business environment
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(Task 1)
(a.)
What is economy?
According to (Investopedia, 2015) definition of economy is “the large set of inter-
related economic production and consumption activities which aid in determining
how scarce resources are allocated”. Based on my reading economy is a the state
of a country or region in terms of the production and consumption of goods and
services and the supply of money
There are three types of economy:
a. Command economy
First of all is command economy. Command economy is known also as planned
economy, this is the types of economy where the government determines what
goods should be produces, how much should be produces and the government also
set the prices for goods to be sale. For example central body or known as
government play important roles in allocating scarce resource like labour, capital,
soil and natural resources. A characteristic of these types of economy is the
government creates a central economic plan for all sectors and regions of
the country. It is for generate robust economic growth, increase production
efficiency and best utilize scarce resource. Next is government allocates all
resources according to the central plan. This is for eliminates unemployment
by promising to use each person’s skills and abilities to their highest capacity.
Lastly is government sets the priorities for production of all goods and
services. This is important to supply enough food, housing and other basics to
meets the needs of everyone in the country
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b. Market economy
Next is about market economy. Market economy also known as free market system,
this is the type of economy which decision regarding resource allocation,
production, consumption, price levels and competition are made by the collective
actions such as individuals, organization or private sector which seeking for their
own advantage. For this type economy freedom of the markets and government
intervention is limited this is because this economy is set by private ownership. A
characteristic of these types of economy is private property. It allows the owner
to make legal contract to buy, sell, lease, or rent their property. In other words,
their property gives them the right to profit from ownership. Next is, freedom of
choices. It means owners, businesses, consumers and workers are free to produce,
sell and purchase goods and services in a free market. Lastly is, competition. The
forces of competitive pressure keeps prices moderate and it will ensure that goods
and services are provided most efficiently.
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c. Mixed economy
Finally is about mixed economy. Mixed economy is an economic systems which
combine both command and market economy. Mixed economy system allows a
level of private economic freedom in the use of capital, but also allows for
governments to interfere in economic activities. Means all of production are shared
between the private and public sectors and it also call as dual economy. Since a
mixed economy includes a mix of both private and government control, it reflects
characteristics of both capitalism and socialism. A characteristic of these types of
economy is operated by the price system and government directives.
Manufacture and asset are made by the management or the system selected by the
government. But the private sector in the mixed economy is operated by price-
mechanism.
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Decide your organization is operating under which type
Bistari Young company Enterprise is a company from Malaysia and it is operating
under mixed economy system. This is because Malaysia is a country which is
implement dual economy system. This system is a combination of command and
market economy. Put in simply, mixed economy was included free enterprise and
government control or some form of direct intervention by government. There are
some characteristics of mixed economy that our company need to obey such as for
the resource distribution, government will decides on the resource of distribution of
scare merchandise and allocation of income, income workers in organization are
managed by government.
Next is about the advantage and disadvantage using this type of economy
Advantages
1. Most business and industry can be left to privates firm
= this is because private firms tend to be more efficient than government
controlled firms because they have a profit incentive to cut costs and be
innovative.
2. Government regulation will occur in market failure area
= for example is regulation on the abuse of monopoly power this is important
to prevent mergers and prevent excessively high prices. Furthermore is
taxation and regulation of goods with negative externalities such as for
pollution and for the last one is subsidy or state support for goods and
services which under the consumed in a free market. this include public
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goods, like police and national defence and merits goods like education and
health care.
3. Can create greater equality and provide a safety net
= this can prevent people living in poverty. At the same time, mixed
economy can enable people to enjoyed the financial rewards of hard work.
Disadvantage
1. Difficult to know how much government should intervene
= for example discretionary fiscal policy may create alternative problems
such as government borrowing.
2. Criticized by command economy for allowing too much government
intervention
=this will lead to inequality and an inefficient allocation of resources.
3. Get criticized by market economy for allowing too much government
intervention.
= libertarians argue that goverments make very poor managers of the
economy, invariably being influenced by political and short term factors
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How company should behave
Malaysia is a country which using mixed economy system. Since our
company is a company from Malaysia, so we need to obey all the regulations
and law that have been set by Malaysian government. Our organization need
to take a look on the factor of production which is land, labour, capital, and
entrepreneur.
