Oligopoly is a common market form. As a quantitative description of oligopoly, the fourfirm concentration ratio is often utilized.

This measure expresses the market share of the four largest firms in an industry as a percentage. Oligopolistic competition can give rise to a wide range of different outcomes. In some situations, the firms may employ restrictive trade practices (collusion, market sharing etc.) to raise prices and restrict production in much the same way as a monopoly. Where there is a formal agreement for such collusion, this is known as a cartel. A primary example of such a cartel is OPEC which has a profound influence on the international price of oil. Firms often collude in an attempt to stabilise unstable markets, so as to reduce the risks inherent in these markets for investment and product development. There are legal restrictions on such collusion in most countries. There does not have to be a formal agreement for collusion to take place (although for the act to be illegal there must be a real communication between companies) - for example, in some industries, there may be an acknowledged market leader which informally sets prices to which other producers respond, known as price leadership. In other situations, competition between sellers in an oligopoly can be fierce, with relatively low prices and high production. This could lead to an efficient outcome approaching perfect competition. The competition in an oligopoly can be greater than when there are more firms in an industry if, for example, the firms were only regionally based and didn't compete directly with each other. The welfare analysis of oligopolies suffers, thus, from a sensitivity to the exact specifications used to define the market's structure. In particular, the level of dead weight loss is hard to measure. The study of product differentiation indicates oligopolies might also create excessive levels of differentiation in order to stifle competition.

Oligopoly
An oligopoly describes a market situation in which there are limited or few sellers. Each seller knows that the other seller or sellers will react to its changes in prices and also quantities. This can cause a type of chain reaction in a market situation. In the world market there are oligopolies in steel production, automobiles, semi-conductor manufacturing, cigarettes, cereals, and also in telecommunications. Often times oligopolistic industries supply a similar or identical product. These companies tend to maximize their profits by forming a cartel and acting like a monopoly. A cartel is an association of producers in a certain industry that agree to set common prices and output quotas to prevent competition. The larger the cartel, the more likely it will be that each member will increase output and cause the price of a good to be

lower. The majority of time an oligopoly is used describe a world market; however, the term oligopoly also describes conditions in smaller markets where a few gas stations, grocery stores or alternative restaurants or establishments dominate in their fields. A distinguishing characteristic of an oligopoly is the interdependence of firms. This means that any action on the part of one firm with respect to output, price, or quality will cause a reaction on the side of other firms. Many times an oligopoly leads to price leadership between many firms. A price leadership is the practice in many oligopolistic industries in which the largest firm publishes its price list ahead of its competitors. Then these competitors feel the need to match those announced prices so they lower their prices. This is also termed a parallel pricing. Oligopolies tend to be broken down into one of two distinguished groups. These groups are either a homogeneous or differentiated oligopoly. Homogeneous oligopolies have a standardized product and which include industrial, with petroleum serving as the standardized example, and also...

Oligopoly and its Dual Features

Introduction

A market system refers to an organized system that enables several market players to operate. Generally, this is a system that allows both bidders and sellers to communicate and conduct business deals. In the field of economics, this can be explained clearly through various market forms. Some of the most common examples of these market forms include perfect competition, imperfect competition and monopoly. Basically, these market forms have distinct features based on the amount of consumers and producers in the market, the types of goods or services offered as the level at which information can freely flow. Each of these market systems has their own advantages and drawbacks. Nonetheless, one market form, specifically oligopoly, has the features of

In this market structure. However. The players of an oligopolistic system are referred to as oligopolists.competition and monopoly systems. In oligopoly. which in turn prevents others from owning the market demand curve. When the competing firms produce identical goods or services. price and marketing strategies (2004). rival firms would have to compete on various aspects including product quality. each member is subjected to sufficient intercompany rivalry. In this market structure. Oligopoly Oligopoly is one of the prevailing market structures in the business field. when differentiated products are involved. the monopolistic and competitive features of an oligopolistic system will be identified. Since there are a few members or participants in this market form. This market system is also the dominating market structure in modern economies (. In this brief discussion. This type of market is mainly characterized by interactivity. 2000. all the . allowing it to optimize the gains of both market forms. 1999). the competition level is only limited to the price aspect. only a few firms dominate a specific industry (. 1997). . Businesses within an oligopolistic system may either produce an identical or differentiated product. each member is interdependent of the actions of other members.

The following section identifies the efficiency gains that oligopoly has due to its dual character. the oligopolistic system is dominated by a few major companies. These descriptions of an oligopoly explain how this market system has both monopolistic and competitive features. the structure of the industries as well as the behaviors of the business firms may vary. However. metal or chemicals. having great business control over an industry makes oligopoly similar to the monopolistic setting. While in most instances. the production of differentiated products further increases the competition among these few companies. As mentioned. in this type of market form. Moreover. strict competition is observed. the price aspect dictates the competition level. Among these few dominating companies. the responses of other members towards strategic planning are always taken into consideration so as not to create internal conflict (. Dual Features . Having these dual features allow the oligopolistic system to be more efficient and beneficial compared to monopoly and competition. Although. Under oligopoly. most oligopolists market differentiated products. 2001).members¶ decision is mainly influenced by other members in an oligopoly. they may produce virtually identical products like sugar. a single company dominates a specific industry in a monopoly.

