Sunday, April 20, 2008
yo 6E (and btw en hao here)
[i shall use mostly small letters since i dont like capping]
since my PI's on instant noodles, i decided to expand on it via econs! alright, its not because of that mainly, i discovered some interesting stuff while searching around for statistics...
notice that everything from econs (as we know it now) fits in nicely...
alright... although i dont know much about the instant noodles industry (most statistics came in the form of "business reports" which are not free), i'll try my best to link econs to this industry.
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External Links 1:
http://mobchina.blogspot.com/2008/02/china-is-largest-instant-noodle-market.htmlwhat it says:1. [instant noodles has a market estimated at US$6.6 billion in china alone]
2. [super cheap prices ranging from RMB 1 - 5 (US$0.14 - o.70)] *(note: there are some premium brands which cost more.. those that are below RMB 2 are usually the inferior versions)
3. total advertising cost spent by this industry? a whopping US$237.4m (1.7B RMB)
4. ["Despite the size of the market, China's noodle industry is dominated by one company"] does this remind u of the likes of monopoly? unfortunately, its
not a monopoly (it should be oligopoly). with such a large consumer base, its more likely the consumers can have a greater power (eg. they can choose to protest / boycott) than the firm in setting an equilibrium price.
From the website: Its Master Kong brand commands a lofty 43.3 percent (market) share. Its closest rival, Japanese joint venture Nissin Hualong, has 14.2 percent.
5. ["while branding can play a huge buying factor, whats more important is how good its when you eat it"] - consumer satisfaction dominates advertising, no questions asked.
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External Links 2:
http://www.chinadaily.com.cn/olympics/2007-07/31/content_6005255.htmwhat it says:1. ["price of instant noodles rose by ~20% or more in july 2007"]
2. ["Industries are banned by the Price Law from colluding with each other to manipulate prices"]
bet you didnt know theres such a law! yes this law exists in china as well as singapore. if the authorities spot any irregularities in pricing, they'll step in.
3. ["major instant noodle makers, [...] had met and made a collective decision to raise prices"]
also a new concept... you realise that small and medium firms cannot influence the price, but this is what happens if they co-operate and agree on their prices.
4. ["China makes 51 percent of all instant noodles in the world with more than 46 billion packets produced last year."]
half of instant noodles you see here are "made in china"
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External Links 3:
http://news.bbc.co.uk/2/hi/7004409.stmwhat it is:a less related link to econs, although it doesnt mention anything about instant noodles, it shows that price of wheat has increased (factor of production) which also caused firms to raise prices (as noted in the previous paragraph)
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i'll rewrite the econs concepts with regards to instant noodles
here goes: (note that this only applies to developed countries)
concept of elasticity:why PED of instant noodles is elastic:-assumption 1: many substitutes** (eg. rice / bread - as staple food)
why PED of instant noodles is inelastic:-assumption 1: no substitutes** (nothing is as convenient & cheap & tasty as this)
-assumption 2: habit / addiction (some people are addicted to instant noodles hmmm)
-fact 1: instant noodles are usually considered necessities
overall PED of instant noodles: likely to be price inelastic
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why YED of instant noodles is inelastic:-fact 1: basic good (high degree of necessity)
-fact 2: desire of good is satisfied very easily
-variable 1: poor people will buy much more instant noodles (and also for rich people perhaps during recession) but YED should remain inelastic (except for situations e.g. stockpiling)
**note: instant noodles is usually classified as an inferior good (for the average / rich) but can be listed as normal good also (for the poor)
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why CED of instant noodles is elastic:-fact 1: there are many firms producing instant noodles (as in price vs qty between 2 brands of instant noodles)
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why PES of instant noodles is elastic:-fact 1: many firms in the industry
-fact 2: short production period
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taxes:nothing much to mention as i dont have the statistics, but do note that in the event of natural disaster / etc, some govt may allow temporary subsidies to up production of instant noodles for disaster-relief efforts
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cost theoryvariable factors include:amt of flour / flavouring (MSG, sodium salts) / sachets / packaging used to store noodles
labour salary (manpower) / electricity & water bills
fixed factors include:use of the factory / outlet, the machines involved (these machines are usually highly specialised and therefore non-transferable), cost of transport vehicles (if not rented)
**again, i dont have enough statistics to prove some cost theory concepts... i'll try to go find, but no guarantees. meanwhile, do note that there are big and small firms in the instant noodles industry, and the big ones can afford to purchase expensive equipments specially tailored for them by tech-savvy firms.
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market structures11.4.1 characteristics of the market1. no. / size of sellers : few large sellers (for singapore, the more famous brands include nissin, maggi, super)
2. no. of buyers: high, consumers cannot influence price
3. nature of product: mostly homogeneous (buyers are indifferent, no need for advertising)
4. entry and exit: barrier to entry & exit: high setup costs involved
5. knowledge of buyers/sellers: imperfect (like who wants to buy a business report anyway?!)
6. factor of mobility: capital is highly specialised, not easily transferred
type of market structure: hmm i still think its oligopoly.
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alright... thats it for now. time to sleep, will update this soon.
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Changes Log:
*1st update: 23 april 0015hr (changed text is in bold + underline)
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-oah ne nat iivx sordnaxela lit tenrag
*ahhh i feel so sad i cant post my nick+name backwards ) :
-tan en hao (currently loves FF nine! :)
Output time: 11:26 PM
