Extended Essay Economics

Extended Essay Economics HL
To what extent are the tuition centres in

Taipan Business Centre, USJ, a form of monopolistic competition?
Ahmad Kamal, Syanaz Bazil

000592-0049
Abstract
The tuition industry grown exponentially throughout years in Malaysia, thus it has
interested me to pursue a research to confirm its market structure and type of competition upon
reading an article in a newspaper. This curiosity has led me to form a research question To what
extent are the tuitions in Taipan Business Centre USJ, a form of monopolistic competition?
The location of the investigation is narrowed into a small area of neighborhood in order for
the investigation to be more precise. Primary data used are interviews which was conducted with
7 out of 12 firms in TBC and surveys among 60 parents picked using random sampling in order to
know their behavior towards the market structure. Secondary data is obtained in form of literature
review and supporting data for primary data. Few limitations include not being able to get some
confidential data but this does not prevent from the research to continue.
The barriers of entry are medium as it has little elements of brand loyalty and a few
procedures. Although the product differentiation does not seem significant, survey from parents
shows that it plays a big role as its more of a non-price determinant rather than price determinant.
Thus, price war does not exist as price maintained at a range of market price accepted and
producers take actions independently. The fact that theres entry and exit of firms and ability of
firms to gain abnormal profit in the short run confirms it is a monopolistic competition. There is
fairly perfect knowledge among consumers, and second degree price discrimination is practiced.
In conclusion, tuition centres in TBC are a form of monopolistic competition as it has
strong product differentiation, with slight oligopoly features due to existence of little brand loyalty,
and price rigidity.
(294 words)
Page 1 of 76


000592-0049
Introduction
Malaysia is a developing country that is now focusing on the tertiary sector, especially on
education. One of the services that is popular in this country is tutoring service in tuition centres1.
According to a local newspaper, the demand for tutoring services in tuition centers2 has been on
the rise in the past few years and this may lead to some firms to compete by price 3 this extra
curricular has by now become such an integral part of the primary education, in the same way as
classroom teaching and learning, that one conditions the other, and one cannot function without
the other4 (UNESCO 1991: 41). This reflects as the amount Malaysians spent in education which
is 5.79 billion in 20095.
Education system in Malaysia is very academic oriented and nowadays parents see tuition
centres as a necessity despite of their high cost of living6.Tuition classes among the students back
in the old days used to be a supplementary for the weak students to do better in class but now its
more of a trend.
The topic seems interesting to me due to the socio economic background of the people in
my area, and whether they choose based on price or other factors and their behavior towards the
Tuition centers, Wikipedia<http://en.wikipedia.org/wiki/Tuition_center>, Accessed 20 March 2013

The tuition industry might be unfamiliar to some countries, as it is more recognized as private tutoring services
outside Malaysia
3
Nevash Nair Increase in demand for tuition in Malaysia, The Star 5 November 2012
<http://thestar.com.my/news/story.asp?file=%2F2012%2F11%2F5%2Fmetrobiz%2F12265348&sec=metrobiz>
[Accessed 20 March 2013]
4
Centre for Public Policy Studies, ELECTIONS 08 DAILY POLICY FACTSHEET #6: EDUCATION 21
<http://cpps.org.my/resource_centre/Education.pdf> [Accessed 30 April 2013]
5
Trading Economics, PUBLIC SPENDING ON EDUCATION; TOTAL (% OF GDP) IN MALAYSIA, 2009
<http://www.tradingeconomics.com/malaysia/public-spending-on-education-total-percent-of-gdp-wb-data.html>
[Accessed 4 May 2013]
6
Cost of living in Subang Jaya Malaysia, Numbeo <http://www.numbeo.com/cost-ofliving/city_result.jsp?country=Malaysia&city=Subang+Jaya > [Accessed 4 May 2013]
2
Page 2 of 76


000592-0049
competition between the tuition centres. This leads me to form the research question To what
extent are the tuition centres in Taipan Business Centre (TBC), USJ, a form of monopolistic
competition? The fact that there is more than 10 tuition centers7 in a small area and suspicions
about whether they compete by price war or non-price, the investigation is worth to be carried out.
Hypothesis
With this, it is hypothesized that TBCs tuition centres as a monopolistic competition. This was
assumed due to the large number of competitors in such a small area. Besides that, the firms in the
area focused more on competing based on non-price competition. Lastly, due to having some
monopoly power, they managed to practice second degree price discrimination.
Appendix A : Name of tuition centres
Page 3 of 76


000592-0049
Methodology
The primary research is carried out by interviewing 9 out of 13 tuition owners only due to
confidentiality. The site is also restricted in order to make the research more accurate. Questions
that is essential to aid the characteristics of the market structures, collusion and competition is
asked.
Price of each of the services is collected and analyzed to investigate on whether the tuition
centres practice price discrimination or not to enhance their price setting ability. They are taken on
the same day as price can fluctuate. Questionnaires using random sampling on the same day is
given to 60 parents to find out about their behavior in purchasing tuition classes service.
The secondary research is carried out by getting resources from the internet and books.
Page 4 of 76


000592-0049
Review of Economic Concepts

Market structures have a significant impact on the firms to determine the nature of the
competition and the pricing 8.
Perfect Competition
The obvious thing about perfect competition is theres a huge number of buyers and sellers.
Thus, any actions of consumer or producer would not effect on the market price 9, so it is a pricetaker. The products are homogenous, which means of the same or a similar kind or nature10
means the products have no difference between one another. Therefore, demand curve is perfectly
elastic since there are many substitutes. There is very low barriers to entry and exit.11 Lastly, every
economic agents are aware of the market price of the commodity.
Monopolistic Competition
This type of competition characterized by many buyers and sellers but have slight
monopoly power due to product differentiation. Differentiated products is also known as
heterogenous product12 which is similar but not identical13. It has many buyers and sellers but the
downward-sloping demand curve is due to it being more elastic because of the product
A2 Micro: Market Structure, Conduct & Performance, Tutor2U [Accessed 23 April 2013]
<http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revision-market-structureconduct-performance>
9
Dominick Salvatore. Microeconomics Theory and Applications Fourth Edition, USA,Oxford University Press, 2003
pg 265
10
Homogenous, Merriam Webster [Accessed 30 April 2013] <http://www.merriamwebster.com/dictionary/homogeneous>
11
pg 265
12
pg 354
13
Ibid: 354
Page 5 of 76


000592-0049
differentiated. Barriers to entry and exit are low as the cost of getting in is easy but each of the
firm has its small percentage share in the industry which wont affect the whole market.
Oligopoly
Oligopolies are a few firms dominating the industry by having a large fraction of
percentage share over the total industry. Each of the market can be determined by using its
concentration ratio. Each producer competes to gain market share by lots of ways such as attempt
on advertising and differentiating the product. An interesting feature of this type of competition
would be the competition are so stiff that every action of a firm would have a significant effect on
the others. They are interdependent to each other.
14
Figure 1: Characteristics of each market structure
14
Ch. 10 Perfect Competition, Monopoly, and

Monopolistic Competition, Department of Economics, Volkswirtschaftslehre, Johannes Kepler Universitat
<http://www.econ.jku.at/members/WinterEbmer/files/Teaching/managerial/lecture4.pdf>
Page 6 of 76


000592-0049
FINDINGS AND ANALYSIS OF INVESTIGATION

DETERMINANTS OF THE MARKET STRUCTURE MONOPOLISTIC COMPETITION
5.1 Low barriers to entry
Barriers to entry is a very important criteria when determining the type of market structures.
It is defined as something that prevents a firm to entering a certain industry, can be artificial or
natural. These includes the cost of setting up, economies of scale among existing firms,
government regulation, cost of marketing and brand loyalty 15 that already exist among
consumers16.
Name of tuition centre
Startup Costs (approximation)(RM)
Number of years
Mawar
RM 80 000
<1 year
STC
RM 40 000
15 years
.Get A
RM 60 000
5 years
Sri Restu
RM 70 000
5 years
Kancil
RM 50 000
14 years
TTC
RM 80 000
5 years
Tutorial Lee
RM 70 000
5 years
Generasi Muda
RM 60 000
5 years
Mastermind
RM120 000
5 years
15
Economics Online, Barriers to entry

http://www.economicsonline.co.uk/Business_economics/Barriers_to_entry.html [Accessed: September 18, 2013]
16
BARRIERS TO ENTRY, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 20002013. [Accessed: September 28, 2013].
Page 7 of 76