Market share is also concentrated to only a few competing firms. Barriers to entry pertain to the degree to which new business entrants is restricted or controlled within an industry. When firms operating within an industry are highly capital intensive. This makes competition even harder for new and smaller companies to enter the industry ( 2001). especially if the business require significant commitment or capitalization to sophisticated equipment. barriers to entry are not as high. the barriers to entry are very high that no other companies can operate in the industry. Other entry barriers like time and patience are also required in order for the business to reach a high level of profitability. dominant market presence and established reputation are achieved. One of which is called absolute cost barriers. directly benefiting the business operators. since the limited operating firms have considerable . Keeping a semi-monopolistic environment in an oligopoly can cause significant market failure.In a monopolistic environment. The presence of entry barriers then help in regulating competition within the system. When firms become successful in an oligopolistic system. However. new business entrants tend to hesitate to enter the industry due to high start up costs. There are a number of barriers of entry observed in the business field. as other yet few companies can enter an oligopolistic system.

. moreover. If this environment will be considered. they tend to work extra hard in preventing slack in inputs. In turn. With this strategy. companies are more after cost-effective strategies that will allow efficient capital allocation. this in turn is achieved through innovation. business organizations are more efficient in responding to various performance pressures. In addition to this. Consumers are given with quality goods. causing market letdown. the production of goods or provision of services can be affected. The objective of the companies within a competitive market environment is to provide the best to the consumers. production is likely to be less efficient due to lack of competition. As the limited number of companies compete with one another. companies will be able to make their products stand out in the market and eventually overcome threats of rivalry. resource allocation is also enhanced in competitive market forms as business organizations become more innovative. resulting to efficient resource allocation ( 2002).market shares. This then makes the competitive factor an important feature of an oligopoly as it helps in balancing out the system. specifically. especially in terms of quality. efficient resource allocation is also achieved through competitive market reform by means of diverse products and services that consumer can benefit from. oligopolists will only focus on the profitability aspect of business. resource allocation becomes more efficient. Aside from innovativeness. Without the presence of a driving force for quality production.

This diminished growth in turn. With this market system characteristic.With this dual feature. each firm knows that in initiating price changes. raising or lowering prices as well as implementing new marketing strategies will most likely be copied by rivals. by means of establishing a balance between total control and competitive factors of business. Within the oligopolistic environment. Their behavior is necessarily influenced by the realization of mutual interdependence ( 1996). In assessing the net effects of a price change. The economic theory of interdependence is based on the tendency of competing firms to follow the actions or strategies of their rivals. oligopolists depend very closely upon the actions of the others operating in the same market. The case of AT&T. can be cited as an example to explain this tendency. oligopoly also has access to yet another important aspect. it must take account of the probable reaction of others. If a firm decides to change the price of its goods. One example of interdependence among oligopolists is the issue on price. In oligopoly. Back in the early 1990s. major carriers in the United States had experience a major growth reduction for the first time in the domestic longdistance market. The telecommunication companies . led to the rise of strong negative commentaries from the financial community. oligopoly allows operating companies to be interdependent of one another. other firms will also react to them. the company considers not only the general market situation and its own financial and stock position but also the probable behavior of its principal competitors. the telecom giant.

As the telecom company operates in an oligopolistic environment. Through its . cooperation is easier (1996). In order to implement this in the international setting. especially governmental and large industrial buyers (1994). AT&T decided to implement an end to end customer service to tie all of its customers.must then act fast on this issue as this could lead to major adverse impacts on their capital costs. both companies had established joint ventures with foreign firms (. its major competitors Sprint and MCI followed the same strategy in the United States and in other foreign markets. In response to this. their interdependence to one another also allows them to establish business agreements. oligopoly has dual features of both monopoly and competition systems. Conclusion Oligopoly is a market system wherein few companies operate and compete in a certain industry. Considering that the number of interdependent firms is minimal. Oligopolists involved in mutual interdependence find it convenient and profitable to coordinate their policies and strategies together. This example then stresses the observance of interdependence among oligopolists. Compared to other market forms. 1995). An oligopolistic situation is frequently accompanied by marketsharing arrangements between a number of producers or firms. While members of an oligopoly compete by reacting to ones actions.

this can be explained clearly through various market forms. these market forms have distinct features based on the amount of consumers and producers in the market. In the field of economics. The efficiency gains of an oligopolistic system is then concentrated on the fact that both operators and consumers benefit from this type of market system. The presence of competition on the other hand. This also drives them to become innovative and customer-oriented.monopolistic features. . In turn. Some of the most common examples of these market forms include perfect competition. making it an ideal market structure. Each of these market systems has their own advantages and drawbacks. this in turn allow them to obtain considerable shares of the market. Introduction A market system refers to an organized system that enables several market players to operate. Basically. this is a system that allows both bidders and sellers to communicate and conduct business deals. making business progress faster among limited firms. imperfect competition and monopoly. Although the power to operate is only distributed to a few oligopolists. the competition factor encourages them to produce quality goods and services. the types of goods or services offered as the level at which information can freely flow. This also helps in limiting the level of competition observed in the market. helps in preventing oligopoly from market failure. oligopolists are able to operate with less rivals. Generally. the presence of both monopolistic and competitive features in oligopoly creates a balanced system.

