The Volume Advantage: Why Competitive Pricing and High Turnover Beat High Margins in a Value-Driven Market - by Nik Zafri

A simple business scenario:

 The cost of one product is RM0.50.

• Seller A buys 1,000 units and resells them at RM1.00 (a 50% margin)
• Seller B buys 500 units and sells them at RM0.80 (a 30% margin).

Both offer the same product quality and service. However, within one week, A only manages to sell 100 units, while B sells all 500 units and continues receiving similar demand.

1. Lower Margin, Higher Volume Can Outperform Higher Margin, Lower Volume

• A sells at a higher profit per unit (RM0.50) but only manages to sell 100 units.
• B sells at a lower profit per unit (RM0.30) and manages to sell 500 units, fully clearing stock.

 In absolute profit terms:

• A’s profit: 100 units × RM0.50 = RM50
• B’s profit: 500 units × RM0.30 = RM150

So, B earns 3 times more profit despite a lower margin.

Lesson 1 - A business strategy cannot rely solely on high margins. Competitive pricing + high turnover often leads to better total profit.

2. The Market Dictates the Price - Not the Seller

Both products are identical in quality and service. Yet customers prefer the cheaper option.

Lesson 2 : Customers will gravitate to the price that feels fair and offers value, especially when comparing identical products. Pricing must align with what the market is willing to pay.

3. Accessibility and Affordability Expand Your Customer Base

A higher price reduces your reachable market. B’s lower price makes it accessible to more buyers, which increases volume.

Lesson 3 : Sometimes, the best approach is to reduce your margin but widen your reach.

4. Cash Flow Matters

• B sells all 500 units, turning stock into cash quickly.
• A sells slowly, locking capital in inventory.

Lesson 4 : High turnover improves cash flow, reduces risk of dead stock, and allows faster reinvestment.

5. Customer Behavior: Perception of Fairness and Trust

Even if quality and service are the same, customers may perceive A’s pricing as too high, creating resistance.

Lesson 5 : Customers are more likely to trust a price that aligns with their perception of value.

6. Long-Term Advantage - Repeat Customers

If B continues providing good value, customers remember the “fair price” and come back.

A risks losing customers permanently if perceived as overpriced.

7. Strategy Must Match Market Conditions

• A is using a premium pricing strategy in a market that behaves like a value-driven market.
• B is aligning with what the market wants.

Lesson 6 : Choose a strategy that fits the market, not the seller’s personal preference.

In short : A’s mistake is prioritizing profit margin instead of total profit and turnover. B wins because of competitive pricing, faster cash flow, and better alignment with customer expectations.

8. Understanding the Surroundings

What Seller B is doing reflects a deeper understanding of economic reality and customer psychology during a downturn.

i. B Recognizes Reduced Purchasing Power

In a slow or uncertain economy, customers:

• become more price-sensitive
• compare options more carefully
• cut back on non-essentials
• prefer lower-priced alternatives even if quality is the same

Seller B's pricing aligns with this behaviour, making it easier for customers to continue buying.

 

ii. B Reduces the Customer’s Financial Burden

By lowering margin and offering a fairer price:

• customers feel less “pain of paying”
• they can buy more or more frequently
• they perceive B as understanding and trustworthy

This builds loyalty - very valuable in tough times.

iii. B Helps Customers Regain Purchasing Power

When a seller provides value pricing:

• customers conserve money
• they can buy other necessities
• they feel more in control of their spending

This creates repeat demand because customers feel respected.

iv. Pricing Strategy Reflects Situational Awareness

• Seller A uses a premium-pricing mindset in a value-driven market.
• Seller B uses a market-aligned strategy, showing awareness of inflation, declining disposable income, cost-of-living pressures and competitive landscape

This awareness is a major advantage, especially when consumers are cautious.

v) B Gains Trust During Hard Times

Customers remember sellers who:

• remained affordable
• did not take advantage of the situation
• provided consistent value

This often results in long-term loyalty even after the economy improves.

In short : Yes - Seller B’s success strongly indicates that:

• B understands the economic downturn
• B empathizes with customers’ reduced purchasing power
• B adapts pricing to match real-world conditions

 

9. B Hires a Worker (10 sen/day) While A Sells Alone

a. B Invests in Leverage while A Relies Only on Himself

B understands that:

• One person alone can only sell so much,
• By hiring help, he increases capacity, reach, and speed.