000592-0049
Table 1: Barriers to entry cost and years

Based on the figures collected, each of the tuition centre has varied cost depending on
which year they started and the facilities which is between RM 40000 to RM 120 000, and the cost
of setting up the tuition center is not expensive, as they only need to build a few classrooms with
air conditioners and hire tutor with a reasonable salary depending on their qualification17.
Name of
Number of
Miniumum
tuition centre
teachers hired
Qualification
Full Time
Part Time
Experience
Average
Of the teacher salary per
of teachers
teacher
(approximate)
Mawar
Diploma
10 years
RM2000
STC
13
Degree
More than 6
RM1500
years
Get A
15
Degree
5 years
RM2500
SPM, Diploma and
10-20 years
RM2000
5 years
RM2000-
Sri Restu
Kancil
Degree
20
Diploma
RM4000
TTC
15
20-25
Diploma,
4-10 years
RM3000
Bachelors
and Masters
Tutorial Lee
Degree
5-20 years
RM2000
Generasi
Degree
At least 3
RM2000
Muda
17
years
Interview with the tuition owners
Page 8 of 76

Mastermind
Degree

000592-0049
5 years
RM3000
Table 2 : Number of tutors and details

The process that they have to go through while setting up the business is quite tedious but
manageable by getting an educational license18 from the Petaling District Education Department
Selangor State Education Department.
Skills that is needed is to qualify as a tutor is a good qualification degree where Bachelors
Degree would be sufficient. However, through the interview conducted with Mr. Anthony from his
tuition centre which claimed Specializes in Mathematics and Science on the signboard, he
honestly said that he didnt even finish his tertiary education but manage to set up the business
successfully through the trust he gained from the parents. Despite of this surprising results, a
degree is a must as parents are fussy about the tutors qualification19.
Barriers to entry does not necessarily have to be associated with costs, it can be
demonstrated through brand loyalty. By having a brand name that the customer have relied their
trust on, it is making it harder for a new firm to be opened up. Kancil, TTC, Get A, Mastermind
and Mawar has their own branches in other areas and Kancil has been established for up to 15
years. Mawar tuition center has been certified as the first tuition franchisor in Malaysia. 20 Thus,
the existence of brand loyalty can be proven through survey.
18
Interview with tuition owners

Survey from parents
20
http://www.mawar.edu.my/v2/index.php?ref=business
19
Page 9 of 76


000592-0049
How long have you been sending your kids to the

same tuition centre?
Less than 6 months
1 year
1-3 years
4-6 years
more than 7 years
9%
9%
33%
28%
21%
Chart 1: Evidence of brand loyalty
The survey has shown that 33% of the population in this area have sent their kids to the
same tuition centre for more than 7 years, followed by 28% for 1-3 years and 21% for 4-6 years.
This shows that the brand loyalty is slightly strong among the customers, as majority of the parents
stayed with the same tuition centre based on their experience sending their elder children to the
same tuition centre, but its not strong enough to classify it as an oligopoly.
Other than that, through observation, it is seen that the demand is segregated by the
socioeconomic factor. Some of the tuition centres are race-based, as there is almost 100% Chinese
students who went to the Chinese-owned tuition and vice versa. This might raises the barriers of
entry of the industry in this area as there is some element of brand loyalty.
In terms of economies of scale, TTC, Kancil and Mawar Tuition Centre are the big guys
in the area as they are the firms that have branches in other area. According to an interview, some
Page 10 of 76


000592-0049
teachers in TTC come back and forth from their other branch which is in Sunway 21. Kancil tuition
centre also gave extra classes during any crash course 22 programme. This advantage may not be
gained by other tuition centres.
It is fair to conclude that the barriers of entry is medium. Evidence showed that the barriers
to entry is low, but findings about brand loyalty has slightly increases the barriers of entry. The
results has proven that the market cannot be perfectly competitive. Besides, perfect competitive is
rarely exist in the real world.
21
Interview with Mr Lim from TTC

Crash course is a course designed to prepare students for last minute study for national examinations that
include predicted questions which might appear on the exams
22
Page 11 of 76


000592-0049
5.2 Product differentiation

In the tuition industry, services are intangible. Therefore, explicitly it is hard to
differentiate whether it is a heterogenous or a homogenous. The teaching method in every
tuition centres are the same which is through a lecture with approximately 20 students per
class, 10 being the lowest and 30 the highest. However, implicitly after some preliminary
reading in the textbook, the product could be differentiated as when the product is viewed
in a way that is different from other goods and services. 23 This is proven in the brochure
attached and the survey as most parents are concerned about the quality of the teacher
teaching.
Name of
Number of students
Name of tuition
Number of students
tuition centres
per class
centre
per class
Mawar
10-15
Sri Restu
15
STC
20-25
Kancil
15
Get A
25-30
TTC
20
Generasi muda
5-10
Mastermind
15
Table 3: Number of students per class
23
Blink, Jocelyn & Dorton, Ian, Economics for IB Diploma Course Companion, Oxford University Press, 2011
Page 12 of 76


000592-0049
Figure 2: Number of students per class in the frequently asked questions
Page 13 of 76


000592-0049
Figure 1: Tutors qualification in the Brochures Frequently Asked Questions

By quality, the respondents said that they would like to have a qualified, and experienced
teacher to teach their children how to ace the exams and number of students per class so attention
can be given more24, followed by other non-price determinants of demand. However, due to price
being ranked as the second most concerned factor, price competition might exist and will be
discussed later.
When a product is differentiated, a product is seem to be superior compared to another, and
the firms have some market power. This results in the downward sloping of the demand curve
24
Survey with parents
Page 14 of 76


000592-0049
becomes more inelastic, therefore an increase in price will not have a significant effect on the
quantity demanded.
Graph 1 : Elastic demand

dd
Graph 2 : Inelastic demand
Mastermind tuition centre is a good example of this situation as it has spent a large amount
of money to increase the degree of its service differentiation. This is evident through their
infrastructure25 and the co-curricular events26. Thus, they are able to charge a higher price. Kancil,
25
26
Appendix : Pictures
Table 3
Page 15 of 76


000592-0049
Mastermind, and few others aggressively spent a lot of money on advertising 27 while the rest rely
on the word of mouth28 of the customers who are satisfied with the service given. Advertising may
or may not be effective. If it is, this will shift the demand curve to the right, but if it is not, it will
still have to bear the additional cost. In order to maximize the profit marginal revenue must equal
the marginal cost.
Name of Van to send Activities with the Awards
tuition
them to go to students
Recognition
centre
tuition
Ceremony
Mawar
Not available
Outdoor activities Available
& Amount of spent on

Marketing (RM)
400
to avoid stress and

strengthen
relationship
STC
Not available
Not available
50
.Get A
Not available
Revision courses
Available
300
Sri Restu
Not available
Not Available
100
Kancil
Available
Activities
Available
500
TTC
Available
Available
400
Tutorial
Not available
Not Available
200
Not available
Seminars
Not available
200
Available
Trips
Available
700
Lee
Generasi
Muda
Mastermi
nd
27
28
Table 3
Interview with Mr Anthony, Sri Restu tuition owner
Page 16 of 76


000592-0049
Table 3: Non-price competition

In order to make its demand curve more inelastic, product variation is practiced by some
tuition centres that provides private classes which has less than 5 people per group. As it is now
becomes more appealing, the firm could charge a more competitive price as there is added value.
Factors affecting the demand for tuition

services in Taipan USJ
8.55
8.2
7.5
7.05
7.55
6.45
5.4
5.35
4.75
3.2
2
Graph 3: Factors affecting the demand for tuition services

(Rating 1-10)
Based on the data collected, quality of tutors is viewed as the number one factor that determines
their demand towards the purchase of tuition services. The rating average for the highest would
be 2 for quality and availability of transport comes last with average ratings of 8.55. In this
context, the respondents defined quality as qualification of the tutor and teaching
Page 17 of 76


000592-0049
experience. 29 Parents also stated that they do look for statistics of achievement and results of the
previous students. This is evident through leaflets and websites about their past achievements.
30
Figure 2: Mawar Achievements and Results on their website
29
Survey from the parents

