extended essay economics

Extended Essay Economics HL “To what extent are the tuition centres in Ahmad Kamal, Syanaz Bazil Taipan Business Centre, USJ, a form of monopolistic competition? 000592-0049

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Abstract

The tuition industry grown exponentially throughout years in Malaysia, thus it has

interested me to pursue a research to confirm its market structure and type of competition upon

reading an article in a newspaper. This curiosity has led me to form a research question “To what

extent are the tuitions in Taipan Business Centre USJ, a form of monopolistic competition?”

The location of the investigation is narrowed into a small area of neighborhood in order for

the investigation to be more precise. Primary data used are interviews which was conducted with

7 out of 12 firms in TBC and surveys among 60 parents picked using random sampling in order to

know their behavior towards the market structure. Secondary data is obtained in form of literature

review and supporting data for primary data. Few limitations include not being able to get some

confidential data but this does not prevent from the research to continue.

The barriers of entry are medium as it has little elements of brand loyalty and a few

procedures. Although the product differentiation does not seem significant, survey from parents

shows that it plays a big role as it’s more of a non-price determinant rather than price determinant.

Thus, price war does not exist as price maintained at a range of market price accepted and

producers take actions independently. The fact that there’s entry and exit of firms and ability of

firms to gain abnormal profit in the short run confirms it is a monopolistic competition. There is

fairly perfect knowledge among consumers, and second degree price discrimination is practiced.

In conclusion, tuition centres in TBC are a form of monopolistic competition as it has

strong product differentiation, with slight oligopoly features due to existence of little brand loyalty,

and price rigidity.

(294 words)


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Introduction

Malaysia is a developing country that is now focusing on the tertiary sector, especially on

education. One of the services that is popular in this country is tutoring service in tuition centres1.

According to a local newspaper, the demand for tutoring services in tuition centers2 has been on

the rise in the past few years and this may lead to some firms to compete by price3 “…this extra

curricular has by now become such an integral part of the primary education, in the same way as

classroom teaching and learning, that one conditions the other, and one cannot function without

the other4 (UNESCO 1991: 41).” This reflects as the amount Malaysians spent in education which

is 5.79 billion in 20095.

Education system in Malaysia is very academic oriented and nowadays parents see tuition

centres as a necessity despite of their high cost of living6.Tuition classes among the students back

in the old days used to be a supplementary for the weak students to do better in class but now it’s

more of a trend.

The topic seems interesting to me due to the socio economic background of the people in

my area, and whether they choose based on price or other factors and their behavior towards the

1 Tuition centers, Wikipedia<http://en.wikipedia.org/wiki/Tuition_center>, Accessed 20 March 2013 2 The tuition industry might be unfamiliar to some countries, as it is more recognized as private tutoring services outside Malaysia 3 Nevash Nair “Increase in demand for tuition in Malaysia,” The Star 5 November 2012 <http://thestar.com.my/news/story.asp?file=%2F2012%2F11%2F5%2Fmetrobiz%2F12265348&sec=metrobiz> [Accessed 20 March 2013] 4 Centre for Public Policy Studies, ELECTIONS ‘08 DAILY POLICY FACTSHEET #6: EDUCATION 21 <http://cpps.org.my/resource_centre/Education.pdf> [Accessed 30 April 2013] 5Trading Economics, PUBLIC SPENDING ON EDUCATION; TOTAL (% OF GDP) IN MALAYSIA, 2009 <http://www.tradingeconomics.com/malaysia/public-spending-on-education-total-percent-of-gdp-wb-data.html> [Accessed 4 May 2013] 6 Cost of living in Subang Jaya Malaysia, Numbeo <http://www.numbeo.com/cost-of-living/city_result.jsp?country=Malaysia&city=Subang+Jaya > [Accessed 4 May 2013]

http://en.wikipedia.org/wiki/Tuition_center

http://thestar.com.my/news/story.asp?file=%2F2012%2F11%2F5%2Fmetrobiz%2F12265348&sec=metrobiz

http://cpps.org.my/resource_centre/Education.pdf

http://www.tradingeconomics.com/malaysia/public-spending-on-education-total-percent-of-gdp-wb-data.html

http://www.numbeo.com/cost-of-living/city_result.jsp?country=Malaysia&city=Subang+Jaya

http://www.numbeo.com/cost-of-living/city_result.jsp?country=Malaysia&city=Subang+Jaya


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competition between the tuition centres. This leads me to form the research question “To what

extent are the tuition centres in Taipan Business Centre (TBC), USJ, a form of monopolistic

competition?” The fact that there is more than 10 tuition centers7 in a small area and suspicions

about whether they compete by price war or non-price, the investigation is worth to be carried out.

Hypothesis

With this, it is hypothesized that TBC’s tuition centres as a monopolistic competition. This was

assumed due to the large number of competitors in such a small area. Besides that, the firms in the

area focused more on competing based on non-price competition. Lastly, due to having some

monopoly power, they managed to practice second degree price discrimination.

7 Appendix A : Name of tuition centres


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Methodology

The primary research is carried out by interviewing 9 out of 13 tuition owners only due to

confidentiality. The site is also restricted in order to make the research more accurate. Questions

that is essential to aid the characteristics of the market structures, collusion and competition is

asked.

Price of each of the services is collected and analyzed to investigate on whether the tuition

centres practice price discrimination or not to enhance their price setting ability. They are taken on

the same day as price can fluctuate. Questionnaires using random sampling on the same day is

given to 60 parents to find out about their behavior in purchasing tuition classes service.

The secondary research is carried out by getting resources from the internet and books.


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Review of Economic Concepts

Market structures have a significant impact on the firms to determine the nature of the

competition and the pricing8.

Perfect Competition

The obvious thing about perfect competition is there’s a huge number of buyers and sellers.

Thus, any actions of consumer or producer would not effect on the market price9, so it is a price-

taker. The products are homogenous, which means “of the same or a similar kind or nature”10

means the products have no difference between one another. Therefore, demand curve is perfectly

elastic since there are many substitutes. There is very low barriers to entry and exit.11 Lastly, every

economic agents are aware of the market price of the commodity.

Monopolistic Competition

This type of competition characterized by many buyers and sellers but have slight

monopoly power due to product differentiation. Differentiated products is also known as

heterogenous product12 which is similar but not identical13. It has many buyers and sellers but the

downward-sloping demand curve is due to it being more elastic because of the product

8 A2 Micro: Market Structure, Conduct & Performance, Tutor2U [Accessed 23 April 2013] <http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-market-structure-conduct-performance> 9 Dominick Salvatore. Microeconomics Theory and Applications Fourth Edition, USA,Oxford University Press, 2003 pg 265 10 Homogenous, Merriam Webster [Accessed 30 April 2013] <http://www.merriam-webster.com/dictionary/homogeneous> 11 Dominick Salvatore. Microeconomics Theory and Applications Fourth Edition, USA,Oxford University Press, 2003 pg 265 12 Dominick Salvatore. Microeconomics Theory and Applications Fourth Edition, USA,Oxford University Press, 2003 pg 354 13 Ibid: 354

http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-market-structure-conduct-performance


http://www.merriam-webster.com/dictionary/homogeneous



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differentiated. Barriers to entry and exit are low as the cost of getting in is easy but each of the

firm has its small percentage share in the industry which won’t affect the whole market.

Oligopoly

Oligopolies are a few firms dominating the industry by having a large fraction of

percentage share over the total industry. Each of the market can be determined by using its

concentration ratio. Each producer competes to gain market share by lots of ways such as attempt

on advertising and differentiating the product. An interesting feature of this type of competition

would be the competition are so stiff that every action of a firm would have a significant effect on

the others. They are interdependent to each other.

“ ”14

14Ch. 10 Perfect Competition, Monopoly, and Monopolistic Competition, Department of Economics, Volkswirtschaftslehre, Johannes Kepler Universitat [Accessed 30 May 2013]

<http://www.econ.jku.at/members/WinterEbmer/files/Teaching/managerial/lecture4.pdf>

Figure 1: Characteristics of each market structure

http://www.econ.jku.at/members/WinterEbmer/files/Teaching/managerial/lecture4.pdf


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FINDINGS AND ANALYSIS OF INVESTIGATION

DETERMINANTS OF THE MARKET STRUCTURE MONOPOLISTIC COMPETITION

5.1 Low barriers to entry

Barriers to entry is a very important criteria when determining the type of market structures.

It is defined as something that prevents a firm to entering a certain industry, can be artificial or

natural. These includes the cost of setting up, economies of scale among existing firms,

government regulation, cost of marketing and brand loyalty15 that already exist among

consumers16.