Even though the worker is paid 10 sen per day, B trades a small cost for a large increase in sales volume.

A, however, is limited by time, physical ability, energy, customer reach

This is a classic difference between working IN the business vs working ON the business.

b. B Converts Cost into Growth

B’s commission cost is tiny compared to his profit:

• Total profit: RM150
• Worker cost (example: if 7 days × RM0.10): RM0.70
• Net profit: RM149.30

The worker cost is less than 1% of B’s earnings (to me, this is good trade-off)

This shows B understands scalability.

c. A Avoids Expenses but Also Avoids Growth

A tries to “save money” by doing it alone.

This is common among small businesses, but:

• Saving costs does not equal making profit.
• Doing everything alone slows the business.
• Opportunity cost becomes huge.

A’s choice actually costs him more because he misses out on potential sales.

d. B Creates Employment and Strengthens Community Trust

Hiring someone even for a small commission:

• builds goodwill

• creates local support

• strengthens reputation

• increases customer trust (“This seller is growing”)

Customers often prefer businesses that create jobs rather than solo traders who appear stagnant.

v) B Understands That Cash Flow Is King

The faster the stock clears:

the faster money returns, the faster B can reinvest, the faster B grows

Hiring help accelerates this cycle.

A, by relying on only himself, slows everything down.

vi. B Is Playing a Long-Term Game, A Is Stuck in Day-to-Day Survival

• B is building a system.

• A is building self-dependence only.

Systems win long-term.

In summary

Seller B shows understanding of:

• leverage
• business scaling
• cash flow management
• customer behaviour
• market environment
• productivity
• long-term business mindset

Seller A focuses on:

• saving costs
• doing it alone
• short-term thinking
• limited growth

CONCLUSION

The scenario of Seller A and Seller B decisively illustrates that a successful business strategy cannot rely solely on high margins. Seller Bs victory, earning triple the profit (RM150 vs. RM50) despite a lower margin, highlights the power of competitive pricing, high turnover, and strategic alignment with customer expectations. 

By recognizing reduced purchasing power in the market and prioritizing cash flow and accessibility , Seller B not only maximized absolute profit but also cultivated customer trust and loyalty by offering perceived fairness and value. Furthermore, Bs willingness to leverage a worker for a small cost demonstrates an understanding of scalability and long-term systems thinking over As focus on cost-saving and self-dependence. 

Ultimately, success comes from choosing a strategy that fits the market, not the sellers personal preference.

BUILDING A SUSTAINABLE FUTURE : ESG IN THE CONSTRUCTION INDUSTRY

Photo Credit : QHSEL Website

The construction industry is one of the world’s largest contributors to greenhouse gas (GHG) emissions, resource consumption, and waste generation. In today’s global business environment, Environmental, Social, and Governance (ESG) principles are becoming essential for sustainable development, risk mitigation, and long-term value creation in construction projects.

1) Environmental Responsibility

Construction activities can have significant environmental impacts - energy consumption, carbon emissions, water usage, and soil disturbance. By adopting ESG practices, companies can implement measures:

• Using low-carbon/recycled construction materials.
• Implementing energy-efficient machinery/renewable energy sources on-site.
• Applying water management and reduction plans.
• Incorporating green building designs that minimize the carbon footprint.

Simulated Case Study: ABC Construction Sdn. Bhd. undertook a mid-sized residential project in Malaysia. Through ESG-aligned practices, the company opted for precast concrete elements to reduce material waste, used solar-powered lighting on-site, and established a strict water runoff management system. As a result, carbon emissions were reduced by an estimated 20%, and water usage dropped by 15% compared to traditional construction methods.

2) Social Responsibility

The ‘S’ in ESG emphasizes people - workers, communities, and stakeholders. 

Construction companies can: 

• Ensure worker safety and fair labor practices.
• Engage local communities to minimize social disruption.
• Promote diversity and inclusion in hiring practices.

In the ABC project, the company implemented robust occupational health and safety protocols, conducted monthly community engagement sessions, and trained local workers in new construction technologies. This strengthened community relations and improved employee morale.

3) Governance

Strong governance ensures transparency, accountability, and ethical conduct. 