Mawar Achievements and Results Accessed 24 August 2013
<http://www.mawar.edu.my/v2/index.php?ref=results >
30
Page 18 of 76


000592-0049
Figure 3: Kancils Achievement and Results from their Facebook page31

Therefore, this means that the firms succeeded in letting the differentiation in the product more
important than price, hence resulting in them becoming a price maker, to some extent.
31
Kancils facebook page

https://www.facebook.com/photo.php?fbid=411337585604925&set=a.397148710357146.94299.3960693004650
87&type=1&theater
Page 19 of 76


000592-0049
ANALYSIS ON CUSTOMER DEMOGRAPHY AND PERCEPTION

Are you more likely to send your children to attend one
subject, few subjects or the whole package?
One subject
Few subjects
25%
Whole package
19%
56%
Chart 2: Usual amount of tuition subjects bought
Results from the parents survey also shows that most of the parents said they are more
likely to send their children to attend few subjects that they are weak in, and they would have send
to the whole package if it wasnt too expensive. This also implies that parents are also sensitive to
price.
Page 20 of 76


000592-0049
Average Salary of Parents per month in RM

1000 below
10001-3000
30001-5000
5001-10000
10000
unstated
4%
13%
8%
21%
27%
27%
Chart 3: Average Salary
The majority of the parents income per person is 3000-10000. This shows that they have
slightly above average income and can afford to pay high price for tuition classes.
Opinion on the price of tuition classes

Very expensive
Expensive
2%
Normal
Cheap
Very cheap
0%
7%
37%
54%
Chart 4: Opinion on price
Despite of the demographic background, most parents still think the price of the tuition
classes are expensive. This is due to a lot of demand which causes the prices to increase.
Page 21 of 76


000592-0049
Number of kids they have

1 to 2
3 to 5
6 to 8
9 and more
skipped
0% 2%
1%
35%
62%
Chart 5: Number of kids per household
The number of kids that an average family has is 3-5 suggests that the family may be
struggling to pay for tuition classes and more sensitive to price
Number of childrens in the tuition centre

1 to 3
3 to 5
0%
6 to 8
unanswered 1
13%
9%
78%
Chart 6: Number of children sent to tuition centres
Most of the parents send only 1 to 3 children to the tuition centre as tuitions are
expensive and children with most important exams are prioritized
Page 22 of 76


000592-0049
Do you think by sending your kids to the

tuition centre, their results will be improved?
Yes
No
5%
95%
Chart 7: Confidence in tuition classes
Despite the question being too indirect, this shows that parents really do believe that by sending
their children to tuition classes, their children will excel, therefore it is a need to have although
its not a necessity, thus demand for tuition classes is inelastic.
With the abolishment of UPSR and PMR, will you still

send your children to attend classes at tuition
centres?
Yes
No
no answer
7%
19%
74%
Chart 8: Willingness to send if there is not a need
National examinations for primary & secondary school (UPSR and PMR) in Malaysia is
abolished soon, and despite not having big examinations, many parents will still send their
children to tuition centres.
Page 23 of 76


000592-0049
5.3 Many buyers and sellers and types of competition

Market share32 is a reliable way to determine which type of market structure a certain
industry in a certain area belongs to. Since there is 12 firms in the area of the investigation, I will
determine its share by the number of enrolments of each tuition centers.
Number of enrolments of students

(approximation)
100
100
150
150
150
200
300
350
80
Mawar
STC
Get A
Sri Restu
Kancil
TTC
Tutorial Lee
Generasi Muda
Mastermind
Chart 9: Number of enrolments of students
Based on the number of enrolments, it is seen that Kancil has the highest number of
students, followed by Get A and TTC33. However it would be superficial to conclude that these 3
firms are made up of the largest dominant in the industry at this area if data is solely based on
enrolment.
It is also important to note that there are 12 primary school and 9 secondary school students in the
area which indicates that there is a large number of buyers. 34
32
the percentage of a firms output over the total output of the market in the industry.
Interview with all Mr Mogen and Mr Shahrul about their knowledge of percentage share of each business
34
Appendix K: Name of schools in Subang Jaya
33
Page 24 of 76


000592-0049
All of the tuition owners interviewed has said there was no collusion, and they have only
relied on non-price competition, which are brand loyalty, customers trust and word of mouth35.
If one other firm lowers their price, would

you follow them?
0
Yes
No
Chart 10: If one firms lower their price
All of the firms have answered no if one firm lowered. This further strengthens that there
is no interdependence among the firms to collude.
If two or more firms lower their price,

would you follow them?
2
5
Yes
No
Chart 11: If two or more firms lower their price
35
Interview with Mr Shahrul, STC tuition owner
Page 25 of 76


000592-0049
For the second question, all of the firms said that they will not lower their price if one
until three firm decides to lower their price. However, if theres four or more firms decides to
lowers their tuition price, half of them still said they wont lower their price, while the other half
hesitated and may be tempted to lower their price.
Graph 4: Usual amount of tuition subjects bought
Tuition centres in this area are would not have price war36 as it is very unlikely for them
to lower their price despite of the competition. If one of the firms raised their price higher than
the mean price of tuition classes (for SPM), it would have an elastic demand. However, if any of
the firms decide to lower their price, the demand for tuition would become inelastic, and
tempting other firms to follow suit. Due to price rigidity, all the firms have the price that ranges
from RM 60-70. It can be interpreted that most of the tuition centres do not compete by price,
thus further strengthens the claim that they are a type of monopolistic competition.
36
Appendix D:An online newspaper article about the demand for tuitions in Malaysia
Page 26 of 76


000592-0049
The theory of monopolistic competition states that it can obtain abnormal profit in the short
run. The firms in the industry will have a graph similar to a monopoly. Other potential firms are
attracted to open up their business in the industry, thus shifting the supply curve to the right, and
this causes the demand curve to shift to the left as some of the sales are being taken away by the
new firms. This can be demonstrated through the actions of Mawar tuition centre which has just
recently been opened earlier this year in this area. 37
Graph 5: Monopolistic competition in the short run (abnormal profits)
37
Interview with Mawar tuition centre owner
Page 27 of 76


000592-0049
38
Figure 2 &3: Before and after tuition centre (Pusat Kemuncak Jaya) at the same place
Another tuition centre called Pusat Kemuncak Jaya has been closed down around April. After
contacting the owner who closed down by myself it has been said that they have moved to a better
and cheaper place, in terms of facilities, and also less competitive.
Graph 6: Monopolistic competition in the short run (losses)
The firm said they had made a short run loss, therefore they has moved to the next best opportunity
cost by moving to a place that is more profitable and has less tuition centres to compete with. This
38
Pusat Tuisyen Kemuncak Jaya [Accessed 30 May 2013] <http://myjmecc.blogspot.com/2011/08/pusat-
tuisyen-kemuncak-jaya-usj9-subang.html>
Page 28 of 76


000592-0049
causes exit of certain firms due to losses that has been made, thus creating more demands for other
substitutes.
In the long run, every firm will only achieve normal profit 39 or zero economic profit in the long
run, because more firms are coming to this industry due to insignificant barriers of entry. During
the interview, there are a few tuition owners who had a good qualification, such as a degree in
Economics and a Masters in Electrical Engineering. This can be assumed as the implicit cost that
contributes to the economic profit. Speaking of the amount of profit, Encik Shahrul40 said that they
managed to obtain abnormal profit in the short run.
Graph 7: Monopolistic competition in the long run
39
40
When economic cost = total revenue (explicit and implicit cost) = 0

Owner of STC tuition center
Page 29 of 76


000592-0049
5.4 Imperfect information

The availability of the information of all the prices of the tuition services can be obtained, but it is
tedious to know as one needs to put in effort by calling or going to the tuition centre itself.
How many tuitions do you survey first before

getting the right tuition?
1 to 2
3 to 5
6 to 8
11 to 13
14 to 15
unanswered
5%
9 to 10
0%
9%
2%
50%
34%
Chart 12: Number of times surveying before purchase
Most parents would only look for 1-5 tuition centres as there is many tuition centres in that area.
This is also may be due to word of mouth that says a tuition centre has a very good teacher, low
number of students per class and effective exam papers.
Page 30 of 76


