Industrial Economic Research Paper

Qustion1 Identify and explain the market structure in which the company is operating Pos Malaysia Market structure * Monopoly firm Introduction (Pos Malaysia) Pos Malaysia Berhad is Malaysia’s premier physical communications provider. Pos Malaysia also has a widespread network of 701 post offices all over the country, in addition to its network of mini post offices, mobile post offices, postal agents and stamp agents, making it one of the most extensive retail networks in Malaysia.Pos Malaysia’s Strategic Business Units that aim to provide quality, reliable, timely and innovative solutions to its customers, are made up of PosMel (mail and postal services), PosLaju (courier and express mail services), and PosNiaga (retail business services). Pos Malaysia also acts as a counter collection and payment agency for a range of financial transactions, such as bill payments, remittance, insurance and unit trusts. Pos Malaysia consists of 3 Main Core Business Units: Pos Mel ,Pos Laju and Pos Niaga. Poslaju or EMS service caters to all segments of the business community and the general public.There are 37 Poslaju Centres nationwide offer all types of courier services. Besides Mail and Express servicer. Poslaju or EMS service caters to all segments of the business community and the general public. Type of courier services Inbound Logistics * Customs Clearance, Import permit documentation, Transportation, Warehousing, Distribution channel/break bulk, Proof of delivery, Track and trace. Outbound Logistics * Customs clearance ,Export documentation ,Transportations ,Warehousing ,Distribution channel/break bulk ,Proof of delivery ,Track and trace Monopoly market structure (Pos Malaysia)Government protection Pos Malaysia Berhad is a Malaysian postal service company that was privatized in 1992 from a government department into a business corporation. Government also protects and helps pos Malaysia if that firm has shortage cost and losses. was attributed to the pos Malaysia is the first company established to provide these services and the company has long operated, known by society and high cost in the provision of post Malaysia. Society loyalty The society in Malaysia has known about brand of pos Malaysia and the society also has familiar to uses pos Malaysia as services of mail.The public will be more confident in such a service as Pos Malaysia is an agency under the ministry and the government is indirectly involved in ensuring the security of the items kept here. Maximize profit A monopoly market exists when there is huge number of buyers but small or very limited number of sellers in the market. Monopoly is the only supplier of a product for which there is no close substitute. In monopoly market, the firm has get a maximize profit, if the manager has have good skill and knowledge to manages that company.For example, pos Malaysia have a good manages, and that means this company can get a height profit. In monopoly market, pos Malaysia can set its own price and the prices chosen affects the quantity it sells. Pos Malaysia is the only licensed mail services provider in Malaysia and is the leader in the Malaysia Courier Services. Pos Malaysia posted a net profit of RM 61 million for the nine months ended September 2004 – an increase of more than 40 per cent from the corresponding period in the previous year.It is projected to earn a net profit of close to RM100 million this year based on existing postal rates. Power of set prices In monopoly market, pos Malaysia can put the price of the service with a high rate to the profit of the community to obtain greater. This can be carried out in the market as pos Malaysia is the only domestic postal mail offered in Malaysia Advantages in monopoly Stability of prices * In a monopoly market the prices are most of the times stable. This happens because there is only one firm involved in the market that sets the prices if and when it feels like.In other types of market struc tures prices are not stable and tend to be elastic as a result of the competition that exists but this isn’t the case in a monopoly market as there is little or no competition at all. Source of revenue for the government * The government gets revenue in form of taxation from monopoly firms. Massive profits * Due to the absence of competitors which leads to high number of sales monopoly firms tend to receive super profits from their operations.The massive profits realized may be used in such things as launching other products, carrying out research and development among many other things that may be beneficial to the firm. Question 2 Comment if there are barriers to entry Definition Barriers to entry are designed to block potential entrants from entering a market profitably. They seek to protect the monopoly power of existing (incumbent) firms in an industry and therefore maintain supernormal (monopoly) profits in the long run.Barriers to entry have the effect of making a mark et less contestable. Defined an entry barrier as â€Å"A cost of producing (at some or every rate of output) which must be borne by a firm which seeks to enter an industry but is not borne by firms already in the industry. Barriers to entry in( pos Malaysia). In pos Malaysia, there are barriers to entry. Among them are: Advertising and marketing * Developing consumer loyalty by establishing branded products can make successful entry into the market by new firms much more expensive. Cost Advantages Lower Costs; through experience of Being in the market for missing time, allows the existing postal company Malaysia’s to cut price and win price wars if another firm enter the market. Absolute cost advantages * Allows an incumbent firm to earn excess profits without feat of new firm entering the market. for example in the market, pos Malaysia price of the service is able to offer a cheaper service player medals RM7 per unit, but other companies likes DHL and FedEx only able to off er prices as low as RM 12 mail service. so its pos Malaysia cans set PRICES at rm10.Which is are more chipper, than the more customer use pos Malaysia services and also get a highest profit. Government Restrictions * Government is the source of barriers to entry that are created by patents and copyrights. But these are not the only barriers to entry enabled by government. Government is, after all, the entity that establishes the rules of the game. Governments frequently erect barriers to entry by legally limiting the number of participants in a market. Legal restrictions for public utilities are usually designed to make the most effective use of natural monopoly markets that can create serious inefficiency problems.Other legal restrictions, such as licenses or charters, are generally intended to pursue other goals, but create barriers to entry nonetheless. For example, pos mel only provided by pos Malaysia. Although there are big rivals like FedEx and DHL outside, but pos Malaysia o ffer cheaper prices. First mover advantages * The first firm to enter incurs lower marketing costs because it faces no rivals. Later firm face higher marketing costs because they must compete against the first firm. If the presence of the incumbent raises the marketing costs of the second firm to enter, then the first firm has permanent advantages and can maintain high prices