Name of tuition centre Startup Costs (approximation)(RM) Number of years

Mawar RM 80 000 <1 year

STC RM 40 000 15 years

.Get A

RM 60 000 5 years

Sri Restu

RM 70 000 5 years

Kancil RM 50 000 14 years

TTC RM 80 000 5 years

Tutorial Lee RM 70 000 5 years

Generasi Muda RM 60 000 5 years

Mastermind RM120 000 5 years

15Economics Online, Barriers to entry http://www.economicsonline.co.uk/Business_economics/Barriers_to_entry.html [Accessed: September 18, 2013] 16 BARRIERS TO ENTRY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2013. [Accessed: September 28, 2013].

http://www.economicsonline.co.uk/Business_economics/Barriers_to_entry.html


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Table 1: Barriers to entry – cost and years

Based on the figures collected, each of the tuition centre has varied cost depending on

which year they started and the facilities which is between RM 40000 to RM 120 000, and the cost

of setting up the tuition center is not expensive, as they only need to build a few classrooms with

air conditioners and hire tutor with a reasonable salary depending on their qualification17.

Name of

tuition centre

Number of

teachers hired

Miniumum

Qualification

of teachers

Experience

Of the teacher

Average

salary per

teacher

(approximate)

Full Time Part Time

Mawar 5 5

Diploma

10 years RM2000

STC 13 - Degree

More than 6

years

RM1500

Get A 15 4 Degree 5 years RM2500

Sri Restu

- 2 SPM, Diploma and

Degree

10-20 years RM2000

Kancil 7 20 Diploma 5 years RM2000-

RM4000

TTC

20-25

15 Diploma,

Bachelors

and Masters

4-10 years RM3000

Tutorial Lee - 9 Degree 5-20 years RM2000

Generasi

Muda

1 2 Degree At least 3

years

RM2000

17 Interview with the tuition owners


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Mastermind 8 7 Degree 5 years RM3000

Table 2 : Number of tutors and details

The process that they have to go through while setting up the business is quite tedious but

manageable by getting an educational license18 from the Petaling District Education Department

Selangor State Education Department.

Skills that is needed is to qualify as a tutor is a good qualification degree where Bachelor’s

Degree would be sufficient. However, through the interview conducted with Mr. Anthony from his

tuition centre which claimed “Specializes in Mathematics and Science on the signboard”, he

honestly said that he didn’t even finish his tertiary education but manage to set up the business

successfully through the trust he gained from the parents. Despite of this surprising results, a

degree is a must as parents are fussy about the tutor’s qualification19.

Barriers to entry does not necessarily have to be associated with costs, it can be

demonstrated through brand loyalty. By having a brand name that the customer have relied their

trust on, it is making it harder for a new firm to be opened up. Kancil, TTC, Get A, Mastermind

and Mawar has their own branches in other areas and Kancil has been established for up to 15

years. Mawar tuition center has been certified as the first tuition franchisor in Malaysia.20 Thus,

the existence of brand loyalty can be proven through survey.

18 Interview with tuition owners 19 Survey from parents 20 http://www.mawar.edu.my/v2/index.php?ref=business

http://www.mawar.edu.my/v2/index.php?ref=business


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The survey has shown that 33% of the population in this area have sent their kids to the

same tuition centre for more than 7 years, followed by 28% for 1-3 years and 21% for 4-6 years.

This shows that the brand loyalty is slightly strong among the customers, as majority of the parents

stayed with the same tuition centre based on their experience sending their elder children to the

same tuition centre, but it’s not strong enough to classify it as an oligopoly.

Other than that, through observation, it is seen that the demand is segregated by the

socioeconomic factor. Some of the tuition centres are race-based, as there is almost 100% Chinese

students who went to the Chinese-owned tuition and vice versa. This might raises the barriers of

entry of the industry in this area as there is some element of brand loyalty.

In terms of economies of scale, TTC, Kancil and Mawar Tuition Centre are the ‘big guys’

in the area as they are the firms that have branches in other area. According to an interview, some

9%

9%

28%

21%

33%

How long have you been sending your kids to the same tuition centre?

Less than 6 months 1 year 1-3 years

4-6 years more than 7 years

Chart 1: Evidence of brand loyalty


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teachers in TTC come back and forth from their other branch which is in Sunway21. Kancil tuition

centre also gave extra classes during any ‘crash course’22 programme. This advantage may not be

gained by other tuition centres.

It is fair to conclude that the barriers of entry is medium. Evidence showed that the barriers

to entry is low, but findings about brand loyalty has slightly increases the barriers of entry. The

results has proven that the market cannot be perfectly competitive. Besides, perfect competitive is

rarely exist in the real world.

21 Interview with Mr Lim from TTC 22 Crash course is a course designed to prepare students for last minute study for national examinations that include predicted questions which might appear on the exams


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5.2 Product differentiation

In the tuition industry, services are intangible. Therefore, explicitly it is hard to

differentiate whether it is a heterogenous or a homogenous. The teaching method in every

tuition centres are the same which is through a lecture with approximately 20 students per

class, 10 being the lowest and 30 the highest. However, implicitly after some preliminary

reading in the textbook, the product could be differentiated as when the product is “viewed

in a way that is different from other goods and services”.23 This is proven in the brochure

attached and the survey as most parents are concerned about the quality of the teacher

teaching.

Name of

tuition centres

Number of students

per class

Name of tuition

centre

Number of students

per class

Mawar 10-15 Sri Restu 15

STC 20-25 Kancil 15

Get A 25-30 TTC 20

Generasi muda 5-10 Mastermind 15

Table 3: Number of students per class

23Blink, Jocelyn & Dorton, Ian, Economics for IB Diploma Course Companion, Oxford University Press, 2011


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Figure 2: Number of students per class in the frequently asked questions


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Figure 1: Tutor’s qualification in the Brochure’s Frequently Asked Questions

By quality, the respondents said that they would like to have a qualified, and experienced

teacher to teach their children how to ace the exams and number of students per class so attention

can be given more24, followed by other non-price determinants of demand. However, due to price

being ranked as the second most concerned factor, price competition might exist and will be

discussed later.

When a product is differentiated, a product is seem to be superior compared to another, and

the firms have some market power. This results in the downward sloping of the demand curve

24 Survey with parents


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becomes more inelastic, therefore an increase in price will not have a significant effect on the

quantity demanded.

dd

Mastermind tuition centre is a good example of this situation as it has spent a large amount

of money to increase the degree of its service differentiation. This is evident through their

infrastructure25 and the co-curricular events26. Thus, they are able to charge a higher price. Kancil,

25 Appendix : Pictures 26 Table 3

Graph 1 : Elastic demand

Graph 2 : Inelastic demand


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Mastermind, and few others aggressively spent a lot of money on advertising27 while the rest rely

on the word of mouth28 of the customers who are satisfied with the service given. Advertising may

or may not be effective. If it is, this will shift the demand curve to the right, but if it is not, it will

still have to bear the additional cost. In order to maximize the profit marginal revenue must equal

the marginal cost.

Name of

tuition

centre

Van to send

them to go to

tuition

Activities with the

students

Awards &

Recognition

Ceremony

Amount of spent on

Marketing (RM)

Mawar Not available Outdoor activities –

to avoid stress and

strengthen

relationship

Available 400

STC Not available - Not available 50

.Get A

Not available Revision courses Available 300

Sri Restu

Not available - Not Available 100

Kancil Available Activities Available 500

TTC Available - Available 400

Tutorial

Lee

Not available - Not Available 200

Generasi

Muda

Not available Seminars Not available 200

Mastermi

nd

Available Trips Available 700

27 Table 3 28 Interview with Mr Anthony, Sri Restu tuition owner


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Table 3: Non-price competition

In order to make its demand curve more inelastic, product variation is practiced by some

tuition centres that provides private classes which has less than 5 people per group. As it is now

becomes more appealing, the firm could charge a more competitive price as there is added value.

Based on the data collected, quality of tutors is viewed as the number one factor that determines

their demand towards the purchase of tuition services. The rating average for the highest would

be 2 for quality and availability of transport comes last with average ratings of 8.55. In this

context, the respondents defined quality as ‘qualification of the tutor’ and ‘teaching

2

3.2

4.75

7.05

5.4 5.35

6.45

7.5

8.27.55

8.55

Factors affecting the demand for tuition services in Taipan USJ

Graph 3: Factors affecting the demand for tuition services

(Rating 1-10)


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experience’.29 Parents also stated that they do look for statistics of achievement and results of the

previous students. This is evident through leaflets and websites about their past achievements.

“ ”30

Figure 2: Mawar Achievements and Results on their website

29 Survey from the parents 30 Mawar Achievements and Results Accessed 24 August 2013 <http://www.mawar.edu.my/v2/index.php?ref=results >

http://www.mawar.edu.my/v2/index.php?ref=results


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Figure 3: Kancil’s Achievement and Results from their Facebook page31

Therefore, this means that the firms succeeded in letting the differentiation in the product more

important than price, hence resulting in them becoming a price maker, to some extent.

31Kancil’s facebook page https://www.facebook.com/photo.php?fbid=411337585604925&set=a.397148710357146.94299.396069300465087&type=1&theater

https://www.facebook.com/photo.php?fbid=411337585604925&set=a.397148710357146.94299.396069300465087&type=1&theater



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ANALYSIS ON CUSTOMER DEMOGRAPHY AND PERCEPTION

Results from the parents survey also shows that most of the parents said they are more

likely to send their children to attend few subjects that they are weak in, and they would have send

to the whole package if it wasn’t too expensive. This also implies that parents are also sensitive to

price.