Sloman. In this market structure. rival firms would have to compete on various aspects including product quality. Businesses within an oligopolistic system may either produce an identical or differentiated product. This market system is also the dominating market structure in modern economies (Chrystal & Lipsey. price and marketing strategies (Parkin. allowing it to optimize the gains of both market forms. each member is interdependent of the actions of other members. one market form. 1999).Nonetheless. When the competing firms produce identical goods or services. The players of an oligopolistic system are referred to as oligopolists. the competition level is only limited to the price aspect. In oligopoly. the monopolistic and competitive features of an oligopolistic system will be identified. when differentiated products are involved. each member is subjected to sufficient inter-company rivalry. Oligopoly Oligopoly is one of the prevailing market structures in the business field. 2000. specifically oligopoly. which in turn prevents others from owning the market demand curve. However. In this brief discussion. This type of . only a few firms dominate a specific industry (Cabral. Since there are a few members or participants in this market form. 2004). 1997). has the features of competition and monopoly systems.

2001). . While in most instances. strict competition is observed. These descriptions of an oligopoly explain how this market system has both monopolistic and competitive features. the responses of other members towards strategic planning are always taken into consideration so as not to create internal conflict (Sloman & Sutcliffe. having great business control over an industry makes oligopoly similar to the monopolistic setting. metal or chemicals. The following section identifies the efficiency gains that oligopoly has due to its dual character. Although. the oligopolistic system is dominated by a few major companies. in this type of market form. Having these dual features allow the oligopolistic system to be more efficient and beneficial compared to monopoly and competition.market is mainly characterized by interactivity. all the members¶ decision is mainly influenced by other members in an oligopoly. Among these few dominating companies. As mentioned. Moreover. a single company dominates a specific industry in a monopoly. they may produce virtually identical products like sugar. Under oligopoly. However. the structure of the industries as well as the behaviors of the business firms may vary. the production of differentiated products further increases the competition among these few companies. In this market structure. the price aspect dictates the competition level. most oligopolists market differentiated products.

Barriers to entry pertain to the degree to which new business entrants is restricted or controlled within an industry. 2001). the barriers to entry are very high that no other companies can operate in the industry. dominant market presence and established reputation are achieved. as other yet few companies can enter an oligopolistic system. especially if the business require significant commitment or capitalization to sophisticated equipment. However. Other entry barriers like time and patience are also required in order for the business to reach a high level of profitability. . barriers to entry are not as high.Dual Features In a monopolistic environment. The presence of entry barriers then help in regulating competition within the system. One of which is called absolute cost barriers. When firms operating within an industry are highly capital intensive. directly benefiting the business operators. There are a number of barriers of entry observed in the business field. When firms become successful in an oligopolistic system. new business entrants tend to hesitate to enter the industry due to high start up costs. Market share is also concentrated to only a few competing firms. This makes competition even harder for new and smaller companies to enter the industry (Gershon.

. Consumers are given with quality goods. If this environment will be considered. specifically. oligopolists will only focus on the profitability aspect of business. In addition to this. Without the presence of a driving force for quality production. 2002). resource allocation becomes more efficient. resulting to efficient resource allocation (OECD Economic Outlook. production is likely to be less efficient due to lack of competition. The objective of the companies within a competitive market environment is to provide the best to the consumers. since the limited operating firms have considerable market shares.Keeping a semi-monopolistic environment in an oligopoly can cause significant market failure. the production of goods or provision of services can be affected. This then makes the competitive factor an important feature of an oligopoly as it helps in balancing out the system. they tend to work extra hard in preventing slack in inputs. companies are more after cost-effective strategies that will allow efficient capital allocation. companies will be able to make their products stand out in the market and eventually overcome threats of rivalry. especially in terms of quality. In turn. With this strategy. causing market letdown. As the limited number of companies compete with one another. Aside from innovativeness. this in turn is achieved through innovation. moreover. business organizations are more efficient in responding to various performance pressures. resource allocation is also enhanced in competitive market forms as business organizations become more innovative.

