Astro's Monopoly in Malaysia

Does anyone know what Monopoly in Market Structure is?  Among all the market structure, Monopoly will be the most interesting part. Monopoly is which there is only a firm that producing products and services.  It would be high barriers that could protect the firm from prevent other market to enter and due to that, there would not be any substitutes and that’s why it make the product is unique.  Is Astro still a monopoly firm since nowadays we have Unifi?

  

Unifi, under TMnet not only provide wireless line but also provide drama and shows named HyppTV. Particularly, the number of shows and drama provided by both the firm are totally different. Unifi focusing on providing wireless line while Astro is the firms that focus on channeling TV shows. Astro is also a natural monopoly. A natural monopoly is an industry that single firm production that good or services that is more efficient. The natural monopoly market structure in Malaysia is Astro.  Astro Malaysia Holding Berhad is a leading unified consumer media entertainment group in Malaysia and Southeast Asia. Over 130 million or 52% penetration of Malaysia TV households, Publication and Digital Media.  It could be stated that Astro has hold a big market in channeling hundred of TV shows in Malaysia.    

 Astro Malaysia Holding Berhad would affect Malaysia in many ways for example like it would be an extra income for the country such as government tax. To attract the consumer, Astro comes out with many promotions that would be cheaper than the usual price. For example like Super pack 1, super pack 2, super pack 3 and super pack 4. Super pack 4 only cost RM 125.00 that valued RM 199.95 and plus 6% government tax.  In addition, there would be many exclusive channels for news, kids, learning and variety such as discovery, Disney channel and celestial movies. When it is on promotion, more consumers will purchase it because it is reasonable that the amount we need to pay for 160 channels.   

The advantage of monopoly is earning high profits. Astro enjoy high revenue as high as RM3.2 billion. Astro also enjoy the benefits of economic scale as well. However, the disadvantages of monopoly are incentive and innovate. Malaysia viewer knew that when raining fade it would be a big problem for subscribers as the signal is not stable and we could not watch the TV shows.

In conclusion, monopoly firm had been protected by government by introducing barriers. In my opinion, it would be more effective to have only one firm than having more than one firm to compete with each other.

Written By : Loh Jing (0315615)

A view on the smartphone market - An Oligopoly

The smartphone market is one of the most prominent oligopolies. It is one of the largest and most profitable markets in the world . Among the major players in the smartphone industry are Apple, Samsung, Nokia, Blackberry, HTC, Sony Erricson, LG and Motorola.

The most identifying characteristic of an oligopoly is the number of sellers . In the case of the smartphone industry, the number of sellers are small, each of them holding a sizable percentage of the market share, with Apple and Samsung being the dominant players. When firms are working within an oligopoly, the number of sellers are so small that they must anticipate their competitors' reactions before making a pricing decision.

Being an oligopoly, the barriers to entry for the smartphone market is very high. It is extremely difficult for new firms to enter the market as barriers such as existing patents, control over essential raw materials and market, high customer switching costs and strong customer loyalty for existing brands block access to new firms who wish to enter the market. For example, Apple and Samsung's existing loyal customers would not be inclined to switch brands to a new startup firm as they have strong customer loyalty and trust in the brands that they are using , not to mention the extreme difficulty any new firms face with patent ownership, making production of new smartphones a very difficult task.

When firms work within an oligopoly, they have a joint control over the price of the products. Thus, there exists a mutual interdependence between firms to strategically price their products in order to mutually enjoy the highest profits. In the case of the smartphone industry, firms are forced to comply to the prices that are set in the market, or risk losing the demand for their product. When one firm lowers the price of their smartphone, the demand will increase and thus profits will increase. However, this increase in profits cannot be enjoyed for long because other firms will decrease the prices of their smartphones as well, in order to even the playing field .

Mergers also exists within the smartphone market. When firms sense the danger of new firm entries, they merge and create joint policies in product pricing and and production in order to discourage the entry of new firms. This is an integral component for the survival of the current firms. In order to continue profiting, the firms that exist within an oligopoly must work together to block the entry to new firms who wish to enter the market.

Samsung has recently taken the lead in the smartphone market, overtaking Apple in terms of market share, thanks largely in part to their flagship device, the Samsung Galaxy S4 outselling Apple's iPhone 5. And thus, as the smartphone market continues to grow and evolve, Samsung will be spearheading this movement forward, dominating the market with their Samsung galaxy S4, at least for the time being.

Written by : Keeve Wong Wekit (0315620)

References :

http://money.cnn.com/2013/06/05/technology/mobile/samsung-apple-market-share/index.html

http://www.oocities.org/znuniverse/micro_economics/Price_Determination_under_Oligopoly.htm