19%

56%

25%

Are you more likely to send your children to attend one subject, few subjects or the whole package?

One subject Few subjects Whole package

Chart 2: Usual amount of tuition subjects bought


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The majority of the parents’ income per person is 3000-10000. This shows that they have

slightly above average income and can afford to pay high price for tuition classes.

Despite of the demographic background, most parents still think the price of the tuition

classes are expensive. This is due to a lot of demand which causes the prices to increase.

4%

8%

27%

27%

21%

13%

Average Salary of Parents per month in RM

1000 below 10001-3000 30001-5000

5001-10000 10000 unstated

7%

54%

37%

2% 0%

Opinion on the price of tuition classes

Very expensive Expensive Normal Cheap Very cheap

Chart 3: Average Salary

Chart 4: Opinion on price


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The number of kids that an average family has is 3-5 suggests that the family may be

struggling to pay for tuition classes and more sensitive to price

Most of the parents send only 1 to 3 children to the tuition centre as tuitions are

expensive and children with most important exams are prioritized

35%

62%

1% 0% 2%

Number of kids they have

1 to 2 3 to 5 6 to 8 9 and more skipped

78%

9%

0%13%

Number of childrens in the tuition centre

1 to 3 3 to 5 6 to 8 unanswered 1

Chart 5: Number of kids per household

Chart 6: Number of children sent to tuition centres


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Despite the question being too indirect, this shows that parents really do believe that by sending

their children to tuition classes, their children will excel, therefore it is a need to have although

it’s not a necessity, thus demand for tuition classes is inelastic.

National examinations for primary & secondary school (UPSR and PMR) in Malaysia is

abolished soon, and despite not having big examinations, many parents will still send their

children to tuition centres.

74%

19%

7%

With the abolishment of UPSR and PMR, will you still send your children to attend classes at tuition

centres?

Yes No no answer

95%

5%

Do you think by sending your kids to the tuition centre, their results will be improved?

Yes No

Chart 7: Confidence in tuition classes

Chart 8: Willingness to send if there is not a need


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5.3 Many buyers and sellers and types of competition

Market share32 is a reliable way to determine which type of market structure a certain

industry in a certain area belongs to. Since there is 12 firms in the area of the investigation, I will

determine its share by the number of enrolments of each tuition centers.

Based on the number of enrolments, it is seen that Kancil has the highest number of

students, followed by Get A and TTC33. However it would be superficial to conclude that these 3

firms are made up of the largest dominant in the industry at this area if data is solely based on

enrolment.

It is also important to note that there are 12 primary school and 9 secondary school students in the

area which indicates that there is a large number of buyers.34

32 the percentage of a firm’s output over the total output of the market in the industry. 33 Interview with all Mr Mogen and Mr Shahrul about their knowledge of percentage share of each business 34 Appendix K: Name of schools in Subang Jaya

100150

200

80350

300

150

100150

Number of enrolments of students (approximation)

Mawar STC Get A

Sri Restu Kancil TTC

Tutorial Lee Generasi Muda Mastermind

Chart 9: Number of enrolments of students


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All of the tuition owners interviewed has said there was no collusion, and they have only

relied on non-price competition, which are brand loyalty, customer’s trust and word of mouth35.

All of the firms have answered no if one firm lowered. This further strengthens that there

is no interdependence among the firms to collude.

35 Interview with Mr Shahrul, STC tuition owner

0

7

If one other firm lowers their price, would you follow them?

Yes No

2

5

If two or more firms lower their price, would you follow them?

Yes No

Chart 11: If two or more firms lower their price

Chart 10: If one firms lower their price


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For the second question, all of the firms said that they will not lower their price if one

until three firm decides to lower their price. However, if there’s four or more firms decides to

lowers their tuition price, half of them still said they won’t lower their price, while the other half

hesitated and may be tempted to lower their price.

Tuition centres in this area are would not have price war36 as it is very unlikely for them

to lower their price despite of the competition. If one of the firms raised their price higher than

the mean price of tuition classes (for SPM), it would have an elastic demand. However, if any of

the firms decide to lower their price, the demand for tuition would become inelastic, and

tempting other firms to follow suit. Due to price rigidity, all the firms have the price that ranges

from RM 60-70. It can be interpreted that most of the tuition centres do not compete by price,

thus further strengthens the claim that they are a type of monopolistic competition.

36 Appendix D:An online newspaper article about the demand for tuitions in Malaysia

Graph 4: Usual amount of tuition subjects bought


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The theory of monopolistic competition states that it can obtain abnormal profit in the short

run. The firms in the industry will have a graph similar to a monopoly. Other potential firms are

attracted to open up their business in the industry, thus shifting the supply curve to the right, and

this causes the demand curve to shift to the left as some of the sales are being taken away by the

new firms. This can be demonstrated through the actions of Mawar tuition centre which has just

recently been opened earlier this year in this area.37

37 Interview with Mawar tuition centre owner

Graph 5: Monopolistic competition in the short run (abnormal profits)


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38

Another tuition centre called Pusat Kemuncak Jaya has been closed down around April. After

contacting the owner who closed down by myself it has been said that they have moved to a better

and cheaper place, in terms of facilities, and also less competitive.

The firm said they had made a short run loss, therefore they has moved to the next best opportunity

cost by moving to a place that is more profitable and has less tuition centres to compete with. This

38Pusat Tuisyen Kemuncak Jaya [Accessed 30 May 2013] <http://myjmecc.blogspot.com/2011/08/pusat-tuisyen-kemuncak-jaya-usj9-subang.html>

Figure 2 &3: Before and after tuition centre (Pusat Kemuncak Jaya) at the same place

Graph 6: Monopolistic competition in the short run (losses)

http://myjmecc.blogspot.com/2011/08/pusat-tuisyen-kemuncak-jaya-usj9-subang.html



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causes exit of certain firms due to losses that has been made, thus creating more demands for other

substitutes.

In the long run, every firm will only achieve normal profit39 or zero economic profit in the long

run, because more firms are coming to this industry due to insignificant barriers of entry. During

the interview, there are a few tuition owners who had a good qualification, such as a degree in

Economics and a Masters in Electrical Engineering. This can be assumed as the implicit cost that

contributes to the economic profit. Speaking of the amount of profit, Encik Shahrul40 said that they

managed to obtain abnormal profit in the short run.

39 When economic cost = total revenue – (explicit and implicit cost) = 0 40 Owner of STC tuition center

Graph 7: Monopolistic competition in the long run


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5.4 Imperfect information

The availability of the information of all the prices of the tuition services can be obtained, but it is

tedious to know as one needs to put in effort by calling or going to the tuition centre itself.

Most parents would only look for 1-5 tuition centres as there is many tuition centres in that area.

This is also may be due to word of mouth that says a tuition centre has a very good teacher, low

number of students per class and effective exam papers.

50%

34%

2%

5%0%0%

9%

How many tuitions do you survey first before getting the right tuition?

1 to 2 3 to 5 6 to 8 9 to 10

11 to 13 14 to 15 unanswered

Chart 12: Number of times surveying before purchase


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As most firms are not aware of every tuition centers, each of them need to find a way to inform

the customers by advertising.

The parents do not have completely have perfect information, hence it is fine to say that

they have fair information about the tuition classes.

32%

61%

7%

Are you aware of the cheapest and the most expensive tuition centres in this area?

Yes No no answer

Chart 13: Awareness of the general tuition

classes price


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6.0 Further Investigation

Price discrimination can also be observed and to prove that it is monopolistic competition, it must

have monopoly power. In order to prove this, I have graphed the prices for all products, for UPSR41

, PMR42 and SPM 43 to see if their range of prices matches each other or not.44

41 Primary School Evaluation Test (UPSR) is a national examination that needs to be taken before they complete primary school. Source : http://en.wikipedia.org/wiki/Primary_School_Evaluation_Test_(Malaysia) 42 Lower Secondary Assessment (PMR) is a Malaysian public examination taken in order to determine whether the student is placed at science stream or arts stream Source: http://en.wikipedia.org/wiki/Penilaian_Menengah_Rendah 43 Malaysian Certificate of Education, (SPM) is a national examination taken in order for the student to pursue their studies at tertiary level http://en.wikipedia.org/wiki/Sijil_Pelajaran_Malaysia 44 Some firms that does not have the graph either don’t offer the subjects at that particular level or unwilling to give out the information on prices

0

50

100

150

200

250

300

Pri

ce in

RM

Name of tuition centres

Ujian Penilaian Sekolah Rendah (UPSR) tuition classes rate

1 subject 2 subjects 3 subjects 4 subjects 5 subjects

Graph 7: Price list for UPSR students


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The maximum price that can be seen above is RM250 with the purchase of 5 subjects. Some of

the tuition centres does not offer tuition classes for UPSR.