The economic theory of interdependence is based on the tendency of competing firms to follow the actions or strategies of their rivals. 1996). With this market system characteristic. . In oligopoly. by means of establishing a balance between total control and competitive factors of business. With this dual feature. Their behavior is necessarily influenced by the realization of mutual interdependence (Trebing. One example of interdependence among oligopolists is the issue on price. other firms will also react to them. raising or lowering prices as well as implementing new marketing strategies will most likely be copied by rivals. Within the oligopolistic environment. each firm knows that in initiating price changes. In assessing the net effects of a price change. If a firm decides to change the price of its goods. it must take account of the probable reaction of others.efficient resource allocation is also achieved through competitive market reform by means of diverse products and services that consumer can benefit from. the company considers not only the general market situation and its own financial and stock position but also the probable behavior of its principal competitors. oligopoly allows operating companies to be interdependent of one another. oligopolists depend very closely upon the actions of the others operating in the same market. oligopoly also has access to yet another important aspect.

Considering that the number of interdependent firms is minimal. Back in the early 1990s. In order to implement this in the international setting. As the telecom company operates in an oligopolistic environment. 1994). their interdependence to one another also allows them to establish business agreements. In response to this. . the telecom giant. The telecommunication companies must then act fast on this issue as this could lead to major adverse impacts on their capital costs. An oligopolistic situation is frequently accompanied by marketsharing arrangements between a number of producers or firms. 1996). led to the rise of strong negative commentaries from the financial community. This diminished growth in turn. Oligopolists involved in mutual interdependence find it convenient and profitable to coordinate their policies and strategies together. AT&T decided to implement an end to end customer service to tie all of its customers. While members of an oligopoly compete by reacting to ones actions. its major competitors Sprint and MCI followed the same strategy in the United States and in other foreign markets. cooperation is easier (Varian. This example then stresses the observance of interdependence among oligopolists.The case of AT&T. major carriers in the United States had experience a major growth reduction for the first time in the domestic longdistance market. can be cited as an example to explain this tendency. 1995). both companies had established joint ventures with foreign firms (Estabrooks & Trebing. especially governmental and large industrial buyers (Keller.

B. This also helps in limiting the level of competition observed in the market. Introduction to Industrial Organization. oligopolists are able to operate with less rivals. L. Through its monopolistic features. References: Cabral. MA: MIT Press. . Cambridge. the competition factor encourages them to produce quality goods and services. Compared to other market forms. the presence of both monopolistic and competitive features in oligopoly creates a balanced system. (2000). oligopoly has dual features of both monopoly and competition systems. helps in preventing oligopoly from market failure. In turn. The presence of competition on the other hand.Conclusion Oligopoly is a market system wherein few companies operate and compete in a certain industry. making it an ideal market structure. this in turn allow them to obtain considerable shares of the market. This also drives them to become innovative and customer-oriented. making business progress faster among limited firms. Although the power to operate is only distributed to a few oligopolists. The efficiency gains of an oligopolistic system is then concentrated on the fact that both operators and consumers benefit from this type of market system.M.

Economic for Business. Prentice Hall. 30(2). M. & Lipsey. OECD Economic Outlook. (2004).A. 2006 from www. Economics for Business and Management. (1997). (1995). Product market competition and economic performance. . 29(2). (1994. The Globalization of Telecommunications: A Study in the Struggle to Control Markets and Technology. (1999). Trebing. England: Pearson Education.findarticles. H. J. Estabrooks. Wall Street Journal. M. Sloman. (1997). Keller. The Transnational Media Corporation: Global Messages and Free Market Competition.Chrystal. (1996). J. K. Journal of Economic Issues. Ontario: University of Western Ontario. Achieving Coordination in Public Utility Industries: A Critique of Troublesome Options. 535+. Economics. 561+. December).J. J. Parkin. AT&T Arranges Pact on Increased Role in Europe. December 8). R.com Sloman. Retrieved May 15. R. & Trebing. B-13. (2002. NJ: Lawrence Erlbaum Associates. & Sutcliffe. 7th Ed. Oxford: Oxford University Press. Journal of Economic Issues. Gershon. H. 3rd Ed. (2001). M. Economics. Mahwah.

Homogeneous Product Oligopoly: Industries in these markets produce intermediate goods which are use by other different industries later on for manufacturing their products.Varian. New York: W. out of the 25 firms doing business the top 5 firms are responsible for 65% of the total industry sales. What is an Oligopolistic Market ? An oligopolistic market is the one which is dominated by some large suppliers. Firms manufacture branded products and high competition among them results in tremendous advertising and marketing spends by these firms. Examples include ± steel. H. like in a perfect competition market. Leading forms are able to make abnormal profits in the long run. Entry barriers prevent other entrants and pricing is mostly by competition and mutual understanding between top manufacturers.R. This particular oligopoly characteristic ensures that all large firms have a fair amount of market control. petroleum and aluminum industries. Honda. In an oligopolistic market. The car automobile industry is a very good example of an oligopolistic market. while the figure shoots up to 80% if the top 10 firms are taken into consideration. It can thus be inferred that oligopolistic markets are found in two separate categories: 1. while others manufacture differentiated products like in an monopolistic market. Toyota and Ford. Norton. Homogeneous or Differentiate Products Certain industries in an oligopolistic market manufacture homogeneous products. (1996). 4th Ed. Consumers need a variety of products. as they have different . mutual interdependence. Intermediate microeconomics. in a hypothetical telecommunications market. few large producers and high entry barriers are oligopoly characteristics prevalent in such markets. 2. For example. What are the Characteristics of Oligopoly? The three most important characteristics of oligopoly include: y y y Industry dominance by few large firms Products sold by these firms are either differentiated or identical in nature Various entry barriers depending upon the industry Few Large Firms This is a very crucial oligopoly characteristic which states that these markets include few large firms which are dominant in existence. There are various competitors in this market but the dominant ones include General Motors. the major ones account for more than half of the total industry output. they need to consider impact and reactions on other firms while determining their own pricing and investment policies.W. Homogeneous products. as new firms have numerous entry barriers. As all firms in an oligopolistic market are interdependent. Differentiate Product Oligopoly: Goods manufactured in these kinds of markets are for personal consumption. and each one of these firms is comparatively larger than the market size. not seen in a monopoly market. Chrysler. In spite of there being other smaller firms in the market. the leading firms account for a large percentage of market share.