000592-0049
Are you aware of the cheapest and the most

expensive tuition centres in this area?
Yes
No
no answer
7%
32%
61%
Chart 13: Awareness of the general tuition

classes price
As most firms are not aware of every tuition centers, each of them need to find a way to inform
the customers by advertising.
The parents do not have completely have perfect information, hence it is fine to say that
they have fair information about the tuition classes.
Page 31 of 76


000592-0049
6.0 Further Investigation

Price discrimination can also be observed and to prove that it is monopolistic competition, it must
have monopoly power. In order to prove this, I have graphed the prices for all products, for UPSR41
, PMR42 and SPM 43 to see if their range of prices matches each other or not.44
Ujian Penilaian Sekolah Rendah (UPSR) tuition classes rate

300
Price in RM
250
200
150
100
50
0
Name of tuition centres

1 subject
2 subjects
3 subjects
4 subjects
5 subjects
Graph 7: Price list for UPSR students
41
Primary School Evaluation Test (UPSR) is a national examination that needs to be taken before they complete
primary school. Source : http://en.wikipedia.org/wiki/Primary_School_Evaluation_Test_(Malaysia)
42
Lower Secondary Assessment (PMR) is a Malaysian public examination taken in order to determine whether the
student is placed at science stream or arts stream Source:
http://en.wikipedia.org/wiki/Penilaian_Menengah_Rendah
43
Malaysian Certificate of Education, (SPM) is a national examination taken in order for the student to pursue their
studies at tertiary level http://en.wikipedia.org/wiki/Sijil_Pelajaran_Malaysia
44
Some firms that does not have the graph either dont offer the subjects at that particular level or unwilling to
give out the information on prices
Page 32 of 76


000592-0049
The maximum price that can be seen above is RM250 with the purchase of 5 subjects. Some of
the tuition centres does not offer tuition classes for UPSR.
Price in RM
Penilaian Menengah Rendah (PMR) tuition classes

rate
450
400
350
300
250
200
150
100
50
0

1 subject
2 subjects
3 subjects
4 subjects
5 subjects
6 subjects
Graph 8: Price list for PMR students

As the qualification goes higher, more subjects are offered, and the highest price that can be seen is RM
360.
Page 33 of 76


000592-0049
Sijil Pelajaran Malaysia (SPM) tuition classes rate

700
600
Price in RM
500
400
300
200
100
0

1 subject
2 subjects
3 subjects
4 subjects
5 subjects
6 subjects
7 subjects
8 subjects
Graph 9: Price list for SPM students

The amount of tuition class price per month that can be the most expensive would be in Mastermind
Tuition Centre, which reaches almost RM700 with 8 subjects. Get A only offer packages, instead of one
subject.
The average for tuition fees for one subject in UPSR is RM52, in PMR is RM 64 and SPM
is 69. The prices does not deviate from each other very much, however, tuition centres like Sri
Restu and Mastermind managed to charge higher prices due to high degree of product
differentiation. The datas show that SPM has the most expensive fees. As the examination becomes
harder and more important, there is more demand for it.
It is worth noticing that as the number of subjects bought increases, the price is discounted.
The consumers elasticities are divided according to their preference. This can be classified as
Page 34 of 76


000592-0049
second degree price discrimination. With the discount provided, customers are more tempted to
buy more subjects, causing a bigger revenue that can be obtained instead of only one subject.
Conclusion
The aim of the investigation was to find out whether the tuition centres in Taipan subscribe to
monopolistic competition and the hypothesis is accepted.
Barriers of entry are confirmed to be medium as there are elements of brand loyalty and
selling costs. This eliminates the possibility of it being a perfect competition. Throughout the
interview with the tuition centres owners, it is found that the centres do not compete mainly on
price. Findings show that customers rely more on the non-price factors despite their high cost of
living. Each of the product is differentiated differently, as they have their own strategies to attract
customers. Lastly, there is evident though observation there is a huge population of schoolchildren
and tuition centres in the area. It is proved that in the long run, more centres are entering and
leaving the industry. Each centres managed to only gain normal profit. It has been confirmed there
is no collusion between the centres. As an imperfect market, it manages to practice price
discrimination and earns extra profit. It can be concluded that the tuition centres in Taipan Business
Centre is a monopolistic competition.
Some data are unable to obtain due to confidentiality issues but it didnt stop the research
to be conducted successfully. There are rumors saying that government will implement a tax
exemption to the tuition industry. This causes less cost of production for the firms and will ease
the parents burden. This will largely affect the education industry and more investigation could
be conducted. Other than that, research could be extended by looking into home tuition which may
shift the whole competition into a new level.
Page 35 of 76


000592-0049
REFERENCES
Books
1. J. Beardshaw 1992 Economics : A Students Guide. Third Edition Long Acre, London:
Pitman Publishing
2. The Theory of Monopolistic Competition: A Reorientation of the Theory of Value,
(Cambridge, MA: Harvard University Press, 1962 Accessed 28/7/2013
1.
2.
3.
4.
Websites
Malaysia, education & tuition: A background guide, Tuition Plaza
<http://www.tuitionplaza.com/articles/abackgroundguide.htm> [Accessed 28th of April
2013]
How to open tuition center?, Lowyat Forum
<http://forum.lowyat.net/topic/399406/all> (Accessed 28th of April 2013)
The Nature Of Tuition Industry In Malaysia , Blogspot
<http://econsguide.blogspot.com/2009/06/demand-supply-of-tuition-teacher.html>
(Accessed 29th of April 2013)
Let talk about tuition fee in Malaysia Tuition Mall
<http://www.tuitionmall.com/blog.php?nblogid=2> (Accessed 29th of April 2013)
5. How much money to open a tuition centre?, Lowyat Forum,

<http://forum.lowyat.net/topic/511022/all>
(Accessed 29th of April 2013)
6. A tuition is a serious business , Tuition Plaza
<http://www.tuitionplaza.com/articles/atuitionisseriousbusiness.htm> (Accessed 29th of
April 2013)
7. Goodman, John, Will Price Competition Lead To Quality Competition? Health Affairs
Blog 21st April 2011 <http://healthaffairs.org/blog/2011/04/21/will-price-competitionlead-to-quality-competition/> [Accessed 5th of July 2013]
8. Benefits of competitive markets, Tutor 2u
<http://www.tutor2u.net/economics/content/topics/competition/competition_importance.
htm> [Accessed 5th of July 2013]
9. Douglas A Ruby, Price Discrimination, Digital Economist 2003
<http://digitaleconomist.org/pd_4010.html >(Accessed 5th of July 2013)
10. How to set up a tuition centre (Tatacara Penubuhan Pusat Tuisyen), Perlis Education
Department, Ministry of Education
<http://jpn.moe.gov.my/jpnperlis/v2/index.php?option=com_content&view=article&id=3
03:tatacara-penubuhan-pusat-tuisyen&catid=46:sektor-pendidikan-swasta-a-pendidikankhas&Itemid=62> [Accessed 5th of July 2013
Page 36 of 76