As the qualification goes higher, more subjects are offered, and the highest price that can be seen is RM

360.

050

100150200250300350400450

Pri

ce in

RM


Penilaian Menengah Rendah (PMR) tuition classes rate

1 subject 2 subjects 3 subjects 4 subjects 5 subjects 6 subjects

Graph 8: Price list for PMR students


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The amount of tuition class price per month that can be the most expensive would be in Mastermind

Tuition Centre, which reaches almost RM700 with 8 subjects. Get A only offer packages, instead of one

subject.

The average for tuition fees for one subject in UPSR is RM52, in PMR is RM 64 and SPM

is 69. The prices does not deviate from each other very much, however, tuition centres like Sri

Restu and Mastermind managed to charge higher prices due to high degree of product

differentiation. The datas show that SPM has the most expensive fees. As the examination becomes

harder and more important, there is more demand for it.

It is worth noticing that as the number of subjects bought increases, the price is discounted.

The consumers’ elasticities are divided according to their preference. This can be classified as

0

100

200

300

400

500

600

700P

rice

in R

M


Sijil Pelajaran Malaysia (SPM) tuition classes rate

1 subject 2 subjects 3 subjects 4 subjects 5 subjects 6 subjects 7 subjects 8 subjects

Graph 9: Price list for SPM students


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second degree price discrimination. With the discount provided, customers are more tempted to

buy more subjects, causing a bigger revenue that can be obtained instead of only one subject.

Conclusion

The aim of the investigation was to find out whether the tuition centres in Taipan subscribe to

monopolistic competition and the hypothesis is accepted.

Barriers of entry are confirmed to be medium as there are elements of brand loyalty and

selling costs. This eliminates the possibility of it being a perfect competition. Throughout the

interview with the tuition centres owners, it is found that the centres do not compete mainly on

price. Findings show that customers rely more on the non-price factors despite their high cost of

living. Each of the product is differentiated differently, as they have their own strategies to attract

customers. Lastly, there is evident though observation there is a huge population of schoolchildren

and tuition centres in the area. It is proved that in the long run, more centres are entering and

leaving the industry. Each centres managed to only gain normal profit. It has been confirmed there

is no collusion between the centres. As an imperfect market, it manages to practice price

discrimination and earns extra profit. It can be concluded that the tuition centres in Taipan Business

Centre is a monopolistic competition.

Some data are unable to obtain due to confidentiality issues but it didn’t stop the research

to be conducted successfully. There are rumors saying that government will implement a tax

exemption to the tuition industry. This causes less cost of production for the firms and will ease

the parents’ burden. This will largely affect the education industry and more investigation could

be conducted. Other than that, research could be extended by looking into home tuition which may

shift the whole competition into a new level.


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REFERENCES

Books

1. J. Beardshaw 1992 Economics : A Student’s Guide. Third Edition Long Acre, London:

Pitman Publishing

2. The Theory of Monopolistic Competition: A Reorientation of the Theory of Value,

(Cambridge, MA: Harvard University Press, 1962 Accessed 28/7/2013

Websites

1. “Malaysia, education & tuition: A background guide”, Tuition Plaza

<http://www.tuitionplaza.com/articles/abackgroundguide.htm> [Accessed 28th of April

2013]

2. “How to open tuition center?, Lowyat Forum

<http://forum.lowyat.net/topic/399406/all> (Accessed 28th of April 2013)

3. “The Nature Of Tuition Industry In Malaysia” , Blogspot

<http://econsguide.blogspot.com/2009/06/demand-supply-of-tuition-teacher.html>

(Accessed 29th of April 2013)

4. “Let talk about tuition fee in Malaysia” Tuition Mall

<http://www.tuitionmall.com/blog.php?nblogid=2> (Accessed 29th of April 2013)

5. “How much money to open a tuition centre?”, Lowyat Forum,

<http://forum.lowyat.net/topic/511022/all>

(Accessed 29th of April 2013)

6. A tuition is a serious business , Tuition Plaza

<http://www.tuitionplaza.com/articles/atuitionisseriousbusiness.htm> (Accessed 29th of

April 2013)

7. Goodman, John, Will Price Competition Lead To Quality Competition? Health Affairs

Blog 21st April 2011 <http://healthaffairs.org/blog/2011/04/21/will-price-competition-

lead-to-quality-competition/> [Accessed 5th of July 2013]

8. Benefits of competitive markets, Tutor 2u

<http://www.tutor2u.net/economics/content/topics/competition/competition_importance.

htm> [Accessed 5th of July 2013]

9. Douglas A Ruby, Price Discrimination, Digital Economist 2003

<http://digitaleconomist.org/pd_4010.html >(Accessed 5th of July 2013)

10. How to set up a tuition centre (Tatacara Penubuhan Pusat Tuisyen), Perlis Education

Department, Ministry of Education

<http://jpn.moe.gov.my/jpnperlis/v2/index.php?option=com_content&view=article&id=3

03:tatacara-penubuhan-pusat-tuisyen&catid=46:sektor-pendidikan-swasta-a-pendidikan-

khas&Itemid=62> [Accessed 5th of July 2013

http://www.tuitionplaza.com/articles/abackgroundguide.htm

http://forum.lowyat.net/topic/399406/all

http://econsguide.blogspot.com/2009/06/demand-supply-of-tuition-teacher.html

http://www.tuitionmall.com/blog.php?nblogid=2

http://forum.lowyat.net/topic/511022/all

http://www.tuitionplaza.com/articles/atuitionisseriousbusiness.htm

http://healthaffairs.org/blog/2011/04/21/will-price-competition-lead-to-quality-competition/

http://healthaffairs.org/blog/2011/04/21/will-price-competition-lead-to-quality-competition/

http://www.tutor2u.net/economics/content/topics/competition/competition_importance.htm

http://www.tutor2u.net/economics/content/topics/competition/competition_importance.htm

http://digitaleconomist.org/pd_4010.html

http://jpn.moe.gov.my/jpnperlis/v2/index.php?option=com_content&view=article&id=303:tatacara-penubuhan-pusat-tuisyen&catid=46:sektor-pendidikan-swasta-a-pendidikan-khas&Itemid=62




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BIBLIOGRAPHY Books

1. Blink, Jocelyn & Dorton, Ian, Economics for IB Diploma Course Companion, Oxford

University Press, 2011

2. Dominick Salvatore. Microeconomics Theory and Applications Fourth Edition,

USA,Oxford University Press, 2003

Websites

3. Tuition centers, Wikipedia, <http://en.wikipedia.org/wiki/Tuition_center >[Accessed 20

March 2013]

4. Nevash Nair “Increase in demand for tuition in Malaysia,” The Star 5 November 2012,

<http://thestar.com.my/news/story.asp?file=%2F2012%2F11%2F5%2Fmetrobiz%2F122

65348&sec=metrobiz> [Accessed 20 March 2013]

5. Centre of Public Policy: ELECTIONS ‘08 DAILY POLICY FACTSHEET #6:

EDUCATION 21

< http://cpps.org.my/resource_centre/Education.pdf > [Accessed 30 April 2013]

6. PUBLIC SPENDING ON EDUCATION; TOTAL (% OF GDP) IN MALAYSIA, 2009

<http://www.tradingeconomics.com/malaysia/public-spending-on-education-total-

percent-of-gdp-wb-data.html> [Accessed 4 May 2013]

7. Cost of living in Subang Jaya Malaysia, Numbeo <http://www.numbeo.com/cost-of-

living/city_result.jsp?country=Malaysia&city=Subang+Jaya> [Accessed 4 May 2013]

8. A2 Micro: Market Structure, Conduct & Performance, Tutor2U

<http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-

market-structure-conduct-performance>[Accessed 23 April 2013]

9. Homogenous, Merriam Webster<http://www.merriam-

webster.com/dictionary/homogeneous> [Accessed 30 April 2013]

10. Ch. 10 Perfect Competition, Monopoly, and

11. Monopolistic Competition, Department of Economics, Volkswirtschaftslehre, Johannes

Kepler Universitat

<http://www.econ.jku.at/members/WinterEbmer/files/Teaching/managerial/lecture4.pdf>

[Accessed 30 May 2013]

12. Pusat Tuisyen Kemuncak Jaya, Blogspot <http://myjmecc.blogspot.com/2011/08/pusat-

tuisyen-kemuncak-jaya-usj9-subang.html>[Accessed 30 May 2013]

13. Primary School Evaluation Test (UPSR) – Wikipedia

,<http://en.wikipedia.org/wiki/Primary_School_Evaluation_Test_(Malaysia)> [Accessed

1 July 2013]

14. Lower Secondary Assessment (PMR) , Wikipedia

<http://en.wikipedia.org/wiki/Penilaian_Menengah_Rendah>[Accessed 1 July 2013]

