability of

technology is one of the requirements that will evaluate by client or customer before
 getting the services. In inspection services, technology is most important part that need
provides by company to their client or customer. Progressively thorough production
quality specification is driving assembling evaluation and inspection standards to
become stringent (Wolfson and Gordon, 1997). For example, the inspector will use
equipment as tools during do an inspection at site. If the equipment that use is not up to
date or have capability, it will produce a poor result and maybe make the customer not
satisfy with services that provided. Then it lead to declination of sales and demand.

Lastly, economy also can contribute to the declination of sales and demand.
During economy recession, the manufacturer or provider usually not produces more
product in market and automatically give bad impact to inspection services industry. For
example, the impact of economy recession have a relation with oil and gas industry. The
company such as Petronas, Shell and Petron reduces their level productivity and third
party company who provide inspection services into oil and gas product also affected.
The demand for inspection towards oil and gas product will going down and
automatically contribute to the declination of sales and demand.

1.4 RESEARCH QUESTION.

1. Does price have relationship toward the declination of sales and demand in inspection
services?
 2. Does technology have relationship toward the declination of sales and demand in
inspection services?

3. Does economy have relationship toward the declination of sales and demand in
inspection services?

4. What is dominant variable that contribute toward the declination of sales and demand in
inspection services?

1.5 RESEARCH OBJECTIVES.

1. To analyze whether price significantly contribute to the declination of sales and demand
in inspection services.

2. To determine whether technology significantly contribute to the declination of sales and

demand in inspection services.

3. To investigate whether economies significantly contribute to the declination of sales and

demand in inspection services.
4. To identify which factor that dominant significantly contribute to the declination of sales
and demand in inspection services.

1.6 SIGNIFICANT OF STUDY.

1.6.1 RESEARCHER.
 The research is the key to complete and fulfil the requirements of the BBA (Hons) in
Marketing. Besides, by doing the research, the researcher can apply it to the real life and
gaining an experience to do the research in the future.

1.6.2 COMPANY.

By conducting this research, the company wills which factor those significantly contribute
to the declination of sales and demand in inspection services. From that, the company
can find a solution to develop a new plan in order to compete in market and improve the
level of sales and demand from customer.

1.7 LIMITATION OF STUDY

1.7.1 LACK OF INFORMATION

In gathering the information, the SGS (M) Sdn Bhd cannot disclosure certain of their
Information because its confidential and cannot be view by others.

1.7.2 TIME CONSTRAINT

Since this research is been done during internship, the time constraint is the problems
because do not have enough time. Due to the limited of time, the researcher needs to
struggle to complete the study and at the same time also need to focus on practical
training. Sometimes the researcher quite busy with work so does not have time to make
the research. The researcher must balance between works and doing research, so this
research is can be done during free time only.

1.8 SCOPE OF STUDY

The purpose of this study is to identify the factors that significantly contribute to the
declination of sales and demand in inspection services and what is the main factors that
significantly contribute to the declination of sales and demand in inspection services.

1.9 DEFINITION OF TERM

Demand
 Demand is an economic principle that describes a consumer's desire and willingness to
pay a price for a specific good or service. Holding all other factors constant, an increase
in the price of a good or service will decrease demand, and vice versa.

Economy

Economics is a social science which deals with human wants and their satisfaction.
(Tamilnadu Textbook and Educational Services Corporation, 2007)

Price

Zeithaml, 1988 as cited in Han and Ryu, 2009 defined price as what is given up or
sacrificed to obtain a product. Price is distinguished as objective price and perceived
price (Jacoby & Olson, 1977). While objective price is the actual price of a
product/service, perceived price indicates the price as encoded by the customer (Jacoby
& Olson, 1977).

Technology

Technology is defined as the information necessary to achieve a certain production

outcome from a particular means of combining or processing selected inputs which
include production processes, intra-firm organizational structures, management
techniques, and means of finance, marketing methods or any of its combination.
(Mascus, 2003)

Sales

According to http://www.investopedia.com/terms/s/sale.asp, the definition of sales is a

transaction between two parties where the buyer receives goods (tangible or intangible),
services and/or assets in exchange for money. It can also refer to an agreement
between a buyer and seller on the price of a security. A sale functions as a contract
between the buyer and seller of the selected good or service.

CHAPTER 2

2.0 INTRODUCTION
 This chapter will give an overview of literature that is related to the research problem
presented in the previous chapter. This chapter will introduce the factor that contribute to
the declination of sales and demand in inspection services such as price, technology,
and economy. Thus this research the researcher uses a secondary resource that is a
journal, article and book. In this literature review there will be evidence from this new
research. The researcher also use theoretical framework in order to give a clear idea
about the research idea.