Land
Since bistari young is a company from Malaysia and indirectly operates
under mixed economy system so our company need to obey law that government
have been set. For example if we want to open our business, first things that we
need to have is a license. License is important this is because it essential grants you
the right after pay a fee of course if you want to operate a business. The company
are required to register their business with the Companies Commission of Malaysia
(CCM). CCM also known as a Suruhanjaya Syarikat Malaysia (SSM) in the local
language. This company regulates all business activities and can advise prospective
applicants about the required procedures.
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Labour
Next is about labour. According to (business dictionary, 2015)
definition of labour “is the aggregate of all human physical and mental effort used
in creation of goods and services”. Based on my understanding labour are the
people who are work for the business or company. Since bistari young enterprise
want to open their business in Malaysia so we need to take a labour from Malaysia,
this is because Malaysian government want to ensure that there is no
unemployment. Because of that Malaysian government have made a rules and
regulation for labour that the company Bistari young need to obey. For example in
term of rest day. Every employee shall be allowed in each week a rest day of one
whole day, so below is the some of requirement that bistari young need to paid for
their employees :
A daily rated worker who works on a rest day
i. 1 day’s wages if the workers does not exceed half his normal hours of work
ii. 2 day’s wages if the workers is more than half but does not exceed his
normal hours of work.
A monthly rated worker who works on a rest day
i. ½ day’s wages if the work does not exceed half his normal hours of work
ii. 1 day’s wages if the workers is more than half but does not exceed his
normal hours of work.
For overtime work on a rest day, an employee shall be paid at a rate which is not
less than two times his hourly rate of pay.
(wezoh, 2015)
Capital
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Furthermore is about capital. According to (business dictionary, 2015)
definition of capital is a “wealth in the form of money assets, taken as a sign of
the financial strength of an individual, organization, or nation and assumed to be
available for development or investment”. Based on my reading, capital is
known as money that every company need in their business. Capital is important
to business this is because it is used for expenses where the company can buy
raw materials, land and equipments. Capital can be obtained through loan,
business angel, leasing or hire purchase. For example if our company need a
capital to build a office, loan will be suitable for our capital. If we want to take a
loan, there are some rules and regulation that we need to follow. This is because
different bank will set different interest rates it is to prevent from the bank losing
their money or to ensure the company can repay back the money.
Entrepreneur
Lastly is about entrepreneur. According to (business dictionary, 2015)
definition of entrepreneur is a “someone who exercise initiative by organizing a
venture to take a benefit of an opportunity and, as the decision maker, decides
what, how, and how much of a good or services will be produced”. Based on my
knowledge, entrepreneur is a someone who run the business. Malaysian
government have provides a lot of education to their committee such as
government have made school this is only for to creates an expert entrepreneur
which it will give benefit back to the Malaysia. Entrepreneur is very important for
the Malaysia economy this is because they are the people who can generate
new ideas so because of that government allow them to open their business by
support them like provide a land, road and many more. So it will give advantage
to our organisation in run a business. We will not have to expenses a lot of
money.
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(b.)
Government role
As had been discussed Malaysia is a country which operates under mixed
economy system. There are several element that play important role in make
sure the stability of this county. Let’s take a look on the role of government in
development planning on Malaysia. Government plays an active role in
development planning to promote balanced economic growth and social
progress. It can be seen by (windows to malaysia, 2013) “the manufacturing
sector began to assume an increasingly important role in the expansion of
the Malaysian economy. Within the sector, the shift from labour-intensive to
capital-intensive industries took places in line with with national objectives.
Witnessed an economy sustained through productivity and industrial
upgrading to higher value-added industries with a focus on information
technology. At the same time, government policies favor a thrust for the
development of a vibrant small and medium-scale industrial sector as a
backbone of industrial activities”. Based on this statement, it clearly shows
that government is very important in ensuring Malaysia as a rapidly
developing country.
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What is fiscal policy?
According to (Investopedia, 2015) fiscal policy is “the means by which a
government adjusts its spending levels and tax rates to monitor and
influence a nation’s economy. It is the sister strategy to monetary policy
through which a central bank influences a nation’s money supply”. Based on
my understanding fiscal policy is a government revenue and spending policy
designed to counter economic cycles in order to achieve lower
unemployment or no inflation. For example in a recession, goverments
stimulate the economy by the deficit spending which means expenditure is
exceed than revenue while in expansion the economy is growth and have a
surplus government exceeds the revenue compare to the expenditure.
