Background Of Company: Telekom

Introduction

In economic field, there are many types of market structure. The common market structures that we all knew are perfect competition, monopoly, monopolistic and also oligopoly.

In this assignment, we will put priority on monopoly and perfect competition. As we all knew that, monopoly is a situation where there is one seller which the firm is the industry and many buyers in the market whereas monopolistic is a type of market structure where a large number of firms produce close but not perfect substitute product.

In this assignment, our group has chosen Telekom Malaysia as the example of company that practices monopoly structure. Throughout this group assignment, we managed to found a lot of information about Telekom Malaysia. The information are shown below :

Background of Company (Telekom)

Telekom Malaysia BHD (TM) is the first telecommunication monopoly company in the country that still remains top telecom group and a fast-growing international player in the Asian region. The company continues to control the fixed-line telecom market with more than 4.6 million access lines.

In addition to the fixed-line business, TM is one Malaysia’s leading cellular telephone provider and leading Internet provider, TMNet, which is also the sole broadband provider in the country. In addition to their operation in Malaysia, TM has developed a network subsidiaries and investments internationally with the focus on Asian region. In 2005, the company is listed on the Kuala Lumpur Stock Exchange.

Characteristic

In monopoly, there are many characteristic. One of the characteristic is that there are no competition between the companies as it is only seller in the market. Telekom Malaysia is the largest telecommunication company in Malaysia. It has a monopoly on the fixed line network.

Besides that, there are many buyers in the market. Since Telekom Malaysia was build, many citizens in Malaysia started to use their services. It also has a considerable market share of the mobile communications market after acquisition of Celcom and TM Touch. Not only have that, Telekom Malaysia right now also offered narrowband and broadband connectivity which is now the DSL broadband provider in the industry.

Thirdly, the characteristic of monopoly is that the firm enjoys abnormal profits. Because there are no other competitors, the firm has the power to monopolies the price of their goods and services. In this matter, the consumer have no other choice, so they will either choose or leave the product.

The last characteristic of monopoly is barriers to entry which the firm will reduce the ability of new firms to enter the market and compete.

Advantages and Disadvantages between Monopoly and Perfect Competition

There are some advantages and disadvantages of monopoly. Firstly, the advantage is monopoly has only one firm and the market is the price maker. Hence, the price of the goods and services will be stable. Secondly, due to the absence of the competition, monopoly firm can receive the maximum profits from their sales.

On the other hand, the first disadvantage is a high price of a low quality good and service may be charged on the consumer. Secondly, because of no competition may lead to low quality and outdated good and service.

There are also some advantages and disadvantages of perfect competition. The first advantage is due to the presence of the competition, consumers can get a lower price of the goods and services. This is because all the firms produce identical products and the firms are price taker. Secondly, in the perfect competition, the firms must compete to each other to increase their sales. Because of this situation, it will encourage each firm’s efficiency and it will also encourage faster economic growth.

However, perfect competition has disadvantages too. Firstly, unequally of the distribution of the goods and services because of the allocation of resources is determined by the distribution of income. Secondly, externalities are ignored. For example, when there are external benefits, too little goods are produced and when there are external costs, too much goods are produced.

Comparison between Monopoly and Perfect Competition

In the perfect competition, there are a large number of buyers and sellers in the market competing with each other. The price fixed by the industry is accepted by all the firms operating in the market. While in the monopoly, there is only one single seller but a large number of buyers. Hence, the firms are price maker and they all decide the prices.

Besides that, a perfectly competitive firm makes only normal profit in the long run. This is because there is freedom of entry and exit. But under monopoly, the firm continues earning profits even in the long run since there are strong barriers to the entry of new firms in the monopolistic industry.

Conclusion

In a nutshell, throughout this assignment, we are able to learn more about monopoly and monopolistic market structure. Apart from that, our group members and I also learnt that we have to work together effectively and efficiently to make sure our task get done well.

Although we faced some challenges and difficulties when doing this assignment, but we still make through it with everyone’s collaboration. Besides that, we have also learnt about the specialty of monopoly and monopolistic market structure in economics view.