2.1 DECLINING SALES AND DEMAND

Decline is defined in various ways by researchers (Pandit 2000). By follow the definition
of Cameron, Kim and Whetten that organizational decline is a condition in which a
substantial absolute decrease in an organizations resource base occurs over a specified
period of time (1987, p. 224). In other word, decline that is related to short term
variations such as recessions is ruled out and thus the focus is on industries that have a
negative and to some extent irreversible market outlook for the long term (Koponen and
Arbelius, 2009).

Demand is an economic principle that describes a consumer's desire and willingness to

pay a price for a specific good or service. Holding all other factors constant, an increase
in the price of a good or service will decrease demand, and vice versa. Sales activities
are very important during run a business. Sales and demand naturally have a
relationship between each other. Sales can be defined as the exchange or trading of
goods and services for an amount of money or its equivalent. According to Philip Kotler
(n.d), sales are a process of persuading customers to purchase or getting the companys
product or service. In other word, sales can be considered part of promotion in the Four
Ps (product, price, place and promotion). The purpose of sales is to stimulate, rather
than satisfy, demand for products (Weitz and Bradford, 1999, p. 243 as cited in
MeunierFitzhugh, K. L., & Piercy, N. F, 2007). The declination of sales and demand can
lead the company loss the profit and market share.
2.1.1 POINT OF SALES

Point-of-Sales (POS) data evaluate how much product the end-users purchase (Simon,
2008). According to Jishan Zhu (2013), point of sales can be used for improve demand
forecast in business. By using POS, the company can understand the demand of its
product and also can improve the demand. For instance, Heizn North America uses POS
data to size up the future sales for its products (Park, 2008), and Monet Group uses
POS data to calculate the weekly demand of its products (Sichel, 2008). From that, the
company can get accurate information regarding their sales and demand whether
decline or increase. This data can help company monitor and analyze which factor that
contributes to the movement of demand towards their product or services. If the demand
decline, the company or provider can setup a new strategy to settle down the problem.

2.2 PRICE

Price is regularly taken as a foremost factoring guiding choice when it comes to making
a buy decision. (Sabesson, 1992 as cited in Syeda, 2012), stated that brand of
processed food is taken by its quality, taste of the product and price of the merchandise.
In B2B business, the company also evaluates the factor such as quality, level of
competency before getting the services. According to Rama (2017), good service quality
can influence customer to loyal towards their provider. So by provide a good quality and
suitable price of services, the company can produce a loyal customers. Essentially,
 customers who, having a respectable quality tends to be much more firm in their
shopping patterns. As indicated by Mulki & Jaramillo (2011) customer loyalty is often an
emotional loyalty to the firm and develops when customers desires are satisfied in full.
The loyalty customer can avoid any declining demand in business.

Pricing decisions rely on upon a few components, for example, such as organizations
production costs, their market position, depth of market competition, and quality of
products or services gave to clients (Oxenfeldt, 1983 as cited in Armando, 2014). As
indicated by (Nagle and Holden, 1995 as cited in Armando, 2014) an effective pricing
strategy can make the companies gain more profit and success for the long term.
Indeed, the right pricing or value grant companies to pick up an incentive from their
operations, while misguided may disseminate their created value. Furthermore,
companies revenues straightforwardly impact from pricing while others marketing mix
technique which are more oriented (Shipley and Jobber, 2001).

According to John Goth (1995), there have special factors affect the margins earned on
providing services. He also said that success at accumulating a high cost and margin on
services can be as important variables. Any mistake during delivery and setup the price
of services can have problem likes residual damage, its means the issue of declining
demand arises.

2.3 ECONOMY

Economy is a set of large business, production and consumption activities that happen
in a country or outside a country. Kuznets (1971) proposed similar classification of the
economy into agriculture, industry and services sectors, arguing that long-run economic
development is accompanied by shifts in the allocation of resources (especially labor)
from primary sector (agriculture) to secondary sector (industry) and subsequently to
tertiary sector (services). But in an economy, there is up and down. Ghazali and Low
(1999) determine that the Malaysian Treasury bill (MTB) spread is a significant predictor
of future growth of annual output as cited in journal from Zulkhibri and Shukri (2016).
The condition of economy is measured by Gross Domestic Product (GDP). Gross
Domestic Product (GDP) is a total of the market values or values of all final goods and
services produced in an economy during a period of time.