Construction firms should:

• Maintain clear policies on anti-corruption and compliance.
• Implement project monitoring and reporting systems.
• Establish ESG performance KPIs linked to executive compensation.

ABC Construction adopted a digital reporting system to monitor ESG metrics in real-time, allowing the management team to track environmental targets, safety incidents, and supplier compliance. This transparency boosted investor confidence and positioned the company as a responsible market leader.

Conclusion

Integrating ESG principles into the construction industry is no longer optional - it is a strategic imperative. Companies that proactively embed ESG into their projects can reduce environmental impact, foster positive social outcomes, and enhance governance practices. The ABC Construction case demonstrates that ESG-aligned approaches are practical, measurable, and capable of delivering both financial and societal value.

CULTURAL IDENTITY AS MALAYSIA MODERNIZES

 

When we know who we are, we can walk into any global space without fear of losing ourselves.

THE COST OF PROGRESS - DEVELOPMENT VS ENVIRONMENTAL SUSTAINABILITY IN MALAYSIA

Every nation dreams of progress. But progress without balance comes at a price and Malaysia is beginning to feel the cost - floods, recurring slope failures, and severe erosion events are not acts of nature alone, they are the echoes of our own choices. As the nation accelerates its infrastructure and urban expansion, environmental sustainability too often becomes a footnote, rather than a foundation.

1) When Development Turns Disruptive

Hill-cutting for highways, clearing forests for housing, and altering natural waterways for new industrial zones do have consequences even how good the risk assessment is. The soil no longer holds, the rivers overflow, and the cost of repairing damage exceeds what was saved in the first place.

Each disaster is a reminder - we are building faster than we are thinking.

2) ESG: Beyond a Corporate Buzzword

Environmental, Social, and Governance (ESG) principles are not just for listed companies, they are the new language of accountability for every contractor, developer, and policymaker.

Projects that ignore ESG risk may potentially becoming liabilities - financially, socially, and politically. Responsible contracting must now mean assessing environmental impact, enforcing erosion control, and ensuring compliance is not just “paperwork,” but practice.

3) Responsible Contracting and Leadership

Governments and developers must demand accountability throughout the project chain. It’s not enough to meet deadlines or reduce costs, sustainability should be treated as a performance metric.

Tender evaluations should include environmental stewardship. Site supervision must prioritize ecological safety alongside technical compliance.

4) We Need Real Sustainable Progress

Malaysia doesn’t need to slow down, it needs to WISE up.

True progress doesn’t destroy what sustains us, it preserves it for the next generation. Every hill, river, and forest has value far beyond its immediate commercial worth.

If we continue to equate “development” with “deforestation,” we are not progressing, we are merely shifting the cost from our balance sheets to our children’s future.

PUBLIC TRUST AND GOVERNANCE - WHY INTEGRITY STILL MATTERS IN 2025

In an era where digital systems, AI decision-making, and instant information dominate every aspect of governance and business, integrity remains the one value that technology cannot automate.

The rise of anti-scam initiatives, ISO 37001 Anti-Bribery Management Systems (ABMS), and financial accountability measures in recent years shows that society is not just demanding efficiency but ethics as well. 

Yet, the real question remains: Have we restored public trust?

1) Integrity Beyond Compliance

Too often, integrity is treated as a checklist item, something to “tick off” in annual audits. But integrity isn’t paperwork, it’s a culture.

A nation’s reputation is built not only on how quickly it grows but on how honestly it does so. When ethical procurement, transparent reporting, and responsible leadership become second nature, public confidence follows naturally.

2) The Cost of Losing Trust

Every corruption scandal, every broken promise, and every manipulated tender erodes public confidence not just in institutions but in the idea of fairness itself.

Once trust is lost, no amount of PR or slogans can rebuild it. The real currency of governance is credibility.

3) Technology Can Detect, but People Must Decide

With AI-driven monitoring, blockchain traceability, and digital reporting, we now have tools that can detect irregularities faster than ever.

But technology is only as ethical as the people who use it. Governance needs leaders with moral clarity those who understand that integrity is not just compliance, it’s conviction.

4) A Call to Leadership

In 2025 and beyond, the leaders who will inspire are not the loudest or richest but the most trustworthy.

Integrity is not old-fashioned, it’s the new competitive edge.