Apart from this. The third point is noteworthy because government-linked companies hardly qualify as part of the private sector. inclinations towards mergers or collaborations and decision making through mutual consent. Early in it. copyright issues. their difference in Malaysia now is far too blurry for it to be meaningful within the context of the speech. One. It is instructive how the definition of a word or a phrase changes over time.needs and wants. Any enterprise owned by the government. few other oligopoly characteristics include ± tendency to keep price rigid. The cause of that is years of government intervention in the market. Entry Barriers Entry barriers helps existing firms to exercise market control. . as new firms can enter a monopolistic market and reduce dominance of the large firm. Examples include ± computers. huge setup cost and undivided resource ownership are common barriers to entry. Two. the government means to see this through via government-linked companies. where private individuals make private choices with private resources for private gains or losses. Government restrictions. This particular feature also helps in differentiating an oligopolistic market from a monopolistic market. Three. DEC 17 ² Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah recently made a speech that received a lot of attention. he shared that the government is looking to increase the private sector¶s contribution to the domestic economy. the size of government expanded considerably instead. For example. Loss of innocent human lives resulting from military action sanctioned by the state is called collateral damage. is part of the public sector. the last time somebody important in the government expounded the idea. and therefore largely utilises public resources. set-up a manufacturing unit without any initial sales or income from the business and will also need to come up with innovative production techniques to sustain it self in the long run. Invasion is termed as liberation. if a new firm tries to enter the hypothetical telecommunications market discussed earlier it will have to compete against already existing brand names. household products and automobile industry. This particular point would have been exciting if it was not for three reasons. While the break may not be clean because the link between the two sectors in some cases is inevitable. George Orwell probably drives home the point best with the statement ³war is peace. freedom is slavery and ignorance is strength. he is not the first person to say this. as the minister said. practice of non-price competition. irrespective of the product.´ The term private sector is supposed to describe the sector within the economy that is not owned by the state. All these barriers make it difficult for the new entrant to enter the oligopolistic market.

the government or really. The best way to increase the true private sector¶s contribution is to embrace the original meaning of the term. Humbleness is the key in getting the private sector to improve its contribution to the local economy. Rather than trying to . Bailouts of failed enterprises by the government are one way where excessive presence of the state in the market can be introduced. Even when an import substitution policy was all the raged in the early history of Malaysia. the understanding of the term private sector has gradually but surely shifted to assume its opposing definition. Given the vast resources available to the government despite its massive fiscal deficit. In times when the government seems intent to reduce dependency on the state. The creation of a monopoly is not exactly a healthy way to enhance the private sector¶s contribution to the economy because most monopolies have the incentive to maintain the status quo. the government unfairly competes with the true private sector. With that. needs to reduce its participation in the market. this contradicts the effort. During the Abdullah administration. the government has a strong say in the management of those entities. They do this by discouraging adoption of new technology that is crucial to improving productivity and ultimately challenging their dominance to the benefit of society at large. During the Mahathir administration. Another is through the government¶s expressed intention of participating in business that is mostly due to political and not business considerations. The first step to take is for the government of the day to stop overestimating its capability in managing the economy. among others. the government helped create what eventually became favoured oligopolies in multiple sectors. Does the government intend to instruct its government-linked companies to increase activities in the market and then label such contributions to the economy as privately-driven? Or does the government plan to increase activities of government-linked companies to increase opportunities for entities from the true private sector? This creates only a culture of dependency. like it or not. the government essentially controls the direction of these companies. it is hard to see how the private sector could increase its contribution to the economy. multiple fully-owned government-linked companies were established as part of the government¶s focus on the agricultural sector. is to Khazanah Nasional Berhad. how exactly does the government plan to increase the true private sector¶s contribution to the domestic economy through government-linked companies will be interesting. To do that.These interventions come in many ways. Considering all that. the focus on manufacturing brought upon the birth of ± for example ± the state-owned Proton. These oligopolies continue to exist until today. as well as its love affair with centrally planned economic corridors. Bad regulations protecting monopolies and state-owned entities meanwhile require dismantling in order to give true private sector space to expand in a largely distortion-free environment. especially in a sustainable manner. How the protection of Proton has prevented Malaysia from becoming a regional automotive hub driven by foreign but essentially private sector is well known and needs no further elaboration. Due to those interventions. Observe how strongly linked the domestic economy. specifically the supposedly private sector. the state. This unfair competition discourages the creation of new entrepreneurs for the inculcation of competitive market. Without improved productivity. Perbadanan Nasional Berhad and even the Employees Provident Fund. to limit space for the true private sector. To label entities strongly linked to these organisations as part of the private sector is tenuous because.