Economy can lead into an inflation or recession. This is caused by unstable economy of
a country. Inflation creates problems and introduces noises in functioning of the
economy that is likely to affect economic growth. Inflation is where price of goods and
services is increase and purchasing power in decreasing. According to Ming-Yu and Hui-
Boon (2002), Malaysia experienced a second episode of high prices in 1980 and 1981,
which were due mainly to external factors. At the same time, prices of industrial raw
materials and investment goods also increased rapidly. Neoclassical theories of inflation
show inflation as the excess of demand for output over the value of output at existing
prices; conflict theories represent it as the surplus of income claims over the value of
output at existing prices (Leonardo, 2010). According to Ahmad and Siew (2014), most
of the theoretical models predict that inflation uncertainty has a negative impact on
economic growth.

According to Ming-Yu and Hui-Boon, (2002), the severity of the international economic
recession during the early 1980s imposed considerable constraints on the growth and
development of the nation in 1985. Recession is where the economy is decline where
the business production and consumption activity is reduced. When the domestic market
plunges into a recession, many firms are faced with new problems and challenges. An
economic event such as a recession can result in substantial under-utilization of
production capacity, and pose a threat to the firm's survival and growth in the domestic
market (Rao et al., 1983). During recession, company especially supplier , will facing
increasing competition from low-priced, high quality product or services whether from
local or foreign. Competition is what determines the strategies of many firms in a
growing recession, particularly those which face foreign or international competitors.
According to Ronald and Peng, (1992), it will probably work well if the company already
has lower costs than its competitors; if not, the company should consider seriously
whether or not it can invest in productivity increases that its competitors will not or
cannot match. In other word, economy recession also can give bad impact to another
that provide services. For example, during economy recession, the manufacturer reduce
 the level or producing product then third party company who run an inspection services
towards the product also effected by declining sales and demand from manufacturer.

2.2 TECHNOLOGY

Inspection also uses technology as part of delivering services to customer. By introduce

of new technology and innovation non-destructive testing, and allowing faster, more cost
effective inspection (James Quirk, 1999). Technology advancement occurs when there is
innovation and demand from people. If the current technology cannot fulfill their desire,
people will look for initiative where people will innovate and change the technology so
they can get benefit and make their task easier. According to Henderson and Ruikar
 (2010), industry and fierce economy, combined with technological factors such as the
progression of technology infrastructures and applications over the past decade, as well
as the growing cultural dependence on technology in everyday activities, has called for a
need now, more so than ever, to be proactive in the seeking of new initiatives in order to
remain competitive. Technology is important because it make the business or the task
easier where it can increase the efficiency of production.

When there is new technology, company usually invests in a new technology since they
know that there will be a demand for a new technology. The investment then usually will
lead to the cost to the project or supplier. According to Henderson and Ruikar (2010),
there is evidence that the future of construction is one that embraces technological
advances, and therefore the time has come where a strategic adoption of technology is
required in order to extract its full potential. So, when suppliers invest in a new
technology, the cost of their services is also increase since they use the new technology
where they need to cover their cost in investment. The price before and a new
technology is different since there is new features compared to the old one. The
construction industry must focus on developing core businesses and technologies and
expanding the target market to increase the performance and efficiency of businesses
(Yen, 2013). When suppliers invest in new technology, it means that they are increasing
their service quality as well. A good service can increase customer demand.

2.5 HYPOTHESIS

The definition of hypothesis is the unproven statement about the factors that is interest
to the researcher (Malhotra, 2010). According to Kendra (2016), hypothesis is a
statement about the relationship between two or more variables. In this research, the
hypothesis that has been conducted is between dependent variable and independent
variables. The following hypothesis of this research is:
 H1: Price contributes towards the declination of sales and demand in inspection
services.

H2: Technology contributes towards the declination of sales and demand in

inspection services.

H3: Economy contributes towards the declination of sales and demand in inspection
services.

2.6 THEORETICAL FRAMEWORK

In this research it is contain two variables which is dependent variable and independent
variables. The dependent variables are declination of sales and demand the
independent variables are the perception of price, technology, and economy.

Independent Variables Dependent Variable

Price
Technology Declining Sales
Economy
and Demand
 CHAPTER 3: RESEARCH METHODOLOGY

3.0 INTRODUCTION.

This chapter is about the researcher discussing about the data and all the gather
information in order to meet the research objective. This research methodology was
structure as research design, data collection method, survey instrument and sampling.
This chapter will help the researcher answer the question about on how the independent
variables contribute to the declination of sales and demand in inspection services.

3.1 RESEARCH DESIGN.

This research is to understand that how the price, technology, and economy contribute
to the declination of sales and demand in inspection services. According to Malhotra
(2010), research design is a framework in conducting a research project to obtain the
information and solve the issue in the research. In this research also the research will be
using the quantitative method to get the findings result.

Research design can be classified as exploratory and conclusive. In this research the
researcher will be using a conclusive research because the conclusive research is
 design to assist the researcher determine, evaluate and selecting the best course or
variable in the research. It is need to be clearly define any inconclusive research, the
process are usually formal and structure.