When citizens believe their leaders are honest, they’ll walk further with them even through difficult reforms.

Surveillance, Control, and the Illusion of Privacy

(Hard Talk)

Conspiracy theories about powerful entities placing citizens under close surveillance are everywhere. To me, such monitoring makes sense only when it targets real threats - those plotting war, destabilizing nations, or committing heinous crimes.

Since the 1980s, we’ve dreamed of moving forward - of Star Trek technologies becoming real, of breakthroughs in medicine, science, engineering, robotics, computing etc.

Ironically much of that has happened. Yet today, some long for the simplicity of the past. Nostalgia often hits hardest when progress becomes undeniable.

But progress comes with a cost. Is true privacy nearly gone? Every click, search, and swipe leaves a trace. Some call it discipline, others call it control and the difference is significant.

Yet the world may not be as dire as The Matrix or The Net portrays. The lesson is clear, at some point, we should not become overly dependent on technology, no matter how advanced it becomes. As a US friend Wayne - used to say to me : "Shut down your computer and go out and play"

Some retreat to remote areas, seeking peace. Ironically, even isolation has been exploited by cults and manipulative movements. Control finds a way.

Leaders, tech giants, diplomats, intelligence community, journalists, economist, corporate world etc and even nations need information, sometimes genuine, sometimes manipulated. Fake news, disinformation, and half-truths can be weaponized to hide what’s really classified - but of course, in the era that we're living now, it's hard to "classify" some information as "confidential" (the "old school" might work - hard copy with no uploading). Power always resides with those who hold the right information.

The old saying, “If you’ve done nothing wrong, you’ve nothing to fear,” sounds comforting. But reality is rarely that simple. As Michel Foucault observed, surveillance shapes behaviour through the possibility of being watched. George Orwell imagined a world in 1984 where truth itself was rewritten to control minds. (Well, as some say, history is often written by the victors - and that may very well be true)

In the digital age, we are both watchers and watched. Data and product. Privacy? Is it a right, a slipping privilege, or a tool meant to protect society?

The only choice we have is adaptation. (Accepting globalization which includes virtual borderless world via technological advancement) For me, that means moving forward, staying active, avoid trouble and not letting these complex systems give me headaches. Maybe this is what being a good citizen truly means - aware, alert, yet accepting of the world we inhabit.

SOME MEMORIES BEING FORCED TO LIVE IN THE OLD STYLE

I wrote this just two months ago, and little did I know it has made a difference in some lives. It’s never easy, but you must recognize your own worth, your time, your mental health. When people reject good ideas and cling to outdated ways, take it as a clear signal.

MEMORIES

I once worked briefly for a company (which I won’t name here) that clung to outdated, hierarchical ways of management rather than embracing good practices. Despite my efforts to drive improvement, internal “politicking” was rampant, and some individuals did everything they could to push me out. In the end, they succeeded, much to the disappointment of top management. That experience nearly shattered my confidence and made me question my own worth.

However, when I later joined a foreign-based company, I was surprised to find that many people there genuinely valued my experience and skills. The contrast was striking and ironic, it taught me an important lesson - sometimes, you need to be selective about where you choose to work.

PENIPUAN SCAM SYARIKAT DISENARAIKAN DI ACE MARKET

Telah menulis kisah ini pada 2016 kemudian ditulis kembali 2024. Dikongsi kembali sebab ada pihak cuba membuat "comeback" dengan cara yang salah.

Tahun 2016, saya ada menghadiri satu jemputan untuk mendengar ceramah 30 minit mengenai satu syarikat pelaburan yang katanya nak disenaraikan di ACE market di sebuah hotel (3 bintang)

Terkejut juga bila dapat kad perniagaan dari mereka yang bertugas di pintu masuk bilik mesyuarat tertera sebuah "Syarikat Sdn. Bhd." Ada lebihkurang 20 orang yang hadir dan mereka meminta saya duduk di kerusi paling hadapan walaupun saya mendesak untuk duduk di kerusi belakang. (rasa lain macam nih)

Sepanjang penerangan diberikan, saya sudah dapat mengesan "red flags" antara lain - "bukan skim cepat kaya", "diluluskan undang-undang" dll bla-bla-bla ibarat macam syarikat jualan langsung pula. (produk pun tidak ada - sekadar memaparkan kilang-kilang (ODM) tertentu usahasama untuk "contract manufacturing")

Cara penerangan mengenai prosedur penyenaraian pun saya tengok banyak kesalahan. Terus-terus IPO, kut mana ni? 