What is monetary policy?
According to (Investor words, 2015) “the regulation of the money supply and
interest rates by a central bank, in order to control inflation and stabilize
currency”. Based on what I have learned monetary policy is an economic
strategy chosen by a government in deciding expansion or contraction in the
country‘s money supply. It usually through the central bank, and there have
three major tools that the government implement, there is buying or selling
national debt, changing credit restrictions and last one is changing the
interest rates by changing reserve requirements. For example Malaysia
government has been running a deficit for years so this is a good times to
paying down debt.
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What are the impacts using these policies to the company
The fiscal policies that the government pursues are the spending and taxing
program that have been enact. These will affect the business. Government
spending programs may have a more direct impact to the business or
industry, such as build a specific projects like infrastructure projects and it
directly benefits those firms involved. For example when government
spending it will benefit to the young bistari which is government will build
their company. So it will give advantage for our company because we can
save our money.
While for monetary policy, if the government plan to expand the money
supply while keeping inflation it will impact on the interest rates. When the
government decides to expand the country money supply it will hold downs
the interest rates and it will benefit for any company to borrow some money
for capital investment. For example when government plans to expand the
country money supply, it will easy for our enterprise to borrow money for
specific purpose.
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(c.)
Competition Policy
As we know every company which want to run a business have their
competitors. Government is a party which play important role in control the
competition among them. To ensure fair competition can be run government
set a competition policy. According to (Investor words, 2015) competition
policy is “policies intended to prevent collusion among firms and to prevent
individual firms from having excessive market power”.
Malaysia have their own competition policy which is called (MyCC). Based on
website (Malaysia competition commision, 2014) (MyCC) is an “independent
body established under the Competition Commission Act 2010”. The main
role is to protect the competitive process for the benefit of businesses,
consumers and also the economy as well.
Since Malaysia implement this type of policies indirectly it will give impact to
the company. By using this type of policy the prices of goods will be low.
To related with bistari young, for example if prices of goods that our
enterprise want to sell is low so people will prefer to buy the product.
Indirectly, we will get much profit.
Other regulations mechanism
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The popularity of the digital media and the availability of a boardless world of
communication networks have formed a new environment, supported by the
Information and Communication Technologies (ICT). Malaysia is moving to
the new era of knowledge creation and fast moving competitive especially in
the media business sectors. This phenomena has blurred the boundaries
between telecommunications, broadcasting and computing industries. This
new technological environment in Malaysia has result a conflicts and
challenges to the country, especially to the local business sector because it
will impact the social values to the public and the sector itself. A long
with the Malaysia governments Multimedia Super Corridor (MSC), a national
communication and multimedia policy was introduce to encourage
development of industry self regulatory mechanism with minimize the cost of
regulation while at the same time it will providing a clear guidelines for
industry behavior. To related with the bistari young enterprise, it is
good for our company so that we will not have much cost to educated people
about entrepreneurship. For example we can just offer training in developing
entrepreneurship skill through the medium of Catur Bistari so we do not use a
technological environment which can just give a conflicts.
Task 2
(a)
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There are four types of market structure :
a) Perfect competition
According to (economics online, 2015) definition of perfect competition is
a “perfectly competitive market is a hypothetical market where
competition is at its greatest possible level”. Based on my reading, perfect
competition is an industry structure in which there are many firms
producing homogenous products and the firms are large enough to
influence the industry. A characteristic of these types of market
structure is there is perfect knowledge on the products. Knowledge is
freely available to all participants, which means that risk-taking is
minimal. For example, all buyers and sellers have access to information
regarding availability, prices and quality of goods. Next is, there is no
barriers to entry. it means that buyers and sellers can freely enter or
leave the market since the goods that have been sell is homogenous.
Lastly is, no single firms can influence the market prices. The single
firms is refer to the price taker since the product that have been sell is
homogenous so the price of the products between the competitors will be
same. On the other words, the price is taking from the whole industry.
