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)

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Reference List

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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]

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6. Parkin, M. (2013) Economics: Two Big Economic Questions. 10^th 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]

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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]