(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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