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b) Monopolistic competition
According to (economics online, 2015) definition of monopolistic
competition is a “common market structure in which firms have many
competitors, but each one sells a slightly different product”. Based on
what I have understand, monopolistic competition is about a market
structure in which there is a large number of firms, each having a small
proportion of the market share. A characteristic of these types of
market structure is each firms make independent decisions about
the prices. Since there have a lot of competitors and in the market have
different types of product so the sellers will have the power to determine
the best prices for their products. Next is, knowledge is spreadly
between participants. For example, customers can review all the
menus available from restaurants in a town, before they make a choice.
They can spread the menus to the others who do not review the menus
but it will be unperfected because of the others do not see what is the
menus exactly unless heard from the people. Lastly is, no major barriers
to entry or exit the market. For example the firm are free to enter a
highly competitive market where several competitors offer a products that
are close but not exactly.
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c) Oligopoly
According to (boundless, 2014) definition of oligopoly is “an economic
condition in which a small number of sellers exert control over the market
of a commodity”. Based on my reading, oligopoly is a market structure in
which a few firms dominate. Although only a few firms dominate, it is
possible that many small firms may also operate in the market. For
example, major airlines like Malaysia Airlines operates their routes with
only a few close competitors, but there also many small airlines such as
firefly offer their specialist services. A characteristic of these types of
market structure is strategy. It means the firm need to decide whether
they want to be first firm to implement a new strategy or whether they
just wait and see others competitors do. Since this market structure only
have a few firms dominate so they need to plan a strategy. Sometimes is
good for them to starts first because a firms can generate head-start
profit. But there is also good when they are just wait and see because
they will try to improve what are launched by their competitors. Next is,
barriers to entry. this type of structure will maintain their position of
dominance in a market this is because it is too costsly or difficulty for
potential competitors to enter the market. Lastly is, pricing strategies.
Oligopolists may use predatory pricing. It means keeping price low and
often below the full costs of production.
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d) Monopoly
According to (boundless, 2014) definition of monopoly is “a situation, by
legal privilege or other agreement, in which solely one party exclusively
provides a particular product or services, dominating that market and
generally exerting powerful control over it”. Based on what I have learned,
monopoly is about in a market structure which have a single seller, selling
a unique product in the market. it means that the sellers will have no
competition, as he or she is the sole seller of goods with no close
substitute goods. A characteristic of these types of market structure is
market control. Since this type of market structure is a single seller so
he or she can monopoly or control the selling side of the market. Next is,
unique product. It will advantage for the seller because he or she can
sell a unique product it is because he or she is the only seller so there is
no competitor that they will need to compete. Lastly is, specialized
information. Monopoly is commonly characterized by control of
information or production technology. Only they is available and not to
others.
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Decide bistari young is operating under what types of market structure :
Bistari young enterprise is operating under Monopolistic Competition.
Lets take a look on how to determine the type of market structured.
For the nature of product, our company is sells products which are the
training programme and it is different from other competitor.
So next is about entry and exit. For my company it is easy to them to
move from a place to another place. This is because since the company is
not growth enough so it will easy for them to move.
Furthermore is about behavior of the firm in the industry. Our
company is a price maker. It means that we can put any prices that we
want, since our company is sell a different product. Lastly, is about
number of firm in the industry. Our company has a many firm of
industry in Malaysia.
As had been discussed, monopolistic competition is about products which
have a slightly different. To relate with the young bistari enterprise,
we need to get a different way from other competitors, so that customer
will keep remind about our products. For example, based on services and
quality, as had been mention this type of market structure has a slightly
products between the competitors, so the way that can my company to
attract people about their products is by on the services and the quality of
the products itself. We can provide a good quality of products and give a
best service that other competitors do not have. Indirectly customer
attract with our products.
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How this company behaves in term of pricing and competition
Our company sets high prices. As I mention before, our company is price
maker this is because since the competitors sells a slightly different
products so it will up to us to sets any prices that we want. This is one of
the way, we want to market their products. For the competition, as I had
been discussed for the monopolistic competition. There have many of
competitors but each competitors sells a slightly different products. So we
will compete the products based on the quality of products itself. To
relate with the bistari young, our company can give a seminar at first
on how to play and at the same time we will make some competition
between competitors, so participant can evaluate which product or types
of games that they will satisfy.
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Market force shape organizational response
There are three examples that related to the Bistari young company which
is customer perception, cultural environment and the impact of
technology on the organization.
First of all, lets take a look on customer perception about our product.
