Dutch Lady Milk
Industries Limited (“Dutch Lady Malaysia”) is a premium brand in Malaysia dairy
industry leader. It was founded in 1963, is the first milk company listed on
Bursa Malaysia, the local stock exchange in 1968 in Malaysia. Its holding
company Royal FrieslandCampina, the Dutch multinational, the world's largest
dairy companies. Dutch Lady Malaysia manufactures and sells a wide range of
high quality domestic and export markets infant formula, milk powder, condensed
milk, UHT milk, and other dairy products and juices, yogurt and fruit drinks. The
company is located in Petaling Jaya, Malaysia. Currently, the Dutch Lady
Malaysia’s major milk category is milk. (Dutch Lady Milk Industries Berhad,
2013) In 1987, the company has an equity restricting, in order to comply with
the government’s new economic policies. Capital to expand RM16 billion. In the
same year, Dutch Lady produces pasteurized milk production. Dutch Lady produces
growing up milk yogurt and introduced in late 1988 with the competitive
strategies of their competitors. Dutch Lady Milk Industries in 1989 has been
delisted from the Singapore Exchange, in compliance with the government’s
pro-promote national policies Kuala Lumpur stock exchange. (UK essays, 2013)
Factors of production are grouped into three categories. Dutch
Lady Milk Industries Limited employed a total of 634 labours. (Dutch Lady Milk
Industries Berhad, 2013) The quality of labour depends on human capital, which
is the knowledge and skill that people obtain from education, on- the- job
training, and work experience. Dutch Lady Milk Industries Limited employed use
milking mechanics to produce milk. (Parkin 2013) Use of natural gas is used in
Dutch Lady Malaysian manufacturing operations, trends in consumption and use of
continuous monitoring. (Wikipedia, 2013)
When all the resources can be varied, that there is no fixed price, so
that when the price increases, the producer has a greater ability to increase
the QS. So, QS is increase proportionally more than the price increase.
Shortages will increase the total market supply. Over time, the supply will be
more responsive to price (elastic) are able to increase production levels in
technology to improve productivity, new producers enter the market.
Scalability, and then said that it would be higher. Therefore, the price
elasticity of supply is elastic. Other factors affect
price elasticity of supply. If the good is capable of being stored, and then
supplied to the supply is more elastic can be easily increased. Soy milk is
elastic, since it can store one month, and storage milk only 2-3 weeks.
(Student 6, 2013)
 | |||
| Figure 1(a) |
Short run period, at
least one input is fixed prices, the producer's ability to increase QS limited,
because it is limited to increase the variable inputs in order to increase the
QS is less than the price would change. Therefore, price elasticity of supply
is inelastic. Fixed resource production of milk may be the land of the space,
because they may be more land to survive and produce milk than cows. However,
the final output of each input will start to decrease, new input will not
result in output of fixed resource, it is unable to increase the production.
The curve shows an input fixed, so even if prices rise, the producer's ability
is limited, because of the increased variable inputs QS can increase the amount
of restrictions. (Student 6, 2013)
 |
| Figure 1(b) |
An increase in the
price of soy milk.
Milk
and soy milk can be substitute goods. An
increase in the price of soy milk will affect people to increase their consumption of milk,
thereby shifting the demand curve for milk out from D1 to D2 in Figure 2(a). This shift in demand will cause the
equilibrium price to rise from P1 to P2 and the equilibrium quantity to
increase from Q1 to Q2. (Wake Forest University, 2013)
 |
| Figure 2(a) |
An increase in the
price of milk.
Milk
is the main ingredient in butter. When
the price of milk increase the quantity of butter decrease. The supply curve for butter will shift from
S1 to S2 in Figure 2(b), resulting in a higher equilibrium price, P2, covering
the higher production costs, and a lower equilibrium quantity, Q2. (Wake Forest University, 2013)
 | ||||
| Figure 2(b)
With price ceiling,
government should set the price lower than last times to benefits the poor.
However, if government set the price too low it will cause a shortage of milk.