000592-0049
BIBLIOGRAPHY
Books
1. Blink, Jocelyn & Dorton, Ian, Economics for IB Diploma Course Companion, Oxford
University Press, 2011
2. Dominick Salvatore. Microeconomics Theory and Applications Fourth Edition,
USA,Oxford University Press, 2003
Websites
3. Tuition centers, Wikipedia, <http://en.wikipedia.org/wiki/Tuition_center >[Accessed 20
March 2013]
4. Nevash Nair Increase in demand for tuition in Malaysia, The Star 5 November 2012,
<http://thestar.com.my/news/story.asp?file=%2F2012%2F11%2F5%2Fmetrobiz%2F122
65348&sec=metrobiz> [Accessed 20 March 2013]
5. Centre of Public Policy: ELECTIONS 08 DAILY POLICY FACTSHEET #6:
EDUCATION 21
< http://cpps.org.my/resource_centre/Education.pdf > [Accessed 30 April 2013]
6. PUBLIC SPENDING ON EDUCATION; TOTAL (% OF GDP) IN MALAYSIA, 2009
<http://www.tradingeconomics.com/malaysia/public-spending-on-education-totalpercent-of-gdp-wb-data.html> [Accessed 4 May 2013]
7. Cost of living in Subang Jaya Malaysia, Numbeo <http://www.numbeo.com/cost-ofliving/city_result.jsp?country=Malaysia&city=Subang+Jaya> [Accessed 4 May 2013]
8. A2 Micro: Market Structure, Conduct & Performance, Tutor2U
<http://www.tutor2u.net/blog/index.php/economics/comments/a2-economics-revisionmarket-structure-conduct-performance>[Accessed 23 April 2013]
9. Homogenous, Merriam Webster<http://www.merriamwebster.com/dictionary/homogeneous> [Accessed 30 April 2013]
10. Ch. 10 Perfect Competition, Monopoly, and
11. Monopolistic Competition, Department of Economics, Volkswirtschaftslehre, Johannes
Kepler Universitat
<http://www.econ.jku.at/members/WinterEbmer/files/Teaching/managerial/lecture4.pdf>
12. Pusat Tuisyen Kemuncak Jaya, Blogspot <http://myjmecc.blogspot.com/2011/08/pusattuisyen-kemuncak-jaya-usj9-subang.html>[Accessed 30 May 2013]
13. Primary School Evaluation Test (UPSR) Wikipedia
,<http://en.wikipedia.org/wiki/Primary_School_Evaluation_Test_(Malaysia)> [Accessed
1 July 2013]
14. Lower Secondary Assessment (PMR) , Wikipedia
<http://en.wikipedia.org/wiki/Penilaian_Menengah_Rendah>[Accessed 1 July 2013]
15. Malaysian Certificate of Education (SPM), Wikipedia
<http://en.wikipedia.org/wiki/Sijil_Pelajaran_Malaysia> [Accessed 1 July 2013]
Page 37 of 76

APPENDICES
Page 38 of 76

000592-0049


000592-0049
APPENDIX A:
1. Mawar
2. STC
3. Get A
4. Sri Restu
5. Kancil
6. TTC
7. Cu-A
8. Mastermind
9. Era Tinta
10. Inisiatif
11. Generasi Muda
12. Sri Mawar Bestari
13. Tutorial Lee
Page 39 of 76


000592-0049
Appendix B:
Interview questions with the tuition
centre owners
Page 40 of 76


000592-0049
INTERNATIONAL BACCALAUREATE DIPLOMA PROGRAMME
MARA College Banting : ECONOMICS EXTENDED ESSAY

Subang Business Centre a form of monopolistic competition?
NAME OF RESPONDENT:
POSITION:
TUITION CENTRE:
BARRIERS TO ENTRY
1.1 How long has the business been in the industry in this area? // Berapa lamakah bisnes
encik/puan telah ada dalam industri ini di kawasan USJ 9?
0-5 years
5-10 years
10-15 years
15-20 years
20-25 years
>25 years
1.2 How hard is it for sir to get into the business? // Susahkah encik untuk memasuki bisnes ini?
Very Hard// Sangat susah
Hard // Susah
Normal // Biasa
Easy // Senang
Very Easy // Sangat senang
How// Bagaimana: __________________________
2.2 What procedures do you need to go through to get into this business? // Prosedur apa yang
perlu dilalui oleh encik/Puan untuk masuk ke dalam industry ini?
_____________________________________________________________________
3. PRODUCTS/SERVICES
What are your products/services?
Page 41 of 76


000592-0049
If brochure is available, please provide.

The number of packages offered, its price, and the time (weekdays or weekends).
PACKAGES
PRICE (At weekdays)
PRICE (At weekends)
Evening
Evening
Night
Std 1 (All subjects)

Std 1 (1 Subject)
Std 2 (1 Subject)
Std 3 (1 Subject)
Std 4 (1 Subject)
Std 5 (1 Subject)
Std 6 (1 Subject)
UPSR
Bengkel
Ceramah
Form 1 (All subjects)
Form 1 (1 Subject)
Form 2 (1 Subject)
Form 3 (1 Subject)
PMR
Form 4(1 Subject)
Form 5 (1 Subject)
SPM
Form 6 (1 Subject)
Is there a one-to-one private/special class?
How about the extra classes during holidays? Bengkel etc?

Page 42 of 76
Night


000592-0049
Which subject is the most demanded? Rank from 1 being lowest to 10 being highest
Bahasa Malaysia
English
Mathematics
Additional Mathematics
Physics
Biology
Sejarah
Perakaunan
Ekonomi Asas
Geografi
Bahasa Mandarin
ICT
PRICING
How do you price your services? Based on?
Quality of lecturers (their qualification)
Lowest price in the area
As advised by the franchisor
Market price
1. Do you keep track the price of the competitor? // Adakah anda sentiasa mengetahui harga
bisnes lain?
Yes // Ya
No // Tidak
2. Do you know whats the maximum price of the consumer is willing and able to purchase?
// Adakah anda mengetahui berapakah harga tertinggi yang pelanggan mampu dan rela
membeli?
Yes // Ya
No // Tidak
How much//Berapa?: ________________
3.2 Does government intervention exist in determining the prices? // Adakah kerajaan
memasuk campur dalam menentukan harga?
Yes // Ya
No // Tidak
How do you set prices at different periods of time? // Bagaimanakah anda menentukan harga?
Adakah berbeza pada setiap musim?
Page 43 of 76

000592-0049
Do price discrimination exist?
During school holidays? (Peak hours)
First degree price discrimination
(consumer pays the exact price that the consumer is prepared to pay)
Second degree price discrimination
Firms set higher prices when the demand on the season is higher (Peak time)
Is demand is inelastic during exam seasons?
Do you collude with other firms? // Adakah anda bekerjasama dengan perniagaan lain dalam
menentukan harga?
COSTS
What is the average total cost per month?
How big is the size of tuition centre?
- Fixed Cost (Rent)

________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
- Variable Cost
( How much electric bills, maintenance etc)
No of teachers hired (full time) ______________________

(part time) _____________________
Qualification of the teachers : _________________________
The range of their salary: ______________________________
How many years are their teaching experience :_______________
Were they an examiner:__________________________________
Other extra costs and expenses (for advertising, transportation for students (if available)
How many people do you hire to help with the business? //Berapa ramai pekerja yang anda
ambil untuk menolong bisnes? (Kerani/family to handle the management)
1-2 people // 1-2 orang
Page 44 of 76


000592-0049
3. SALES & PROFIT

Number of students per class? ___________________
Number of classes available? ____________________
How many students are enrolled per month? ____________
How many students are enrolled per year? ______________
By elementary school _______________________
By secondary school? _______________________
Total number of students the tuition centre is having now per year/per course (form)?
____________________________
Is there an increase or decrease in number of students every month?
__________________________________________________
The statistics kemasukan pelajar
How much is the percentage of new intake? Do people come to their extra
ceramahs/motivational/extra class holiday session?
_____________________________________________
4. COMPETITION
5. If one other firms lowers their price will you follow them? // Jika lebih dari tiga
perniagaan yang menjual produk yang sama anda menurunkan harga, adakah anda akan
menurunkan harga juga?
Yes // Ya
No // Tidak
6. If two or three other firms lower their price, will you follow them? // Jika lebih dari tiga
perniagaan yang menjual produk yang sama anda menurunkan harga, adakah anda akan
menurunkan harga juga?
Yes // Ya
No // Tidak
6. ADVERTISING & PROMOTION (NON-PRICE COMPETITION)

Non-price competition
Page 45 of 76


000592-0049
Things that can be done to market the product.

Brand loyalty
For example is by providing the transportational service so that people will be more
attracted as parents these days are too busy to send their children to respective tuition
places.
Extra benefits for orphans
Additional benefits Extra Sulit papers from negeri
Free motivational talk
7
Do you advertise? // Adakah anda mengiklan?

Yes // Ya
No // Tidak
How?// Bagaimana:_____________________________________
How much is the cost to advertise:
What kind of promotion strategies did you use?
___________________________________________________________________
- The statistics every year of how many students who have gotten straight As in their big
examination.
- How has the pemansuhan PMR and UPSR has affected their business?
________________________________________________________________________
-
Is there any change (increase/decrease) in price for the last 2 years?

_________________________________________________________________
Has there been any complaint from parents?
_________________________________________________________________
Has there been any evidence of brand loyalty?