Since our company is operated under monopolistic competition, indirectly
there have a lot of competitors. Maybe customer will compared the
products of our company between the other competitors. This is because
in this type of market structure the competitors sell products which are
slightly different. They may look on the quality of the products and make a
comparison between the other competitors which one can attract them.
So the ways that our organisation can take is, make a lot of advertisement
about the products and how to play it, indirectly people will know about
the product and at the same time will attract our product to play as well.
Next is about the cultural environment. Our company is operated in
Malaysia and Malaysia is a country which have a various types of culture.
In Malaysia have a chinese, malay and indian. Every each of these races
have a different lifestyle. For example most of the malay people like to
play outdoor games but the indian and chinese are mostly like to play
indoor games. so it will give an advantage and disadvantage to our
enterprise.
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Lastly is about the impact of technology on organization. Our
enterprise need to make sure that our technology is up to date.
Technology is important to the business, this is because nowadays people
will more attract to gadget, smartphones, and laptop. All these things are
like their heart and it shows it is very important to them. As the time
changes, technology also will keep change, indirectly it will give a benefit
to the business. For example make an online order. For sure it will easy for
the customer to take an order without need to waste time to have a
queue.
By doing this way, it will benefit to our organization to markets our
product, which we can try to market the products to abroad from this
country such as Indonesia, Thailand and Singapore. Indirectly it will make
the product become commercial.
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Business and cultural environment shape the behavior of your
organization
Bistari young will find their ways to gain the competitive advantage
through the distinct competencies in term of resources and capabilities
For resources, we should take a best resource for our company. We will
choose a best supplier with give affordable prices. We will order the
best quality of products so that customer will satisfy on what we had
done. For example, if the supplier provide a products which is quality and
at the same time, the products is we get on the right time so we need to
choose that supplier this is because we know that supplier is not only
supply a product, it is about how long can the supplier supply the product
and the product is in good quality. Let say if the supplier supply a product
which is good in quality, but the product need to take time for one or two
month. Indirectly it will affect our business, we may lose our customer just
because of the supplier. So we need to choose a best supplier in order to
keep our customers. Next is, we will reduce the price of our products
so that that people will attract to buy our products. For example will
reduce our products from the actual prices so people will attract to by our
products.
For the capabilities, we decide to use agent for our company. This is
because through agent it will easy for us to found people who are interested
to our products and the agents are from our company itself. We choose our
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employee as an agent so it will reduce the cost compare to hire agents from
outside of the company. For example, we use capabilities of agent to find a
people who are interested to play our games, and from there indirectly our
product will be commercial. Next is choosing an employee in the
company who can influence people to join this game. For example if one
of our employee who have an expert and good in term of speaking, so we
choose them for persuade people to attract with our products.
CONCLUSION23 | P a g e
As for the conclusion, our company must follow all the rules and law that have been
set by the Malaysian government before we want to run their business. Besides
that, we also must have enough resource and make sure that our company have a
capabilities to compete with other competitors. In a nutshell our company is
operated under a mixed economy system since our organization is located in
Malaysia. In fact our company also operates under monopolistic competition where
as there have a lot of competitors but the product is slightly different.
REFERENCES
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windows to malaysia. (2013). Retrieved from goverment play important role in stability malaysia economy: http://www.windowstomalaysia.com.my/eco/40_1.htm
boundless. (2014). Retrieved from definition of perfect competition: https://www.boundless.com/economics/textbooks/boundless-economics-textbook/competitive-markets-10/perfect-competition-66/definition-of-perfect-competition-247-12344/
Malaysia competition commision. (2014). Retrieved from malaysia competition policy: http://mycc.gov.my/
business dictionary. (2015). Retrieved from what is labor: http://www.businessdictionary.com/definition/labor.html
economics online. (2015). Retrieved from definition of perfect competition: http://www.economicsonline.co.uk/Business_economics/Perfect_competition.html
Investopedia. (2015). Retrieved from definition of economy: http://www.investopedia.com/terms/e/economy.asp
Investor words. (2015). Retrieved from definition of monetary policy: http://www.investorwords.com/3097/monetary_policy.html
wezoh. (2015). MYLabourLaw. Retrieved from rules and regulation for labor in malaysia: http://www.mylabourlaw.net/quick-guides/7-guide-to-employment-act-1955.php
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