In the lowest price, suppliers are not willing to supply more milk. The demand for
milk increase as the price is low because many people can afford it. This cause
the shortage because quantity demand exceeds the quantity supply. When the
price goes down people will buy more. When the price is set too low, the search
activity will increase. Many people will search the lowest price and black
market will occur. If the government set the price higher than the equilibrium
price, it will cause surplus. Therefore, government should set the price too
low or too high.(Microeconomics Article, 2013)
Necessity good is people still need them no matter what
their income is. If the price of necessity good increase, quantity demanded
remain constant. For example, milk is a necessity good because is there is no
substitute for milk. So, this can prove that milk has a relatively inelastic
price elasticity of demand. The changes in milk price from P1 to P2 do not
affect the quantity demand of milk which is Q1 to Q2. (Mei Ting, 2013)
If
milk can have elastic price elasticity of demand as people would have more time
to change their habits and find for more alternatives. This
suggests that price changes since time is another factor that can affect the
elasticity of demand. As time goes by, people will have more time to adjust the
price changes, and open many other alternatives. Therefore, it will reduce milk
demand from the first quarter to the second, which means that changes in the
price of milk, from P1 to P2 in great demand impact, which will have a
relatively elastic demand. (Mei Ting, 2013)
If
the price of milk increase, the market will show that supply for milk is
inelastic. Therefore producers for soy milk and milk powder will not able to
increase supply, because the milk producers need take more time to product and
supply the milk. Before milking machines were invented farmers only milk six
cows per hour, if the farmers use milking machines can milk more than 200 cows
per hor. In the curve, it shown that firms has only a fixed amount of stock in
hand to meet the needs of any factor that cannot be changed. (Student
6, 2013)
Milk
industry is a perfectly competitive market structure a good example. Perfect
competition is an economic term used to describe an industry where there is a
significant number of competitors, no one brand has a huge market share. Almost
homogeneous products (such as milk, pork, beef, bean) and relative prices
remain unchanged, regardless of brand. In a perfectly competitive market,
advertising is usually advertise products, rather than a specific brand. This
is because all competitor homogeneous makeup of the fact that small market
share makes waste, if a company is trying in any major way to differentiate
their products in the market promotion efforts. Milk is
extremely uniform, so consumers, there is no reason to marketing products can
have a big impact. There is no cost of entry (local or national dairy can start
selling companies can sell) and the competition is not on the product
frequently. Advertising milk and other products in a perfectly competitive
industry, basically doing to improve the overall demand for the product - which
will spillover effects, all homogeneous competitors. (Golgstein, 2009)
Dutch Lady Milk Industries Limited (the "DLMI")
is a premium brand in Malaysia dairy industry leader. It was founded in 1963
and listed on Bursa Malaysia, the local stock exchange in 1968 became the first
dairy company. DLMI RM16.0 million to RM64.0million in 2002 through three of its issued share
capital increase of a bonus issue. Its holding company, Royal Friesland
multinationals in the world's largest dairy companies. (TradeSignum, 2013)
(1412 words)
Reference List
1. Dutch Lady Milk Industries Berhad (2013) Annual Report. Available from: http://www.dutchlady.com.my/sharedfiles/financial/files/DL_AnnualReport_2012.pdf
[Accessed 22 October 2013]
2. Dutch Lady Milk Industries Berhad (2013) Company Profile. Available from: http://www.dutchlady.com.my/en/home.asp?page=company&subpage=comp_profile
[Accessed 21 October 2013]
3. Goldstein, D. (2009) Advertising and Market Structure – Perfect Competition. Available
from: http://daniellgoldstein.wordpress.com/category/perfect-competition/
[Accessed 24 October 2013]
4. Mei Ting, P. (2013) Microeconomics. Available from: https://sites.google.com/site/piongmeitingeportfolio/education/semester1/microeconomics
[Accessed 24 October 2013]
5. Microeconomics Article (2013) Baby Milk Price. Available from: http://microarticles04.blogspot.com/2012/10/individual-2-baby-milk-price.html
[Accessed 24 October 2013]
6. Parkin, M. (2013) Economics: Two Big Economic Questions. 10th ed. Pearson
Education Limited.
Student 6 (2013) Economics.
Available from: http://www.nzqa.govt.nz/assets/qualifications-and-standards/qualifications/ncea/NCEA-subject-resources/Economics/91401-A/91401-EXP-A-student6-001.pdf#page=1&zoom=auto,0,850
[Accessed 24 October 2013]
7. TradeSignum. (2013) Dutch Lady Milk Industries Bhd. Available from: http://www.tradesignum.com/company/dlady
[Accessed 24 October 2013]
8. UK essays (2013) Analysis
of Dutch Lady Milk Industries Berhad Finance Essay. Available from: http://www.ukessays.com/essays/finance/analysis-of-dutch-lady-milk-industries-berhad-finance-essay.php
[Accessed 21 October 2013]
9. Wake Forest University (2013) Key for Homework Assignment for Chapter 2. Available from : http://www2.ucy.ac.cy/~kgmarina/classes/files/205/Key%20for%20Homework%2002.pdf
[Accessed 24 October 2013]
10. Wikipedia (2013) Dutch
Lady Milk Industries Berhad. Available from: http://en.wikipedia.org/wiki/Dutch_Lady_Milk_Industries_Berhad
[Accessed 23 October 2013]
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