15. Malaysian Certificate of Education (SPM), Wikipedia

<http://en.wikipedia.org/wiki/Sijil_Pelajaran_Malaysia> [Accessed 1 July 2013]

http://en.wikipedia.org/wiki/Tuition_center



http://cpps.org.my/resource_centre/Education.pdf



http://www.numbeo.com/cost-of-living/city_result.jsp?country=Malaysia&city=Subang+Jaya%3e%20

http://www.numbeo.com/cost-of-living/city_result.jsp?country=Malaysia&city=Subang+Jaya%3e%20





http://www.econ.jku.at/members/WinterEbmer/files/Teaching/managerial/lecture4.pdf



http://en.wikipedia.org/wiki/Primary_School_Evaluation_Test_(Malaysia)

http://en.wikipedia.org/wiki/Penilaian_Menengah_Rendah

http://en.wikipedia.org/wiki/Sijil_Pelajaran_Malaysia


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APPENDICES


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APPENDIX A:

Name of tuition centres 1. Mawar

2. STC

3. Get A

4. Sri Restu

5. Kancil

6. TTC

7. Cu-A

8. Mastermind

9. Era Tinta

10. Inisiatif

11. Generasi Muda

12. Sri Mawar Bestari

13. Tutorial Lee


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Appendix B:

Interview questions with the tuition

centre owners


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INTERNATIONAL BACCALAUREATE DIPLOMA PROGRAMME

MARA College Banting : ECONOMICS EXTENDED ESSAY

To what extent are the tuition centres in

Subang Business Centre a form of monopolistic competition?

NAME OF RESPONDENT:

POSITION: TUITION CENTRE:

BARRIERS TO ENTRY

1.1 How long has the business been in the industry in this area? // Berapa lamakah bisnes

encik/puan telah ada dalam industri ini di kawasan USJ 9?

□ 0-5 years

□ 5-10 years

□ 10-15 years

□ 15-20 years

□ 20-25 years

□ >25 years

1.2 How hard is it for sir to get into the business? // Susahkah encik untuk memasuki bisnes ini?

□ Very Hard// Sangat susah

□ Hard // Susah

□ Normal // Biasa

□ Easy // Senang

□ Very Easy // Sangat senang

How// Bagaimana: __________________________

2.2 What procedures do you need to go through to get into this business? // Prosedur apa yang

perlu dilalui oleh encik/Puan untuk masuk ke dalam industry ini?

_____________________________________________________________________

3. PRODUCTS/SERVICES

What are your products/services?


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If brochure is available, please provide.

The number of packages offered, its price, and the time (weekdays or weekends).

PACKAGES PRICE (At weekdays) PRICE (At weekends)

Evening Night Evening Night

Std 1 (All subjects)

Std 1 (1 Subject)


Std 2 (1 Subject)


Std 3 (1 Subject)


Std 4 (1 Subject)


Std 5 (1 Subject)


Std 6 (1 Subject)

UPSR

Bengkel

Ceramah

Form 1 (All subjects)

Form 1 (1 Subject)


Form 2 (1 Subject)


Form 3 (1 Subject)

PMR


Form 4(1 Subject)


Form 5 (1 Subject)

SPM


Form 6 (1 Subject)

Is there a one-to-one private/special class?

- How about the extra classes during holidays? Bengkel etc?


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- Which subject is the most demanded? Rank from 1 being lowest to 10 being highest

□ Bahasa Malaysia

□ English

□ Mathematics

□ Additional Mathematics

□ Physics

□ Biology

□ Sejarah

□ Perakaunan

□ Ekonomi Asas

□ Geografi

□ Bahasa Mandarin

□ ICT

3 PRICING

How do you price your services? Based on?

□ Quality of lecturers (their qualification)

□ Lowest price in the area

□ As advised by the franchisor

□ Market price

1. Do you keep track the price of the competitor? // Adakah anda sentiasa mengetahui harga

bisnes lain?

□ Yes // Ya

□ No // Tidak

2. Do you know what’s the maximum price of the consumer is willing and able to purchase?

// Adakah anda mengetahui berapakah harga tertinggi yang pelanggan mampu dan rela

membeli?

□ Yes // Ya

□ No // Tidak

How much//Berapa?: ________________

3.2 Does government intervention exist in determining the prices? // Adakah kerajaan

memasuk campur dalam menentukan harga?

□ Yes // Ya

□ No // Tidak

4 How do you set prices at different periods of time? // Bagaimanakah anda menentukan harga?

Adakah berbeza pada setiap musim?


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Do price discrimination exist?

During school holidays? (Peak hours)

First degree price discrimination

(consumer pays the exact price that the consumer is prepared to pay)

Second degree price discrimination

Firms set higher prices when the demand on the season is higher (Peak time)

Is demand is inelastic during exam seasons?

5 Do you collude with other firms? // Adakah anda bekerjasama dengan perniagaan lain dalam

menentukan harga?

6 COSTS

What is the average total cost per month?

How big is the size of tuition centre?

- Fixed Cost (Rent)

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

- Variable Cost

( How much electric bills, maintenance etc)

No of teachers hired (full time) ______________________

(part time) _____________________

Qualification of the teachers : _________________________

The range of their salary: ______________________________

How many years are their teaching experience :_______________

Were they an examiner:__________________________________

Other extra costs and expenses (for advertising, transportation for students (if available)

How many people do you hire to help with the business? //Berapa ramai pekerja yang anda

ambil untuk menolong bisnes? (Kerani/family to handle the management)

□ 1-2 people // 1-2 orang



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3. SALES & PROFIT

Number of students per class? ___________________

Number of classes available? ____________________

How many students are enrolled per month? ____________

How many students are enrolled per year? ______________

By elementary school _______________________

By secondary school? _______________________

Total number of students the tuition centre is having now per year/per course (form)?

____________________________

Is there an increase or decrease in number of students every month?

__________________________________________________

The statistics kemasukan pelajar

How much is the percentage of new intake? Do people come to their extra

ceramahs/motivational/extra class holiday session?

_____________________________________________

4. COMPETITION 5. If one other firms lowers their price will you follow them? // Jika lebih dari tiga

perniagaan yang menjual produk yang sama anda menurunkan harga, adakah anda akan

menurunkan harga juga?

□ Yes // Ya

□ No // Tidak

6. If two or three other firms lower their price, will you follow them? // Jika lebih dari tiga

perniagaan yang menjual produk yang sama anda menurunkan harga, adakah anda akan

menurunkan harga juga?

□ Yes // Ya

□ No // Tidak

6. ADVERTISING & PROMOTION (NON-PRICE COMPETITION)

Non-price competition


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Things that can be done to market the product.

Brand loyalty

For example is by providing the transportational service so that people will be more

attracted as parents these days are too busy to send their children to respective tuition

places.

Extra benefits for orphans

Additional benefits – Extra Sulit papers from negeri

Free motivational talk

7 Do you advertise? // Adakah anda mengiklan?

□ Yes // Ya

□ No // Tidak

How?// Bagaimana:_____________________________________

How much is the cost to advertise:

What kind of promotion strategies did you use?

___________________________________________________________________

- The statistics every year of how many students who have gotten straight As in their big

examination.

- How has the pemansuhan PMR and UPSR has affected their business?

________________________________________________________________________

- Is there any change (increase/decrease) in price for the last 2 years?

- _________________________________________________________________

- Has there been any complaint from parents?

- _________________________________________________________________

- Has there been any evidence of brand loyalty? _________________________________________________________________


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APPENDIX C:

Survey among the customers (parents)

INTERNATIONAL BACCALAUREATE DIPLOMA PROGRAMME

MARA College Banting : ECONOMICS EXTENDED ESSAY

Consumer Questionnaire

This questionnaire is designed to investigate To what extent are the tuition centres in

Taipan Business Centre, USJ, a form of monopolistic competition question. /Sila tandakan untuk setiap soalan.


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1. What’s your race? // Apakah bangsa anda? □ Malay // Melayu □ Chinese // Cina □ Indian // India □ Others please specify // Lain-lain sila nyatakan : ________

2. What is the highest level of education that you have achieved? // Apakah tahap tertinggi kelulusan anda? □ SPM / O-Level / IGCSE □ STPM / A-Level / Other Pre-U// Lain-lain pra-universiti □ Diploma □ Bachelor // Sarjana Muda □ Master // Sarjana □ PhD // Doktor falsafah

3. What is your salary per month? // Berapakah gaji anda dalam masa sebulan?

□ RM1,000 and below / RM1,000 dan ke bawah □ RM1,001 – RM3,000

□ RM3,001 – RM5,000 □ RM5,001 – RM10,000 □ RM10,000 and above / RM10,000 dan ke atas

4. How important is education to you? //Adakah pelajaran dan pendidikan penting bagi anda?

□ Not important // Tidak penting □ Slightly important // Sedikit Penting □ Important // Penting

□ Very important // Sangat penting

5. How many kids do you have? // Berapa banyakkah anak yang anda ada?

□ 1-3 □ 3-5 □ 6-8 □ >9

6. Are all your children in a tuition centre? If yes, how many children? // Adakah semua anak anda ditempatkan di pusat tuisyen? Jika ya, berapa orang anak yang pergi ke tuisyen? □ 1-3 □ 3-5 □ 6-8

7. Do any of your children go to more than one tuition centre? If yes, how many tuition centres? // Adakah anak anda pergi lebih daripada satu pusat tuisyen? Jika ya, berapa? □ 1-2 □ 3-4 □ >5

8. How many tuition centres do you survey first to get the right tuition for your children? // Berapa banyak kah pusat tuisyen yang anda akan survey dahulu sebelum anda menempatkan anda di pusat tuisyen tersebut? □ 1-3 □ 3-5 □ 6-8 □ 9-10 □ 11-13 □ 14-15

9. How much do you spend on your children’s tuition (per month)? // Berapa banyakkah duit yang dibelanjakan untuk tuisyen anak anda?