7 percent of Malaysia's 5.000 in 2006. In other words. or via government-linked companies MALAYSIA--The slow uptake of broadband services has led the Malaysian government to revise its earlier optimistic penetration targets. . We are not seeing FTTH being rolled out here.32 broadband subscribers per 100 inhabitants. The Association has proposed that the cost of broadband usage for consumers be reduced immediately to create a critical mass of broadband users." Pikom is also concerned over repercussions of the Malaysia's costly. It is proposing the government sets a goal to achieve at least 3.8 and Mexico 3. Compared to comparable economies. the Association of the Computer and Multimedia Industry of Malaysia (Pikom) said the government should instead use an internationally recognized benchmark in establishing the broadband penetration target. the government should focus on building credible institutions capable of accommodating expansion of private sector. Greece has 4. up from 7 percent in 2005. The government had previously set a target of 75 percent adoption rate by 2010. in upgrading to fiber networks. the government must refocus on its original purpose. it would be fair to say our copper infrastructure is being stretched.5. "A broadband service provider reported that its total broadband customer base was 864. Finland." Wong said.5 million households currently have broadband access.0 broadband subscribers per 100 inhabitants by 2010. this is mathematically insignificant and works out to 0. This disappointing state of affairs recently prompted a Cabinet Committee chaired by Deputy Prime Minister Najib Tun Razak to revise the target down to 50 percent by 2010. Turkey has 3.6 broadband subscribers per 100 inhabitants. Malaysia lags behind its peers in terms of broadband subscribers per 100 inhabitants. Instead. without being ideological about it. is governing. Let the true private sector do its work properly without excessive government interference either directly from the government itself. "Malaysia fares poorly even when compared against economies like Greece. yet poor-quality broadband services. Wong said Malaysia's Internet industry is stunted because of the nation's broadband shortcomings. "The greatest segment harmed by our broadband inadequacies is electronic commerce. but only 11. in an e-mail interview with ZDNet Asia. prompting industry observers to call for market reform. "Against a population of 27 million.expand the role of government-linked companies. Turkey and Mexico. To improve the quality of broadband services. However." In contrast. developed countries such as Denmark." said Pikom chairman David Wong. Pikom said telcos in Malaysia should follow the lead of countries such as South Korea and Japan. online service-based providers and online content segment of the ICT industry. Wong explained: "Fiber-to-the-home (FTTH) and fiber-to-the-building (FTTB) subscriptions have gain prominence. That original purpose of a government. Sweden and Korea have at least 26 broadband subscribers per 100 inhabitants." he said. not doing business.

and instead awarded WiMax licenses to four lower-tier telcos." he said. At a recent media briefing to outline initiatives to improve its broadband services. Lee Min Keong is a freelance IT writer based in Malaysia. hence the delay in rolling out its services. and this is [just] one of many examples. Hafriz said the introduction of WiMax could resolve. Pikom argued that the current "oligopolistic. Malaysia's prime minister outlined several new initiatives to help spur the country's broadband penetration rate. monopolistic situation for telecommunication backbone and broadband services will doom us all"." he added. However. In a discussion with government officials last April. especially on issues such as the unbundling of last-mile access. as this would lead to a more market-driven and commercial-based industry. and the apparent protection the telco enjoys as a government-linked company. in the areas allocated. the problem of the last-mile access which TM seeks to protect. But we seek your patience. will reduce the cost of broadband services for consumers. it said." Calls to open market Industry observers say some of the problems may stem from TM's dominant market position. In March this year. Hafriz Hezry. which has 94 percent of Malaysia's broadband subscriber market or a base of more than 1 million subscribers. In his Budget Speech 2008. be it in the form of a substitute product or direct replacement should benefit consumers. import duty and sales tax exemptions on hardware equipment. Hafriz pointed out there has not been much development in the WiMax deployment so far. to some extent. Pikom urged the Malaysian government to open up the telecommunication and fiber-optic pipelines owned by government-linked telcos and make the network accessible to all technology providers. said: "I believe de-monopolization plays a critical role in furthering the development of a technology. Much of the brickbats concerning broadband services have been directed at Telekom Malaysia (TM). the Malaysian Communications and Multimedia Commission ignored the country's top telcos such as TM and Maxis. "WiMax provides an alternative to existing services. This. including investment allowance. TM Malaysia Business CEO Zamzamzairani Mohd Isa made an appeal: "We are doing things to improve our service. "For example. ." In an e-mail interview with ZDNet Asia. an investment analyst with TA Securities Holdings."Malaysians are frustrated when they click to watch a streaming video and are forced to wait while buffering repeatedly takes place. Increased industry competition. [one of the licensees] Green Packet is currently facing trouble in securing sites for their transmitters. there are indications that this target may be too ambitious." he noted. The licensees have until the end of 2007 to roll out their WiMax services to 25 per cent of the population.