_________________________________________________________________
Page 46 of 76


000592-0049
APPENDIX C:
Survey among the customers (parents)
INTERNATIONAL BACCALAUREATE DIPLOMA PROGRAMME

MARA College Banting : ECONOMICS EXTENDED ESSAY
Consumer Questionnaire
This questionnaire is designed to investigate To what extent are the tuition centres in
Taipan Business Centre, USJ, a form of monopolistic competition
question. /Sila tandakan untuk setiap soalan.
Page 47 of 76


000592-0049
1.
Whats your race? // Apakah bangsa anda?

Malay // Melayu
Chinese // Cina
Indian // India
Others please specify // Lain-lain sila nyatakan : ________
2.
What is the highest level of education that you have achieved? // Apakah tahap tertinggi kelulusan anda?
SPM / O-Level / IGCSE
STPM / A-Level / Other Pre-U// Lain-lain pra-universiti
Diploma
Bachelor // Sarjana Muda
Master // Sarjana
PhD // Doktor falsafah
3.
What is your salary per month? // Berapakah gaji anda dalam masa sebulan?
RM1,000 and below / RM1,000 dan ke bawah

RM1,001 RM3,000
RM3,001 RM5,000
RM5,001 RM10,000
RM10,000 and above / RM10,000 dan ke atas
4.
How important is education to you? //Adakah pelajaran dan pendidikan penting bagi anda?
Not important // Tidak penting
Slightly important // Sedikit Penting
Important // Penting
Very important // Sangat penting
5.
How many kids do you have? // Berapa banyakkah anak yang anda ada?
1-3 3-5
6-8
>9
6.
Are all your children in a tuition centre? If yes, how many children? // Adakah semua anak anda ditempatkan di pusat
tuisyen? Jika ya, berapa orang anak yang pergi ke tuisyen?
1-3
3-5 6-8
7.
Do any of your children go to more than one tuition centre? If yes, how many tuition centres? // Adakah anak anda
pergi lebih daripada satu pusat tuisyen? Jika ya, berapa?
1-2
3-4 >5
8.
How many tuition centres do you survey first to get the right tuition for your children? // Berapa banyak kah pusat
tuisyen yang anda akan survey dahulu sebelum anda menempatkan anda di pusat tuisyen tersebut?
1-3 3-5 6-8 9-10 11-13
14-15
9.
How much do you spend on your childrens tuition (per month)? // Berapa banyakkah duit yang dibelanjakan untuk
tuisyen anak anda?
RM100 and below / RM100 dan ke bawah
RM101 RM300
RM301 RM500
RM501 RM1000
RM1,000 and above / RM1,000 dan ke atas
10. On what range of money would you willing to pay for a tuition (per subject)?// Kadar berapakah duit yang anda sanggup
membayar tuisyen (untuk satu subjek)?
RM 20-RM30
RM31-RM40
RM41-RM50
RM51-60
RM61-70
RM71-80
RM81-90
RM91-100
Page 48 of 76


000592-0049
RM100
11. On what range of money would you be willing to pay for a tuition (all subject)?// Kadar berapakah duit yang anda
sanggup membayar tuisyen (untuk semua subjek)?
RM100-200
RM201-RM300
RM 301-400
RM 401-500
>RM 500
12. Your opinion on the price of tuition classes? // Pendapat anda tentang harga kelas tuisyen?
Very expensive // Sangat mahal
Expensive // Mahal
Normal/Affordable // Berpatutan
Cheap // Murah
Very cheap // Sangat Murah
13. How long have you been sending your kids to tuition centres?// Sudah berapa lamakah anda telah menghantar anakanak anda ke pusat tuisyen?
Less than 6 months // Kurang daripada 6 bulan
1 year // 1 tahun
1 year-3 years // 1 tahun 3 tahun
4-6 years // 4-6 tahun
>7 years // Lebih daripada 7 tahun
14. Please rank most important factor that affect your purchase of the service (tuition services)? // Apakah faktor paling
penting yang mempengaruhi anda dalam menghantar anak anda ke sesebuah pusat tuisyen?
Quality // Kualiti
Price (Budget) // Harga
Students Preferences // Kesukaan pelajar
Brand loyalty // Kesetiaan terhadap jenama
Services // Servis
Location// Lokasi
Reputation // Reputasi
Facilities // Kemudahan
Word of mouth // Khabar dari rakan-rakan yang dipercayai
Availability of transport // Kemudahan servis pengangkutan
15. Please rank the least important factor that affect your purchase of the service (tuition services)? // Apakah faktor paling
kurang penting yang mempengaruhi anda dalam menghantar anak anda ke sesebuah pusat tuisyen?
Quality // Kualiti
Price (Budget) // Harga
Students Preferences // Kesukaan pelajar
Brand loyalty // Kesetiaan terhadap jenama
Services // Servis
Location// Lokasi
Reputation // Reputasi
Facilities // Kemudahan
Word of mouth // Khabar dari rakan-rakan yang dipercayai
Availability of transport // Kemudahan servis pengangkutan
16. Do you think by sending your kids to the tuition centre, their results will be improved? // Adakah dengan menghantar
mereka ke pusat tuisyen, anda berasa keputusan peperiksaan mereka akan meningkat?
Yes // Ya
No // Tidak
17. If the tuition centre that youve been sending your kids to has not made any change in their schools results, would you
change to other tuition centres / home tuitions? // Jika pusat tuisyen yang anak anda pergi tidak membawa apa-apa
perubahan kepada keputusan peperiksaan anak-anak anda, adakah anda akan menghantar mereka ke pusat tuisyen lain
atau tuisyen persendirian?
Page 49 of 76


000592-0049
Yes // Ya
No // Tidak
18. What are your reasons for sending your kids to tuition centres and not school tuitions/home tuitions? // Apakah sebab anda
menghantar anak-anak anda ke pusat tuisyen dan bukan pusat tuisyen persendirian ataupun kelas tambahan di sekolah?
19. ? If school provides school tuition would you rather go to school tuition and not private tuition centres? Why? // Jika
sekolah anak anda menawarkan kelas tambahan, adakah anda menghantar mereka ke kelas tambahan di sekolah
sahaja dan bukan tuisyen persendirian?
___________________________________________________________
20. If your income increases, would you more likely to spend more in fancier tuition centres with more expensive but
experienced, and good reputation lecturer? // Jika pendapatan anda meningkat, adakah anda cenderung untuk
membelanjakan wang anda di pusat tuisyen yang lebih mahal?
Yes // Ya
No // Tidak
21. How many percentages of discount do you need to convince you to go to the other tuition centres? (assuming its the
same lecturer and the time for the class is the same) // Berapa peratus diskaun yang anda perlu untuk meyakinkan anda
untuk anak anda pergi ke pusat tuisyen lain? (jika guru yang mengajar ialah orang yang sama dan masa untuk kelas
tersebut adalah sama)
5%
10%
15%
20% 30% 50%
22. Are you aware of the cheapest and the most expensive tuition centres in USJ 9? // Adakah anda sedar akan kedai yang
menyediakan servis tuisyen yang paling murah dan paling mahal di Usj 9?
Yes // Ya
No // Tidak
23. With the abolishment of UPSR and PMR, will you still send your children to attend classes at tuition centres? //
Dengan adanya pemansuhan UPSR dan PMR, adakah anda akan masih menghantar anak-anak anda ke pusat tuisyen?
Yes // Ya
No // Tidak
Page 50 of 76


000592-0049
APPENDIX D:
An online newspaper article about the demand for
tuitions in Malaysia
The Star Online >

Monday November 5, 2012
Increase in demand for tuition in Malaysia
By NEVASH NAIR
nevashnair@thestar.com.my
Photos by AZHAR ARIF
Page 51 of 76


000592-0049
Help for exams: Alagesan (above) said when he started teaching from his home
initially, parents knocked on his door at midnight to enrol their children for his
classes.
The demand for tuition in Malaysia has catapulted what was once a cottage
industry to a million-dollar business
MALAYSIANS are accustomed to the tuition, especially in urban areas. Many would
have either attended tuition classes or at the very least known a classmate that
received tutoring in a centre or at home from a private tutor.
It has become the common solution for parents who want their children to excel
academically.
In a letter to the editor published in The Star on March 1, 2012, Aida Tan said:
Parents and guardians have lost faith in the teaching methodology that resembles
mass production without any quality check.
She added: Tuition has become an essential part of learning, owing to the breakdown
of the school teaching system.
Tan is just one of many Malaysians who have openly raised concerns over the rise and
rise of tuition centres.
The boom in tuition centres is easily attributed to the perception that the countrys
education system is flawed.
Teachers are overworked, underpaid and they have between 35 to 45 students in each
class. They now have certain key performance indicators to be met and they
Page 52 of 76