□ RM100 and below / RM100 dan ke bawah □ RM101 – RM300

□ RM301 – RM500 □ RM501 – RM1000 □ RM1,000 and above / RM1,000 dan ke atas

10. On what range of money would you willing to pay for a tuition (per subject)?// Kadar berapakah duit yang anda sanggup membayar tuisyen (untuk satu subjek)? □ RM 20-RM30 □ RM31-RM40 □RM41-RM50 □RM51-60 □ RM61-70 □ RM71-80

□ RM81-90

□ RM91-100


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□ RM100

11. On what range of money would you be willing to pay for a tuition (all subject)?// Kadar berapakah duit yang anda sanggup membayar tuisyen (untuk semua subjek)? □ RM100-200 □ RM201-RM300 □ RM 301-400 □ RM 401-500 □ >RM 500

12. Your opinion on the price of tuition classes? // Pendapat anda tentang harga kelas tuisyen? □ Very expensive // Sangat mahal □ Expensive // Mahal □ Normal/Affordable // Berpatutan □ Cheap // Murah □ Very cheap // Sangat Murah

13. How long have you been sending your kids to tuition centres?// Sudah berapa lamakah anda telah menghantar anak-anak anda ke pusat tuisyen?

□ Less than 6 months // Kurang daripada 6 bulan

□ 1 year // 1 tahun

□ 1 year-3 years // 1 tahun – 3 tahun

□ 4-6 years // 4-6 tahun

□ >7 years // Lebih daripada 7 tahun

14. Please rank most important factor that affect your purchase of the service (tuition services)? // Apakah faktor paling penting yang mempengaruhi anda dalam menghantar anak anda ke sesebuah pusat tuisyen? □ Quality // Kualiti

□ Price (Budget) // Harga □ Student’s Preferences // Kesukaan pelajar □ Brand loyalty // Kesetiaan terhadap jenama □ Services // Servis □ Location// Lokasi □ Reputation // Reputasi □ Facilities // Kemudahan □ Word of mouth // Khabar dari rakan-rakan yang dipercayai

□ Availability of transport // Kemudahan servis pengangkutan

15. Please rank the least important factor that affect your purchase of the service (tuition services)? // Apakah faktor paling

kurang penting yang mempengaruhi anda dalam menghantar anak anda ke sesebuah pusat tuisyen? □ Quality // Kualiti □ Price (Budget) // Harga □ Student’s Preferences // Kesukaan pelajar □ Brand loyalty // Kesetiaan terhadap jenama □ Services // Servis

□ Location// Lokasi □ Reputation // Reputasi □ Facilities // Kemudahan □ Word of mouth // Khabar dari rakan-rakan yang dipercayai

□ Availability of transport // Kemudahan servis pengangkutan

16. Do you think by sending your kids to the tuition centre, their results will be improved? // Adakah dengan menghantar

mereka ke pusat tuisyen, anda berasa keputusan peperiksaan mereka akan meningkat?

□ Yes // Ya □ No // Tidak

17. If the tuition centre that you’ve been sending your kids to has not made any change in their school’s results, would you change to other tuition centres / home tuitions? // Jika pusat tuisyen yang anak anda pergi tidak membawa apa-apa perubahan kepada keputusan peperiksaan anak-anak anda, adakah anda akan menghantar mereka ke pusat tuisyen lain

atau tuisyen persendirian?


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18. What are your reasons for sending your kids to tuition centres and not school tuitions/home tuitions? // Apakah sebab anda

menghantar anak-anak anda ke pusat tuisyen dan bukan pusat tuisyen persendirian ataupun kelas tambahan di sekolah?

19. ? If school provides school tuition would you rather go to school tuition and not private tuition centres? Why? // Jika

sekolah anak anda menawarkan kelas tambahan, adakah anda menghantar mereka ke kelas tambahan di sekolah

sahaja dan bukan tuisyen persendirian?

___________________________________________________________

20. If your income increases, would you more likely to spend more in fancier tuition centres with more expensive but

experienced, and good reputation lecturer? // Jika pendapatan anda meningkat, adakah anda cenderung untuk

membelanjakan wang anda di pusat tuisyen yang lebih mahal? □ Yes // Ya □ No // Tidak

21. How many percentages of discount do you need to convince you to go to the other tuition centres? (assuming it’s the same lecturer and the time for the class is the same) // Berapa peratus diskaun yang anda perlu untuk meyakinkan anda untuk anak anda pergi ke pusat tuisyen lain? (jika guru yang mengajar ialah orang yang sama dan masa untuk kelas tersebut adalah sama) □ 5% □ 10% □ 15% □ 20% □ 30% □ 50%

22. Are you aware of the cheapest and the most expensive tuition centres in USJ 9? // Adakah anda sedar akan kedai yang

menyediakan servis tuisyen yang paling murah dan paling mahal di Usj 9? □ Yes // Ya □ No // Tidak

23. With the abolishment of UPSR and PMR, will you still send your children to attend classes at tuition centres? // Dengan adanya pemansuhan UPSR dan PMR, adakah anda akan masih menghantar anak-anak anda ke pusat tuisyen?



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APPENDIX D:

An online newspaper article about the demand for

tuitions in Malaysia

The Star Online >

Monday November 5, 2012

Increase in demand for tuition in Malaysia

By NEVASH NAIR

[email protected]

Photos by AZHAR ARIF

http://archives.thestar.com.my/default.asp

mailto:[email protected]


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Help for exams: Alagesan (above) said when he started teaching from his home

initially, parents knocked on his door at midnight to enrol their children for his

classes.

The demand for tuition in Malaysia has catapulted what was once a cottage

industry to a million-dollar business

MALAYSIANS are accustomed to the tuition, especially in urban areas. Many would

have either attended tuition classes or at the very least known a classmate that

received tutoring in a centre or at home from a private tutor.

It has become the common solution for parents who want their children to excel

academically.

In a letter to the editor published in The Star on March 1, 2012, Aida Tan said:

“Parents and guardians have lost faith in the teaching methodology that resembles

mass production without any quality check.”

She added: “Tuition has become an essential part of learning, owing to the breakdown

of the school teaching system.”

Tan is just one of many Malaysians who have openly raised concerns over the rise and

rise of tuition centres.

The boom in tuition centres is easily attributed to the perception that the country’s

education system is flawed.

“Teachers are overworked, underpaid and they have between 35 to 45 students in each

class. They now have certain key performance indicators to be met and they


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sometimes rush through their lessons,” said one disgruntled parent who declined to be

named.

“I have to send my child to a tuition centre so that he can catch up on his lessons and

ask any questions that he might have,” the parent added.

An ‘Asian F’

When the character Mike Chang from the television musical Glee received an A- for

his chemistry exam the term “An A- is an Asian F” entered popular culture.

Jostling for attention: Some experts say the

number of tuition centres has doubled over the last decade.

Just like Chang’s fictional parents, Malaysian parents also place tremendous pressure

on their children to achieve good results in school.

In 2005, it was reported that, Malaysian parents fork out anywhere between RM200

and RM2,000 a month in tuition fees for each child.

According to Datuk Dr. Alagesan Arumugam, founder and managing director of

Creative Education Intellect Sdn Bhd, this figure has almost doubled today.


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“We have become a nation obsessed with A’s, so much so that most straight-A

students now are not of the quality of those from 20 years ago,” said Alagesan, who

adds that students should not be blamed for this lack of quality.

“We have good syllabi and policies in place but we lack implementation in public

schools,” said Arumugam who has been a tutor since 1982.

“When I first started teaching from my home full-time in 1988, I had parents

knocking my door at midnight to enrol their children for classes. So in 1994, when I

decided to move into a centre, I had 300 students and it has been steady growth

since,” revealed Alagesan, who frowns on the low quality of some educators in the

tuition centres that have been mushrooming due to increased demand.

Quantity over quality

According to the Education Ministry, there were 2,967 registered tuition centres with

194,567 students as at Dec 31, 2010.

Meanwhile, tutor-student matchmaking site tuitionplaza.com said the number of

tuition centres operating without proper registration is not known exactly, but is

estimated to at least match the legally operating ones.

According to industry experts, today, the number of tuition centres is double that

reported nine years ago.