Mittal would produce more 10 percent of the world output. Arcelor-Mittal have become the largest steel maker in the world by turnover as well as by volume.000 per tone. Arcelor-Mittal is more than three times larger in terms of production of and revenue from steel. Only Ispat Industries came out in support. The sales have increased to Rs 63. of Japan. close to 100 million tons of steel. admitting there was a case for a reduction in prices in the domestic market to control inflation Global market demand and supply: Demand rose from 850mmt in 2000 to 1060mmt in 2005 to 1155mmt in 2007 whereas supply rose from 840 in 2000 to 1070 in 2005 to 1185 in 2007 the main reason for this change is due to the rising demand for the steel all over the world. and revenues close to $70 billion. "It is expected that this price reduction by Tata Steel will.CASE STUDY Mittal taking over Arcelor: On the consolidation front.587/. the steel industry was focused on Mittal¶s bid to gain control over Arcelor. This would give an increased pricing power for producers and suppliers.crores for the first half of FY08. Tata taking over Corus: When the news came out that Tata is taking over Corus it was not accepted by the public or rather the investor in a positive way. CASE STUDY: Handset-driven expansion strategies: . The main reason is due to the rising demand for steel in China other Asian countries. The stock price fell by around 7% in 15 days time. The world¶s number one and two producers have combined and this will go a long way to push consolidation. The new steel company will have about 334. Mittal¶s victory in the battle for global steel industry control is giving the steel industry a new direction. contribute in arresting or moderating the pressures on price increases by major users on their products. and decrease the fragmentation. Price reduction undertaken by Tata Steel (Aug 23. The combined company will now have a significant advantage in setting prices and negotiating the terms of various contracts with key customers. Hoping that other steel manufacturers and members of the steel trade would also display a sense of corporate responsibility by rolling back their prices in the interest of curbing inflationary trends. The deal was finalized at about 18.000 employees¶ worldwide. in turn. 2004): Tata Steel cuts price by Rs 2. The now combined Arcelor.2 billion dollar." company chairman Ratan N Tata said in a statement. This proposed acquisition represents a defining moment for Tata Steel and is entirely consistent with the strategy of growth through international expansion This made Tata the 5th largest steel producing country in the world. than its nearest rival Nippon Steel Corp.

these offers included several value added services like three way conference call. SMS based data services. It will also launch co-branded handsets sourced from major global vendors. Reliance. This connection was valid for six months with a grace period of another six months during which the subscriber could receive SMS and incoming calls without having to recharge the account. 3. India¶s largest mobile operator Bharti Airtel is set to bundle handsets with mobile connections. ³RIM Prepaid raises the bar for innovation. Now the competition has responded. S P Shukla. national roaming. which will spend nearly Rs 250 crore on a high-profile brand transition from Hutch to Vodafone being unveiled on Thursday.. The prepaid subscription offers were seen as a revolutionary step towards making communication and data services affordable to a wider range of customers. While CDMA players like RCOM and Tata Teleservices have adopted handset-driven expansion strategies to drive up subscriber base. call forward and voice message service at local mobile rates. quality of service and value added services in prepaid segment of mobile telephony market.500. Bharti¶s move follows the recent announcement by its main competitor in the GSM space Vodafone. This means that the company will provide a handset with a new connection at partly subsidized rates. Wireless Products and Services. 3. Similar subscription offers were made on other RIM handsets also. In a major shift in strategy. STD and ISD facility. Commenting on the innovativeness and superiority of these services. 2007. is poised to launch cheap cellphones in India under the Vodafone brand. If a subscriber purchased an LG handset worth Rs. Vodafone Essar. he/she got a free RIM prepaid recharge voucher worth Rs. said. 6.´ Industry observers felt that by providing high-end services at affordable prices. Currently Reliance Communications (RCOM) recently launching ultra budget handsets with prices starting at Rs 777. a subscriber could get a free Reliance India Mobile (RIM) prepaid connection and recharge vouchers worth Rs. this is the first time that a GSM player is venturing into this space on a pan-India level. besides hundreds of titles in regional languages.240. to bundle handsets with connections on 22 Jun. This said it will launch a series of ultra low-cost bundled handsets to get a CASE STUDY Moser Baer¶s DVD Play Ignites Price War: There is a price war happening on the home video front. entered the prepaid mobile services segment by offering subscription schemes that allowed customers to make use of a digital mobile phone service at an affordable price. 6. (Reliance).480 valid for six months. India's leading postpaid mobile services provider. Bharti joins race. For a price of Rs. etc. Apart from their price. Reliance was creating value for its customers. Following Moser Baer¶s aggressively priced DVD entry into the home entertainment marketplace. its competitors too are not taking chances.5003 for a CDMA enabled Motorola handset. T-Series has cut DVD . Also. The company also recently launched some 75 Hindi titles. Moser Baer priced its DVDs at Rs 34 for a pop while VCDs at Rs 28.. RIM prepaid was the only prepaid mobile service in the country that provided data applications and internet connectivity. President.Reliance Info com Ltd.