000592-0049
sometimes rush through their lessons, said one disgruntled parent who declined to be
named.
I have to send my child to a tuition centre so that he can catch up on his lessons and
ask any questions that he might have, the parent added.
An Asian F
When the character Mike Chang from the television musical Glee received an A- for
his chemistry exam the term An A- is an Asian F entered popular culture.
Jostling for attention: Some experts say the

number of tuition centres has doubled over the last decade.
Just like Changs fictional parents, Malaysian parents also place tremendous pressure
on their children to achieve good results in school.
In 2005, it was reported that, Malaysian parents fork out anywhere between RM200
and RM2,000 a month in tuition fees for each child.
According to Datuk Dr. Alagesan Arumugam, founder and managing director of
Creative Education Intellect Sdn Bhd, this figure has almost doubled today.
Page 53 of 76


000592-0049
We have become a nation obsessed with As, so much so that most straight-A
students now are not of the quality of those from 20 years ago, said Alagesan, who
adds that students should not be blamed for this lack of quality.
We have good syllabi and policies in place but we lack implementation in public
schools, said Arumugam who has been a tutor since 1982.
When I first started teaching from my home full-time in 1988, I had parents
knocking my door at midnight to enrol their children for classes. So in 1994, when I
decided to move into a centre, I had 300 students and it has been steady growth
since, revealed Alagesan, who frowns on the low quality of some educators in the
tuition centres that have been mushrooming due to increased demand.
Quantity over quality
According to the Education Ministry, there were 2,967 registered tuition centres with
194,567 students as at Dec 31, 2010.
Meanwhile, tutor-student matchmaking site tuitionplaza.com said the number of
tuition centres operating without proper registration is not known exactly, but is
estimated to at least match the legally operating ones.
According to industry experts, today, the number of tuition centres is double that
reported nine years ago.
Alagesan said with the large number of tuition centres located in the Klang Valley,
students have been empowered with the right to choose, thus quality is not top of the
list.
Price is a major factor these days. Even though parents are willing to fork out
hundreds of ringgit for tuition, new players are spoiling the market. Fees are reduced
and they play the volume game, said Alagesan.
Currently, Creative Education Intellect charges RM40 per subject. Each subject is
taught for 90 minutes per session.
Page 54 of 76


000592-0049
Alagesan: In 1994 when I decided to move into a

centre, I had 300 students and it has been a steady growth until recent times.
Private vs centre
Private tuition, referred to varyingly as home tuition, personal tuition, one-to-one
tuition, individual tuition and small-group tuition, is also gaining popularity in the
Klang Valley.
Tuitionplaza.com, on their website, says, Many feel that a private tutor is capable of
providing that extra push when needed because school teachers have too many classes
and too little time for individual attention. Especially when it is a year for major
examinations. Burdened by large classes, individual attention is an extremely rare
commodity in schools.
Tutors, on the other hand, will be attuned to the learning habits and skills of students
that the teaching process is customised for maximum understanding and retention.
Ahmad Hambal Noorsham, who has been a private tutor for six years, said he can
earn between RM40 to RM70 an hour.
I became a full-time private tutor last year as I enjoy teaching. My mother was a
teacher and I have been teaching for so many years now, he said.
Page 55 of 76


000592-0049
Ahmad explained that tutoring opportunities are always available as there are at least
five tutor-student matching websites in Malaysia, each with a very strong database.
He further revealed that a private tutor can earn between RM4, 000 and RM10, 000 a
month depending on the number of students the tutor takes on, though it is not an easy
ride to earn big bucks.
When I started private tutoring, it was difficult. I had to build my reputation and now
most of my students are through referrals, said Ahmad.
Both Ahmad and Alagesan believe tuition centres can co-exist alongside private tutors
as the market is big enough for both sets of players.
Different students have different needs. Some require personalised attention and
some can excel in a small group, said Alagesan.
1995-2013 Star Publications (Malaysia) Bhd (Co No 10894-D)
Page 56 of 76


000592-0049
APPENDIX E: Location of the tuition center using

Google Maps
Page 57 of 76


000592-0049
APPENDIX F : Photos of the tuition centre
45
46
47
45
http://www.google.com.my/imgres?um=1&sa=N&rlz=1C1LENN_enMY514MY514&hl=en&biw=1366&bi
h=667&tbm=isch&tbnid=HYfPmtqaDrgHPM:&imgrefurl=http://panpages.my/listings/my185935-kancileducation-group-sdn-bhd&docid=7FFyvUVEZ2u9wM&imgurl=http://s-yoolkimages.yoolk.com/72425F4A-99A2-11E1-B04C12314000960A.jpg&w=1525&h=945&ei=2Nl7UdaJO4b3rQf8mIDIDQ&zoom=1&ved=1t:3588,r:58,s:0,i:2
65&iact=rc&dur=675&page=3&tbnh=177&tbnw=285&start=36&ndsp=24&tx=164&ty=96
46
https://www.facebook.com/photo.php?fbid=438805506154930&set=a.438803872821760.89053.17465
5532569930&type=3&theater
47
https://www.google.com.my/search?rlz=1C1LENN_enMY514MY514&q=mastermind%20tuition%20usj%
209&psj=1&biw=1366&bih=624&bav=on.2,or.r_cp.r_qf.&um=1&ie=UTF8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=m997UZz0Bc_qrQem14DQDQ#imgrc=6qprzTK7qhaMM%3A%3BPrXgdZDByeiG6M%3Bhttps%253A%252F%252Fstatic.groupon.my%252F02%252F9
2%252F1346499059202.jpg%3Bhttp%253A%252F%252Fwww.groupon.my%252Fdeals%252Fklangvalley-kuala-lumpur%252FMastermind-Training-Academy%252F716596921%3B470%3B313
Page 58 of 76


000592-0049
APPENDIX G: Interview with the tuition owners
https://www.google.com.my/search?q=usj%209%20business%20centre&rlz=1C1LENN_enMY514MY514
&aq=f&um=1&ie=UTF8&hl=en&tbm=isch&source=og&sa=N&tab=wi&ei=dNl7UdCiBo2lrQeWnIGgBA&biw=1366&bih=667&sei
=2Nl7UdyfBInmrAeowoAw#um=1&rlz=1C1LENN_enMY514MY514&hl=en&tbm=isch&sa=1&q=tuisyen+
mawar&oq=tuisyen+mawar&gs_l=img.3..0i5j0i24l2.15594.16617.6.16896.6.6.0.0.0.0.170.695.2j4.6.0...0
.0...1c.1.11.img.cFnac9WAPx4&bav=on.2,or.r_cp.r_qf.&bvm=bv.45645796,d.bmk&fp=99abaef949b1a85
8&biw=1366&bih=667&imgrc=gTxc1lE8TFDBhM%3A%3BPiERYbM8gWkcFM%3Bhttp%253A%252F%252
Fwww.mawar.edu.my%252Fv2%252Fimages%252F1malaysia.png%3Bhttp%253A%252F%252Fwww.ma
war.edu.my%252F%3B336%3B203
Page 59 of 76

APPENDIX H:
Complete price list
GENERASI MUDA
Std 1- Form 1 RM50 each subject
Form 2-3 RM60 each subject
Form 4-5 RM70 each subject
GET A
All subjects
Std 5 RM180
Std 6 RM195
Ceramah RM200
F1 & F2 RM180
F3- RM235
F4- RM185
F5- RM 220
KANCIL
Page 60 of 76