In the conclusive research there is a descriptive and causal. To conduct this research the
researcher are using the descriptive studies. The descriptive study is design to collect
data that describe the characteristic of the person, situation and or situation (Sakaran
and Bougie, 2014).

3.2 DATA COLLECTION METHOD

Data collection method is how the researchers collects and gather the data. In this
research there are two sources of method that is primary data and secondary data
sources. The two sources of collection data are important to the researcher so that it can
make it as references in this research.

3.2.1 PRIMARY DATA

Primary data is the information that the researcher want to obtain the variable interest in
the research. In this research the researcher are using the questionnaire that has been
distribute to the 50 of respondent. A quantitative survey was conducted by using
structured questions. By using this method, the questionnaires will be delivered to
respondents and they will answer the questionnaires. The questionnaire is distributed
through Google Form which is send through e-mail. The questionnaires will ask on
issues related to a study. The questionnaire will divide into three parts.

3.3 SECONDARY DATA

Secondary data is a data that have already been collected and established. These data
can be found on internet, book or articles and it is inexpensive. It can be divided into two
categories:

3.3.1 INTERNAL DATA

 For internal data, the information of the company can be getting from company
websites which SGS (M) Sdn Bhd. Other than that, the information also can be
getting from company report.

3.3.2 EXTERNAL DATA

For external data, the information is from the journal, articles and internet. The
journal that has been selected for this research is taken from journal database
such as Emerald Insight, Science Direct and SAGE. These data is used to
support and act as reference for this research. Articles are usually taken from
internet and this data is usually from outside company sources which most of it
do not have any relation with the company.

3.4 SURVEY INSTRUMENTS

3.4.1 QUESTIONNAIRE

QUESTIONAIRE DESIGN

The designing of questionnaires is based on the structured question using the

Multiple Choice answer. Respondents are required to rate their preference on a
five-point Likert-scale on which they are to indicate whether items are strongly
disagree, disagree, neutral, agree, and strongly agree that will be related
to the attitude or object. In this scaling, the scores of the individual items are
summed to produce a total score of respondents. The survey instrument applied
in this study is in the form of close-ended questionnaire. The questions are
divided into 3 sections and designed in English.

LIKERT SCALE STATEMENT

1 Strongly Agree
 2 Agree
3 Neutral
4 Disagree
5 Strongly Disagree

The survey instrument applied in this study is in the form of close-ended

questionnaire. The questions are divided into 3 sections as mentioned below:

Section I

This part covers the respondent background such as information about type of
company, type of business, location of their company and etc.

Section II

This part the respondents have to answer questions about the declining sales
and demand. This section is where the respondent will be asked whether
declining sales and demand affect their business and how they adapt to it.

Section III

At this section, the respondents have to answer the questions about the factor
that contribute to the declining sales and demands are price, technology and,
economy. There have five questions for each factor that respondents need to
answer.
3.5 DATA ANALYSIS

The researcher analyzed the data using the Statistical Package for the Social Science
(SPSS). SPSS can be used to analyze data collected from surveys, tests, observation or
even secondary data. It can perform a variety of data analysis and presentation function
including statistical analysis and graphical presentation of data. Among its features are
modules for statistical data analysis that induce descriptive statistics, analysis of
variance, factor analysis, multivariate analysis, categorical data analysis and many
more. SPSS can also provide a method for examining the adequacy of the regression
model that covers checking assumption in regression. In the study, SPSS helps the
student to run the secondary data that already collect. SPSS also helps to facilitate data
clearing and checking for logical inconsistencies. In addition, by using this program so it
can analyze the data collected to identify the relationship and correlation between
independent variables and dependent variable. It also involves in the process of
hypothesis testing.

3.6 SAMPLING

3.6.1 SAMPLING FRAME

 In this study, client of SGS (M) Sdn Bhd will be respondents to answer the
questionnaire. Most of these client are from different business and offer a lot of
products and services that need to be inspect. Most of the client comes from
manufacturing and oil and gas industry.

3.6.2 SAMPLING POPULATION

Since this research is focus on clients, the questionnaire will be distributed to a

few client from different business and services.

3.6.3 SAMPLING TECHNIQUE

In this study, non-probability sampling technique is used. Judgment sampling is

being used since the clients from same industry, the questionnaire will focus on
the same group of people. This is because the client is selected based on their
expertise in the area being researched. The questionnaire will be send through e-
mail and the respondent can answer it from the e-mail.

3.6.4 SAMPLING SIZE

Within this pool of clients, a sample of 20 clients will be selected. Since the
clients also busy with their work this sample size is considered appropriate due to
the constraint of time and willingness of respondents to reply correctly and
willingly.