suppliers. In a laudable initiative. Another company Shemaroo Entertainment says it may follow suit Another company Shemaroo Entertainment says it may follow suit. It is considered to be highly capital and labor intensive. original equipment manufacturers. It is one of the important industries in the world. auto electricians etc. an Indian leader in digital media manufacture (DVD's and VCD's) is helping change the piracy paradigm. pirates will find it hard to survive!! "Pulling down prices may curb the price-sensitive piracy-a movie being copied and sold for 10-20% of the original price.But what will be hard to tackle is the time-sensitive piracy. retailers. Moser Baer could find it difficult to provide low prices for the latest movie releases as the rights would be costlier when compared to old movies." Moser Baer would have to work with movie producers and film distributors to shorten the time to market a new movie release and allay their fears that the home video market could affect their business. which provides employment to 25 million people in the world. managing director. Moser Bear's Pricing Strategy: The New Anti-Piracy Model: Moser Bear. AUTOMOBILE INDUSTRY GLOBAL AUTOMOBILE INDUSTRY The global automotive industry is a highly diversified sector. Tips Industries. Moreover. dealers. . whereas the version sold by Moser Baer costs around Rs 30-50 (USD 1). according to law. Ultra has brought down the price of its old catalogues from Rs 300 to Rs 45 even before Moser Baer started the war. Taurani.With such low margins. they are acquiring copyright licenses to a wide range of movies and selling DVD's/VCD's for rock bottom prices. It comprises of manufacturers.prices to Rs 45 on select movies and is offering a package of three films for Rs 75. says he will see how the response to Moser Baer pans out. aftermarket parts manufacturers. which happens because. there has to be a time lag between the theatrical and home-video release of a film. and will decide a future course of action. A normal DVD version of a movie costs around Rs 200 (USD 5) or upwards in India.

Ford.Top five automobile manufacturing nations are : United States.9).9%). scooters.9% of world export of manufacturers. Commercial Vehicles industry comprises of units engaged in manufacturing and selling of commercial motor vehicles. accounting for 9. Major Segments Of Automotive Industry Four Wheelers industry is one of the largest segments of global automotive industry that produces different type of four wheelers namely cars. . Two wheelers industry comprises of four broad segments i. It represents nearly 10% of the $10 trillion US economy. Germany and South Korea The United States of America is the world¶s largest producer and consumer of motor vehicles and automobiles. Honda. Japan. Ford Motor Company (17. United States. articulated trucks.e. Leading automobile manufacturing corporations are:Leading automobile companies and their market share are General Motors (24. vans etc. jeeps. China. The commercial vehicles include light commercial vehicles. rigid vehicles. India and China are the largest producers of two wheelers in the world.5% of world merchandise trade and 12. These corporations have their presence in almost every country. motorcycles. Toyota (14. Daimler Chrysler (14 %) others (29.1%). buses and non-freight carrying truck. Daimler Chrysler AG. India produced 7600801 two wheeler in 2005-06. Nissan Motor Company Ltd. Volkswagen AG.. passenger cars. It has a market share of $432.1%). Toyota. Japan and China are the largest manufacturers of commercial vehicles in the world. The key manufacturers of four wheelers in the world are General Motors. and PSA Peugeot.1 billion Size of the automotive industry The automotive industry occupies a leading position in the global economy. Japan. mopeds and bicycles.

Europe. behind only China and the US. medium and heavy commercial vehicles. light. . multi-utility vehicles such as jeeps). mopeds. The key utility vehicles manufacturing regions of the world are North America. motor-cycles. and three wheelers). new product launches. it produced a wide variety of vehicles including over 2. China and India.Utility Vehicles industry consists of units engaged in manufacturing and selling of Sports Utility Vehicle and the Multi Utility Vehicles. INDIAN AUTOMOBILE INDUSTRY India is on every major global automobile player's roadmap. ‡ India is the second largest two-wheeler market in the world ‡ Fourth largest commercial vehicle market in the world ‡ 11th largest passenger car market in the world ‡ Fifth-largest bus and truck market in the world (by volume) ‡ Expected to be the seventh largest automobile market by 2016 and world's third largest by 2030.06 million four wheelers (passenger cars. and over 9 million two and three wheelers (scooters. Spurred by a huge demand due to increasing purchasing power. coupled with attractive finance schemes and booming exports. During 2006-07. the Indian automobile industry has been growing at a frenetic pace.