Alagesan said with the large number of tuition centres located in the Klang Valley,

students have been empowered with the right to choose, thus quality is not top of the

list.

“Price is a major factor these days. Even though parents are willing to fork out

hundreds of ringgit for tuition, new players are spoiling the market. Fees are reduced

and they play the volume game,” said Alagesan.

Currently, Creative Education Intellect charges RM40 per subject. Each subject is

taught for 90 minutes per session.


of 76

Alagesan: In 1994 when I decided to move into a

centre, I had 300 students and it has been a steady growth until recent times.

Private vs centre

Private tuition, referred to varyingly as home tuition, personal tuition, one-to-one

tuition, individual tuition and small-group tuition, is also gaining popularity in the

Klang Valley.

Tuitionplaza.com, on their website, says, “Many feel that a private tutor is capable of

providing that extra push when needed because school teachers have too many classes

and too little time for individual attention. Especially when it is a year for major

examinations. Burdened by large classes, individual attention is an extremely rare

commodity in schools.

“Tutors, on the other hand, will be attuned to the learning habits and skills of students

that the teaching process is customised for maximum understanding and retention.”

Ahmad Hambal Noorsham, who has been a private tutor for six years, said he can

earn between RM40 to RM70 an hour.

“I became a full-time private tutor last year as I enjoy teaching. My mother was a

teacher and I have been teaching for so many years now,” he said.


of 76

Ahmad explained that tutoring opportunities are always available as there are at least

five tutor-student matching websites in Malaysia, each with a very strong database.

He further revealed that a private tutor can earn between RM4, 000 and RM10, 000 a

month depending on the number of students the tutor takes on, though it is not an easy

ride to earn big bucks.

“When I started private tutoring, it was difficult. I had to build my reputation and now

most of my students are through referrals,” said Ahmad.

Both Ahmad and Alagesan believe tuition centres can co-exist alongside private tutors

as the market is big enough for both sets of players.

“Different students have different needs. Some require personalised attention and

some can excel in a small group,” said Alagesan.

© 1995-2013 Star Publications (Malaysia) Bhd (Co No 10894-D)


of 76

APPENDIX E: Location of the tuition center using

Google Maps


of 76

APPENDIX F : Photos of the tuition centre

45 46

47

45

http://www.google.com.my/imgres?um=1&sa=N&rlz=1C1LENN_enMY514MY514&hl=en&biw=1366&bih=667&tbm=isch&tbnid=HYfPmtqaDrgHPM:&imgrefurl=http://panpages.my/listings/my185935-kancil-education-group-sdn-bhd&docid=7FFyvUVEZ2u9wM&imgurl=http://s-yoolk-images.yoolk.com/72425F4A-99A2-11E1-B04C-12314000960A.jpg&w=1525&h=945&ei=2Nl7UdaJO4b3rQf8mIDIDQ&zoom=1&ved=1t:3588,r:58,s:0,i:265&iact=rc&dur=675&page=3&tbnh=177&tbnw=285&start=36&ndsp=24&tx=164&ty=96 46


47

https://www.google.com.my/search?rlz=1C1LENN_enMY514MY514&q=mastermind%20tuition%20usj%

209&psj=1&biw=1366&bih=624&bav=on.2,or.r_cp.r_qf.&um=1&ie=UTF-

8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=m997UZz0Bc_qrQem14DQDQ#imgrc=6qpr-

zTK7qhaMM%3A%3BPrXgdZDByeiG6M%3Bhttps%253A%252F%252Fstatic.groupon.my%252F02%252F9

2%252F1346499059202.jpg%3Bhttp%253A%252F%252Fwww.groupon.my%252Fdeals%252Fklang-

valley-kuala-lumpur%252FMastermind-Training-Academy%252F716596921%3B470%3B313

http://www.google.com.my/imgres?um=1&sa=N&rlz=1C1LENN_enMY514MY514&hl=en&biw=1366&bih=667&tbm=isch&tbnid=HYfPmtqaDrgHPM:&imgrefurl=http://panpages.my/listings/my185935-kancil-education-group-sdn-bhd&docid=7FFyvUVEZ2u9wM&imgurl=http://s-yoolk-images.yoolk.com/72425F4A-99A2-11E1-B04C-12314000960A.jpg&w=1525&h=945&ei=2Nl7UdaJO4b3rQf8mIDIDQ&zoom=1&ved=1t:3588,r:58,s:0,i:265&iact=rc&dur=675&page=3&tbnh=177&tbnw=285&start=36&ndsp=24&tx=164&ty=96








https://www.google.com.my/search?rlz=1C1LENN_enMY514MY514&q=mastermind%20tuition%20usj%209&psj=1&biw=1366&bih=624&bav=on.2,or.r_cp.r_qf.&um=1&ie=UTF-8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=m997UZz0Bc_qrQem14DQDQ#imgrc=6qpr-zTK7qhaMM%3A%3BPrXgdZDByeiG6M%3Bhttps%253A%252F%252Fstatic.groupon.my%252F02%252F92%252F1346499059202.jpg%3Bhttp%253A%252F%252Fwww.groupon.my%252Fdeals%252Fklang-valley-kuala-lumpur%252FMastermind-Training-Academy%252F716596921%3B470%3B313







of 76

APPENDIX G: Interview with the tuition owners

https://www.google.com.my/search?q=usj%209%20business%20centre&rlz=1C1LENN_enMY514MY514&aq=f&um=1&ie=UTF-8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=dNl7UdCiBo2lrQeWnIGgBA&biw=1366&bih=667&sei=2Nl7UdyfBInmrAeowoAw#um=1&rlz=1C1LENN_enMY514MY514&hl=en&tbm=isch&sa=1&q=tuisyen+mawar&oq=tuisyen+mawar&gs_l=img.3..0i5j0i24l2.15594.16617.6.16896.6.6.0.0.0.0.170.695.2j4.6.0...0.0...1c.1.11.img.cFnac9WAPx4&bav=on.2,or.r_cp.r_qf.&bvm=bv.45645796,d.bmk&fp=99abaef949b1a858&biw=1366&bih=667&imgrc=gTxc1lE8TFDBhM%3A%3BPiERYbM8gWkcFM%3Bhttp%253A%252F%252Fwww.mawar.edu.my%252Fv2%252Fimages%252F1malaysia.png%3Bhttp%253A%252F%252Fwww.mawar.edu.my%252F%3B336%3B203

https://www.google.com.my/search?q=usj%209%20business%20centre&rlz=1C1LENN_enMY514MY514&aq=f&um=1&ie=UTF-8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=dNl7UdCiBo2lrQeWnIGgBA&biw=1366&bih=667&sei=2Nl7UdyfBInmrAeowoAw#um=1&rlz=1C1LENN_enMY514MY514&hl=en&tbm=isch&sa=1&q=tuisyen+mawar&oq=tuisyen+mawar&gs_l=img.3..0i5j0i24l2.15594.16617.6.16896.6.6.0.0.0.0.170.695.2j4.6.0...0.0...1c.1.11.img.cFnac9WAPx4&bav=on.2,or.r_cp.r_qf.&bvm=bv.45645796,d.bmk&fp=99abaef949b1a858&biw=










of 76

APPENDIX H:

Complete price list

GENERASI MUDA

Std 1- Form 1 – RM50 each subject

Form 2-3 RM60 each subject

Form 4-5 RM70 each subject

GET A

All subjects

Std 5 –RM180

Std 6 – RM195

Ceramah RM200

F1 & F2 – RM180

F3- RM235

F4- RM185

F5- RM 220

KANCIL


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ERA TINTA

Form 1-3 Each subject 55

Form 4-5 Each Subject 65 except RM 75 for Science Subjects

SRI RESTU

Form 5 Addmaths RM 90 Chemistry RM90 Physics RM90 Maths RM 90

Form 4 Addmaths RM90 Maths RM90 Physics RM90 Chemistry RM90

Form 3 Maths RM 80 Science RM80

Form 2 Maths RM70 Science RM70

Special Class 8 students per class

Form 1 Science RM60 Maths RM60

Form 5 Biology RM120 Sejarah RM 120 Science RM 120

Form 4 Biology RM120 Sejarah RM120 Science RM 120

Form 1 & 2, PMR & SPM Bahasa Malaysia RM120

STC

Level Subject Monthly Fees

Year 5

Year 6 (UPSR)

Bahasa Malaysia

(Pemahaman)

Bahasa Malaysia (Penulisan)

1 Subject RM 50

2 Subjects RM80

3 Subjects RM120

4 Subjects RM160

Form 1

Form 2

Form 3 (PMR)