Mana "pre-submission" (penstrukturan IPO, "due diligence" dll) Mana "regulatory approval"? dan beberapa proses lain? Yang ditunjukkan surat permohonan untuk disenaraikan? Kandungannya pun nampak silap.

Hati da rasa - ini macam scam ni.

Dah habis penerangan, saya buat-buatlah bodoh bertanya depan-depan orang ramai :

1) Boleh ke Syarikat Sdn. Bhd. jadi firma pelaburan? Bukan yang "awam berhad" ke?

2) Berapa jumlah modal untuk melayakkan diri ke ACE market? Berapa "total market capitalization" yang diperlukan semasa disenaraikan? Berapa lama konsesi yang diberikan oleh kerajaan?

3) Mana lesen pengurusan dana? Mana lesen pengurus dana? (2 lesen tu)

4) Mana prospektus?

Tiba-tiba berbunyi satu suara di belakang saya menyokong apa yang saya katakan. 

Penganjur dah terketar-ketar nak menjawab. Lalu saya pun bangun dan keluar dari ceramah berkenaan diikuti oleh rakan saya dan dua hingga tiga orang dari ceramah berkenaan. Rasa membazir masa pula datang.

Rupa-rupanya di belakang saya tadi yang menyokong saya adalah penyamar orang awam dari pihak berkuasa. Khabarnya dah ada operasi tutup dan rampas tidak lama selepas acara berkenaan. 

Banyak juga whatssap dan PM FB yang saya dapat - ...malaslah nak layan kerana semua mesej yang ditulis adalah sia-sia belaka.

Dah terhantuk baru tergadah. Tapi ramai lagi yang percaya dengan penipuan seperti ini. Sampai ribuan ringgit habis. Saya rasa malas nak tegur sebab ada sahaja alasan/jawapan "penjilat"- biarla pihak berkuasa buat kerja sikit. Saya sekadar nak selamatkan kawan-kawan yang terpengaruh je.

BANK LOAN AGEISM

Another form of ageism shows up in some banks’ personal loan policies, where the maximum age limit is set at 58. What’s the justification? health concerns? or the assumption someone might pass away?

If the bank doesn’t want to offend anyone, it could simply evaluate applications individually and reject applicants on legitimate grounds.

But by displaying a strict age limit, it becomes a clear case of age-based discrimination.

POLITICIANS - STOP POLITICISING TUGU NEGARA

 

"Tugu Negara’s Nose And Height Not Asian Enough, Opposition MP Moots Facelift"

The Tugu Negara stands as a national memorial honouring our fallen soldiers who fought bravely for Malaysia’s independence. It’s a sacred symbol of sacrifice and unity not something to be politicised or trivialised.

Decades ago, there were already misguided claims by "holier than thou" generalizing Muslims of worshipping idols during Warrior's Day and in the 1970s, terrorists even planted a bomb that almost destroyed the monument.

One has to wonder does the MP making such remarks have any family members who once fought for this nation’s freedom? If so, they would surely understand the value of what the Tugu represents.

There are far more pressing issues that deserve attention

DON'T CALL ME PROFESSOR OR DR, JUST EN NIK, MR. NIK OR TUAN NIK

Over the years, I’ve been invited to deliver lectures at numerous institutions of higher learning both government and, more frequently, private universities and colleges. These invitations were extended based on my hands-on experience and the competencies I’ve developed over nearly three decades in the field.

Whenever I conduct these sessions, I always make it clear to my audience whether students or faculty members not to address me as “Professor.” This often surprises the management, who assure me that it’s acceptable within the university compound. However, out of deep respect for those who have truly earned such titles through years of academic pursuit and research, I prefer to be called “Mr. Nik.”

Don’t get me wrong and am not being humble either - many of my close friends are academicians, and I truly enjoy engaging with them. Our discussions are always stimulating, especially when we exchange perspectives on specific topics. Their passion for knowledge and research continues to inspire me.

I take great pride in the professional recognitions and certifications I’ve received from various institutions, which affirm my competency and result-oriented approach, even earning CPD points along the way.

