ABDT5114 Product Management Tutorial 4 Answer

June 11, 2011

Question 1
The PLC follows a new product/category through its introduction, growth (assuming Success), Maturity and decline. Investors take the risk of creating/ introducing a new product category. If the product category, innovators recap substantial profit rewards during its growth stage, but attract competitors. Increased competition raise costs and reduce profits as competit ors seek to take consumers from rival in order to survive. In decline, the product becomes unprofitable, and will eventually be obsolete by the original innovators or by a rival snext new product.

Question 2
Assess market attractiveness for MAS by using Michael Porter 5 forces: 1. Threats of new entrants a. High capital requirement. b. High level of technology requires. c. Political- legal issues require. Threats of new entrant is low, market attractiveness is high. 2. Bargaining power of supplier a. There are only 2 aircraft supplier in the world; Boeing, and Airbus. b. The market is dominated by 2 firms. bargaining power of supplier is high, market attractiveness is low. 3. Bargaining power of buyers a. The buyer is passengers; Business class and economic class/ travel tourists. b. Passengers can choose other preferred airline, such as AirAsia. power is moderated, market attractiveness is moderate as well. 4. Threats of substitute a. While travel in domestic destination, passenger can choose other mode of transportation; such as bus, and train. b. On international destination, passengers can choose other airline, or can travel by ship. threats of substitute is high, market attractiveness is low. 5. Intensity of rivalry a. Intense price war from AirAsia- everyone can fly =.=# b. Competition from other international Airline. intensity of rivalry is high, market attractiveness is low. As a conclusion, market attractiveness is low; MAS is operating in a competitive environment.

ABDT5114 Product Management Tutorial 4 Answer

June 11, 2011

Question 3
There are several ways to legally discourage competition:  Product differentiation may effectively augment the product s tangible features with such intangibles as image, reputation and services.  Capital, technology required to compete effectively may discourage potential rivals (the costs of financial, time and effort related to switching may be increase).  Firms may lock up the most desirable middlemen in exclusive dealing arrangements.

Question 4
There are some major characteristics of categories exhibiting intensive rivalries are high: 1. Competitors are numerous/balance- when there are many competitors, market competition will increase, competitors are fight against each other to gain biggest market share. Before this, telecommunication market has numerous of competitors, like Digi, Celcom, TimeCell, Maxic, and TM Touch. With Maxis merge with TimeCell, Celcom merge with TM Touch, the market become balance, and the 3 telecommunication companies are now quite even and bitter competitors. 2. Competitors have equal size- intensive of rivalry Is high when competitors is in equal size, in term of resources, capital are indifferent. This mean, competitors can do and follow whatever the companies do, and it s hard to differentiate stand up in this high intensive rivalries. 3. Products are undifferentiated- when there are similar and undifferentiated product with competitors, customer will switch to competitors very easily. This in turn will cause company in loss of customers and profit. 4. Switching cost is low- mean customers are free to goes to competitors, cause comp any loss in customers. 5. There is excess production capacity- excess production mean low sale volume. This might be cause by rivalry or competitors attack. 6. Exist barrier are high- mean here is the company is hard to exit the industry, even facing loses, the company may not easy to get out and stop to loss, because the cost of exit is very high. For example, banking industry and insurance industry. They cannot simple quit the business, as they quit they need to pay very high compensation to the investor or ow ner.

Question 5
Bargaining power of buyer is high when: i. Product bought is a large percentage of the buyer s cost. ii. Product bought is undifferentiated. iii. Buyers earn low profits. iv. Buyer threatens to backward integrate. v. Buyer has full information. vi. Substitutes exist for the seller s product or service.

ABDT5114 Product Management Tutorial 4 Answer

June 11, 2011

Question 6
Technology is change very fast now ma. 1st. Company spend more in R&D. the problem is, whether they can earn it b ack before another new technology be invented. 2nd. technology might be a problem to so me firm that not adapt in high technology. This firm might produce in higher cost rather in low cost, b ecause they does not adapt in new technology. As a result, they might lose competitive advantage. 3rd. internet technology will bring negative image to a company also, like competitors use internet to attack it s the firm, and cause firm image drop, worst by worst, this might cause company share go down, 4th. Technology can replace human power. Good technology might reduce the employment. And also some technology might pollute our environment as well. As a result, the use of technology might push the company in to bad name. Community/ society might argue that the company is not a good company as they does not protect the welfare of the society/ or nature.

Question 7
1. Political forces a. Political forces refer to laws, regulation, government agencies, and pressure group that influence or limit various organizations and individual in a given society. Regulation exists to protect companies and consumers. b. BAFIA 1989- An Act to provide new laws for the licensing and regulation of institutions carrying on banking, finance company, merchant banking, discount house and money-broking businesses, for the regulation of institutions carrying on certain other financial businesses, and for matters incidental thereto or connected therewith. c. AFTA agreement- reducing tariffs and eliminating other trade barriers. This in turn means increased attractiveness of the countries to foreign direct investment. 2. Economic forces a. Economic forces refer to factors that affect consumer purchasing power and spending patterns. For example, global and regional economic condition, level and distribution of income had a dramatic impact on consumer spending. b. Liberalization of trade and investment across countries in this region, by providing option on foreign currency accounts to various market segments. 3. Social-cultural forces a. Social-cultural forces refer to demographics shifts and cultural changes. Demography is the study of human population in term of size, age, gender, race, occupation and education levels. These changes may have some implication on business.

ABDT5114 Product Management Tutorial 4 Answer

June 11, 2011

b. Changes in aging population, the growth of double -income families, and increase level of education--- design product mux such as saving and investments accounts option to match with the changing customer needs. 4. Technological forces a. Technological forces refer forces that create new technologies, creating new product and market opportunities. Each wave of technological inventions can replace existing products and companies. b. Internet Maybank has created a corporate website and offer online banking services for online customers. In order to guard security for online transactions, Maybank implemented TAC (transaction authorization code) system.