Bahasa Malaysia, English,

Mathematics, Science,

Sejarah, Geografi

Package A: Bahasa+ 1 Subjek

Tambahan

1 Subject RM60

2 Subjects RM90

4 Subjects RM 160

6 Subjects RM190


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Package B: Bahasa Malaysia,

English, Mathematics &

Science

Form 4

Form 5

Bahasa Malaysia, English,

Mathematics, Science,

Additional Mathematics,

Physics, Chemistry, Prinsip

Akaun, Perdagangan &

Ekonomi

Revision Subject

1 Subject RM 60

1 Subject RM40

Basic Package + Literature

Package

Bahasa Malaysia, English &

Mathematics

Additional Subjects

Accounting Principles

Business

Economics

3 Subjects RM150

1 Subject RM40

2 Subjects RM 80

3 Subjects RM110

4 Subjects RM 140

Accounts Package A

Accounts Package B

Mathematics, Additional

Mathematics and Principles

of Accounting

Mathematics, Science &

Principles of Accounting

Additional Subject

Additional Mathematics

Science

3 Subject RM 150

3 Subjects RM150

1 Subject RM40

2 Subject RM80

Science Package Additional Mathematics,

Physics & Chemistry

Additional Subject

1 Subject RM40

2 Subjects RM 80

3 Subjects RM150


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Mathematics

Principles of Accounting

TTC

Subject RM

1 70

2 140

3 180

4 220

5 260

6 300

7 and above +35/subject

INISIATIF

Primary school (6 subjects)

Subject RM

1 60

2 105

3 147

4 187

5 225

6 260

Secondary school (PMR)5 subjects

Subject RM

1 65

2 120

3 170


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4 200

5 230

Subject RM

1 65

2 120

3 170

4 215

5 255

6 285

7 315


of 76

APPENDIX I: TABULATED

DATAS


of 76

Name of

tuition

center

Number of students this year

Number of enrolled per year

Elementary Secondary In Out

Mawar

STC 20 100 10++ 10++

Get A Varies Varies

Sri Restu - 53 3-4 2

Kancil 60 240++ 5-10 5-10

TTC 80 200++ 5-30 5-10

Cu-A

Mastermind

Era Tinta

Inisiatif

Generasi

Muda

Sri Mawar

Bestari


of 76

Tutorial

Lee

Table 1: Entolment

Name of

tuition

centre

Number

of

teachers

hired

Qualification

of teachers

Experience Salary Offers

Private

Class?

Price

for

private

class

Packages?

Full

Time

Part

Time

Mawar

Diploma and

above

20-50

per

class

Yes Per subject

STC

13

Degree and

above

More than

6 years

30-45

per

class

Yes RM60

per

hour

Per subject

and

packages

Sri Restu

- 2 Degree and

above

10-20 years RM2-

3K

No - Per subject

Kancil 7 20 Diploma and

above

5 years 2K-4K Yes

VIP 9

per

class

Per subject

and

packages

TTC

20-

25

15 Diploma,

Bachelors

and Masters

4-10 years No - Per subject

and

packages

. Cu-A


of 76

.Get A

No

Mastermind

Era Tinta

Per subject

Inisiatif

Generasi

Muda

1 2 Degree At least 3

years

Yes Yes

Sri Mawar

Bestari

Tutorial

Lee

- 9 Degree 5-20 years

Table 2: Product differentiation

Name of tuition

centre

Number of years Name of tuition

centre

Number of years

Mawar Less than one year Era Tinta

STC 15 years Inisiatif

.Get A

5-10 years Generasi Muda

0-5 years

Sri Restu

5 years Sri Mawar Bestari

Kancil 13-14 years Mastermind


of 76

TTC

2 years . Cu-A

Tutorial Lee 0-5 Years

Table 3 : barriers to entry (experience)

Name of tuition

centre

Startup Costs

(approximation)(RM)

Name of tuition

centre

Startup Costs

(approximation)

(RM)

Mawar RM 80 000 Era Tinta

STC RM 40 000 Inisiatif

.Get A

RM 60 000 Generasi Muda

Sri Restu

RM 70 000 Sri Mawar Bestari

Kancil RM 150 000 Mastermind

TTC . Cu-A

Tutorial Lee

Table 4: Barriers to entry: cost

Number of classes in the


of 76

Name of

tuition centre

Set the price

according to

centre Number of students

per class

Mawar Market price, as advised

by franchisor

10-15

STC Market Price 20-25

Get A Quality of the lecturers 5 25-30

Sri Restu Quality of the lecturers 3 15

Kancil Market price (according

to the socioeconomic

background)

20 15

TTC Market price 20

Era Tinta

Inisiatif

Generasi muda Market price 4 5-10

Sri Mawar

Bestari

Cu-A

Tutorial Lee Market price 8

Table 5 : Price setting

Subjects Number of votes

Physics



of 76

English

Mathematics


Biology

Chemistry

Sejarah

Perakaunan

Bahasa Melayu

Ekonomi Asas

Geografi

Table 6 : Subjects

Name of

tuition

centre

Van to send

them to go to

tuition

Activities with the

students

Awards &

Recognition

Ceremony

Amount of spent on

marketing

Mawar Not available Outdoor activities –

to avoid stress and

strengthen

relationship

Available

STC Not available Not available

.Get A

Not available

Sri Restu

Not available Not Available

Kancil Available Activities Available 5000


of 76

TTC

Available 400

. Cu-A

Mastermi

nd

Era Tinta

Inisiatif

Generasi

Muda

3000

Sri Mawar

Bestari

Tutorial

Lee

Table 7: Non-price competition


of 76

APPENDIX J: BROCHURES


of 76

Appendix K:

The number of primary and secondary schools in USJ Subang Jaya, Selangor

Primary48

Sekolah Wawasan USJ 15

Sekolah Kebangsaan Dato Onn Jaafar

Sekolah Jenis Kebangsaan (Cina) Tun Tan Cheng Lock

Sekolah Jenis Kebangsaan (Cina) Tun Tan Siew Sin

Sekolah Tun Sambathan

Sekolah Kebangsaan Seafield 3

Sekolah Kebangsaan USJ 12

Sekolah Kebangsaan Seafield (USJ 6)


Sekolah Jenis Kebangsaan (Cina) Chee Wen


Sekolah Kebangsaan Seri Selangor USJ 4

Secondary

Sirius Scholar Study Skills (USJ Sentral)

Fairview International School (Sime UEP Industrial Park)

Sekolah Menengah Kebangsaan Seafield (USJ 2)

Sekolah Menengah Kebangsaan USJ 8





Sekolah Agama Menengah Bestari USJ 5

48 http://en.wikipedia.org/wiki/UEP_Subang_Jaya

http://en.wikipedia.org/wiki/Sekolah_Menengah_Kebangsaan_USJ_13

http://en.wikipedia.org/wiki/SMK_USJ_4


of 76

Appendix L:


of 76

Rankings 1 2 3 4 5 6 7 8 9 10 11

Quality(Reputation of the

teacher) 75%

(45)

10%

(6)

5%

(3)

0%

(0)

0%

(0)

0%

(0)

0%

(0)

0%

(0)

10%

(6)

0%

(0)

0%

(0)

Price 5%

(3)

55%

(33)

5%

(3)

15%

(9)

5%

(3)

0%

(0)

15%

(9) 0%

(0)

0%

(0)

0%

(0)

0%

(0)

Student’s Preference 5%

(3)

15%

(9)

30%

(18)

10%

(6)

15%

(9)

5%

(3)

0%

(0)

5%

(3)

0%

(0)

0%

(0)

15%

(9)

Brand loyalty 0%

(0)

5%

(3)

0%

(0)

30%

(18)

5%

(3)

5%

(3)

15%

(3)

0%

(0)

5%

(3)

15%

(9)

20%

(12)

Services 5%

(3)

5%

(3)

10%

(6)

15%

(9)

30%

(18)

5%

(3)

0%

(0)

20%

(12)

5%

(3)

5%

(3)

0%

(0)

Location 0%

(0)

0%

(0)

20%

(12)

15%

(9)

15%

(9)

30%

(18)

5%

(3)

10%

(6)

5%

(3)

0%

(0)

0%

(0)

Reputation0 0%

(0)

5%

(3)

5%

(3)

5%

(3)

15%

(9)

10%

(6)

40%

(24)

5%

(3)

10%

(6)

0%

(0)

5%

(0)

Just wanted to send them

because it is a need

10%

(0)

0%

(0)

0%

(0)

0%

(0)

0%

(0)

10%

(6)

10%

(6)

40%

(24)

15%

(9)

10%

(6)

5%

(3)

Facilities 0%

(0)

5%

(3)

0%

(0)

0%

(0)

10%

(6)

5%

(3)

5%

(3)

15%

(9)

35%

(21)

15%

(9)

10%

(6)

Word of mouth 0%

(0)

0%

(0)

15%

(9)

5%

(3)

5%

(3)

15%

(9)

5%

(3)

5%

(3)

5%

(3)

40%

(24)

5%

(3)

Availability of transport 0%

(0)

0%

(0)

10%

(6)

5%

(3)

0%

(0)

15%

(9)

5%

(3)

0%

(0)

10%

(6)

15%

(9)

40%

(24)

Table 1: Factors affecting the demand for tuition services (Percentage of each ranking)

extended essay economics

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