While I’ve been approached with honorary offers from some universities, I believe that such distinctions should be earned, just as I’ve earned my experience and credibility through years of hard work. 

CONSTRUCTION RISK ASSESSMENT

As I reviewed past records of my previous “due diligence” assessments in construction projects, the first thing I always examined was the Risk Assessment, especially those prepared prior to project inception. I still observed numerous recurring errors that often led to excessive client complaints and even stop-work orders, resulting in costly consequences for contractors.

Depending on the project, these errors covered areas such as planning and scope, design and technical, human and management, quantification and evaluation, implementation and monitoring, environmental and social aspects, as well as documentation and compliance.

For example, under Planning and Scope, the most crucial part, among common mistakes included incomplete risk identification (e.g. ground conditions, utility conflicts, adjacent property issues), overreliance on generic templates, and failure to consider early uncertainties such as land acquisition delays or unclear design intent. I also found cases of vague scope definitions and poor coordination between architectural, structural, and M & E trades.

I advised contractors to align closely with client requirements, review contracts thoroughly, and conduct workshops at each phase (design, pre-construction, operation). They should also adopt online tools to maintain a live risk register, integrate risk management with cost control, scheduling, and procurement, and apply quantitative methods like Monte Carlo simulation and sensitivity analysis for key risks.

I’ll be conducting another similar assessment soon and frankly, the recurring nature of these issues remains concerning. Someone asked me just now, “I thought contractors don’t do Risk Assessments only HIRARC. Isn’t that the consultant’s or client’s job?” A good question indeed. I should have clarified that in Design and Build contracts, it’s quite common for the contractor to engage their own consultants to carry out a Risk Assessment, which is then reviewed and validated by the client or their authorized representative. On the other hand, HIRARC (Hazard Identification, Risk Assessment, and Risk Control) is typically conducted by the contractor’s Safety and Health Officer (SHO), together with site supervisors trained in HIRARC procedures. The two often get mixed up - Risk Assessment focuses on overall project and design risks, while HIRARC zeroes in on workplace safety and task-level hazards. It’s a subtle but important distinction. To further clarify on the question being asked : Risk Assessment vs HIRARC - 2 different scopes - Risk Assessment (in the broader project management sense) covers strategic, financial, design, technical, environmental, and contractual risks. It’s often done at project inception, design, or pre-construction stages. Responsibility may rest with the consultant, client’s representative, or in Design & Build (D&B) projects the contractor’s design team. The client or their representative then reviews and validates it. HIRARC on the other hand, is part of occupational safety and health (OSH). In Section 1.5 “General Requirement” of the same document, it states: “HIRARC shall be established by contractor and risk control measures shall be implemented before any new work commencement.” It’s done for site activities, work methods, and tasks, not for project-level risk. Conducted by the contractor’s Safety & Health Officer (SHO) or trained supervisors. (DOSH Malaysia’s Guidelines on HIRARC (2008). In the 2008 DOSH guideline (Guidelines for HIRARC), the purpose section (page 1 etc) states: “The purpose of this guideline is to provide a systematic and objective approach to assessing risks… It is intended for use in the construction sector among others" In CIS 25:2018 (CIDB), under Section 1.2 “Normative reference”, it cites Guidelines for Hazard Identification, Risk Assessment and Risk Control (HIRARC) (2008) by Department of Occupational Safety and Health Malaysia (DOSH) as foundational. In Design & Build (D & B) contracts, the contractor takes on both design and construction responsibilities. Therefore, they are legally and contractually required to manage design-related risks too. Many contractors have in-house design consultants or appoint external ones for this. Their risk assessments are submitted to the client’s consultant or Engineer’s Representative (ER) for validation. Many people confuse the two: 1) HIRARC = task-level safety assessment (hands-on, site-based). 2) Risk Assessment (Project/Design level) = strategic and technical risk management (design, cost, schedule, procurement, etc.). Contractors generally conduct HIRARC as part of OSH compliance, while Risk Assessment at the project level may be done by consultants except in Design & Build projects, where the contractor (with their design consultants) prepares it, and the client or authorized representative validates it. So, yes both are "risk assessments" in nature, but they serve different purposes and fall under different frameworks.

I’ve always had a soft spot for classic signs - simple, straightforward, and filled with that touch of nostalgia.