000592-0049


000592-0049
ERA TINTA
Form 1-3 Each subject 55
Form 4-5 Each Subject 65 except RM 75 for Science Subjects
SRI RESTU
Form 5 Addmaths RM 90 Chemistry RM90 Physics RM90 Maths RM 90
Form 4 Addmaths RM90 Maths RM90 Physics RM90 Chemistry RM90
Form 3 Maths RM 80 Science RM80
Form 2 Maths RM70 Science RM70
Special Class 8 students per class
Form 1 Science RM60 Maths RM60
Form 5 Biology RM120 Sejarah RM 120 Science RM 120
Form 4 Biology RM120 Sejarah RM120 Science RM 120
Form 1 & 2, PMR & SPM Bahasa Malaysia RM120
STC
Level
Subject
Monthly Fees
Year 5
Bahasa Malaysia
1 Subject RM 50
Year 6 (UPSR)
(Pemahaman)
2 Subjects RM80
Bahasa Malaysia (Penulisan)
3 Subjects RM120
4 Subjects RM160
Form 1
Bahasa Malaysia, English,
1 Subject RM60
Form 2
Mathematics, Science,
2 Subjects RM90
Form 3 (PMR)
Sejarah, Geografi
4 Subjects RM 160
Package A: Bahasa+ 1 Subjek
6 Subjects RM190
Tambahan
Page 61 of 76


000592-0049
Package B: Bahasa Malaysia,

English, Mathematics &
Science
Form 4
Bahasa Malaysia, English,
Form 5
Mathematics, Science,
1 Subject RM 60
Additional Mathematics,
Physics, Chemistry, Prinsip
Akaun, Perdagangan &
Ekonomi
Revision Subject
1 Subject RM40
Basic Package + Literature
Bahasa Malaysia, English &
3 Subjects RM150
Package
Mathematics
Additional Subjects
Accounting Principles
1 Subject RM40
Business
2 Subjects RM 80
Economics
3 Subjects RM110
4 Subjects RM 140
Accounts Package A
Mathematics, Additional
3 Subject RM 150
Accounts Package B
Mathematics and Principles
3 Subjects RM150
of Accounting
1 Subject RM40
2 Subject RM80
Mathematics, Science &

Principles of Accounting
Additional Subject
Science
Science Package
Additional Mathematics,
1 Subject RM40
Physics & Chemistry
2 Subjects RM 80
Additional Subject
3 Subjects RM150
Page 62 of 76

Mathematics
Principles of Accounting
TTC
Subject
RM
70
140
180
220
260
300
7 and above
+35/subject
INISIATIF
Primary school (6 subjects)
Subject
RM
60
105
147
187
225
260
Secondary school (PMR)5 subjects

Subject
RM
65
120
170
Page 63 of 76

000592-0049

200
230
Subject
RM
65
120
170
215
255
285
315
Page 64 of 76

000592-0049


000592-0049
APPENDIX I: TABULATED
DATAS
Page 65 of 76


000592-0049
Number of students this year
Number of enrolled per year
Elementary
In
Out
10++
10++
Varies
Varies
Name of
tuition
Secondary
center
Mawar
STC
20
100
Get A
Sri Restu
53
3-4
Kancil
60
240++
5-10
5-10
TTC
80
200++
5-30
5-10
Cu-A
Mastermind
Era Tinta
Inisiatif
Generasi
Muda
Sri Mawar
Bestari
Page 66 of 76


000592-0049
Tutorial
Lee
Table 1: Entolment
Name of
Number
tuition
of
centre
teachers
Qualification Experience Salary

of teachers
Offers
Price
Private
for
Class?
private
class
hired
Full
Packages?
Part
Time Time
Mawar
Diploma and
20-50
above
Yes
Per subject
per
class
STC
13
Sri Restu
Degree and
More than
above
6 years
Degree and
20
RM60
Per subject
per
per
and
class
hour
packages
Per subject
10-20 years RM2-
above
Kancil
30-45
Yes
No
3K
Diploma and
5 years
above
2K-4K Yes
Per subject
VIP 9
and
per
packages
class
TTC
15
Diploma,
4-10 years
No
Per subject
20-
Bachelors
and
25
and Masters
packages
. Cu-A
Page 67 of 76

.Get A

000592-0049
No
Mastermind
Era Tinta
Per subject
Inisiatif
Generasi
Degree
At least 3
Muda
Yes
Yes
years
Sri Mawar
Bestari
Tutorial
Degree
5-20 years
Lee
Table 2: Product differentiation

Name of tuition
Number of years
Name of tuition
centre
Number of years
centre
Mawar
Less than one year
Era Tinta
STC
15 years
Inisiatif
.Get A
5-10 years
Generasi Muda
Sri Restu
5 years
Sri Mawar Bestari
Kancil
13-14 years
Mastermind
Page 68 of 76
0-5 years

TTC
2 years
Tutorial Lee
0-5 Years

000592-0049
. Cu-A
Table 3 : barriers to entry (experience)
Name of tuition
Startup Costs
Name of tuition
Startup Costs
centre
(approximation)(RM)
centre
(approximation)
(RM)
Mawar
RM 80 000
Era Tinta
STC
RM 40 000
Inisiatif
.Get A
RM 60 000
Generasi Muda
Sri Restu
RM 70 000
Sri Mawar Bestari
Kancil
RM 150 000
Mastermind
TTC
. Cu-A
Tutorial Lee
Table 4: Barriers to entry: cost
Number of classes in the
Page 69 of 76

Name of
Set the price
tuition centre
according to
Mawar

000592-0049
centre
Number of students
per class
Market price, as advised
10-15
by franchisor
STC
Market Price
20-25
Get A
Quality of the lecturers
25-30
Sri Restu
Quality of the lecturers
15
Kancil
Market price (according 20
15
to the socioeconomic
background)
TTC
Market price
20
Era Tinta
Inisiatif
Generasi muda
Sri
Market price
Market price
5-10
Mawar
Bestari
Cu-A
Tutorial Lee
Table 5 : Price setting
Subjects
Number of votes
Physics
Page 70 of 76


000592-0049
English
Mathematics
Biology
Chemistry
Sejarah
Perakaunan
Bahasa Melayu
Ekonomi Asas
Geografi
Table 6 : Subjects
Name of Van to send Activities with the Awards

tuition
them to go to students
Recognition
centre
tuition
Ceremony
Mawar
Not available
& Amount of spent on

marketing
Outdoor activities Available

to avoid stress and
strengthen
relationship
STC
Not available
.Get A
Not available
Sri Restu
Not available
Kancil
Available
Not available
Not Available
Activities
Available
Page 71 of 76
5000

TTC
Available

000592-0049
400
. Cu-A
Mastermi
nd
Era Tinta
Inisiatif
Generasi
3000
Muda
Sri Mawar
Bestari
Tutorial
Lee
Table 7: Non-price competition
Page 72 of 76


000592-0049
APPENDIX J: BROCHURES
Page 73 of 76


000592-0049
Appendix K:
The number of primary and secondary schools in USJ Subang Jaya, Selangor
Primary48
Sekolah Wawasan USJ 15

Sekolah Kebangsaan Dato Onn Jaafar
Sekolah Jenis Kebangsaan (Cina) Tun Tan Cheng Lock
Sekolah Jenis Kebangsaan (Cina) Tun Tan Siew Sin
Sekolah Tun Sambathan
Sekolah Kebangsaan Seafield 3
Sekolah Kebangsaan USJ 12
Sekolah Kebangsaan Seafield (USJ 6)
Sekolah Jenis Kebangsaan (Cina) Chee Wen
Sekolah Kebangsaan Seri Selangor USJ 4
Secondary
48
Sirius Scholar Study Skills (USJ Sentral)

Fairview International School (Sime UEP Industrial Park)
Sekolah Menengah Kebangsaan Seafield (USJ 2)
Sekolah Menengah Kebangsaan USJ 8
Sekolah Agama Menengah Bestari USJ 5
http://en.wikipedia.org/wiki/UEP_Subang_Jaya
Page 74 of 76

Appendix L:
Page 75 of 76

000592-0049


000592-0049
Rankings
10
11
Quality(Reputation of the
teacher)
75%
10%
5%
0%
0%
0%
0%
0%
10%
0%
0%
(45)
(6)
(3)
(0)
(0)
(0)
(0)
(0)
(6)
(0)
(0)
5%
55%
5%
15%
5%
0%
15%
0%
0%
0%
(0)
(0)
(0)
Price
0%
(3)
(33)
(3)
(9)
(3)
(0)
(9)
(0)
Students Preference
Brand loyalty
Services
Location
Reputation0
Just wanted to send them

because it is a need
Facilities
Word of mouth
Availability of transport
5%
15%
30%
10%
15%
5%
0%
5%
0%
0%
15%
(3)
(9)
(18)
(6)
(9)
(3)
(0)
(3)
(0)
(0)
(9)
0%
5%
0%
30%
5%
5%
15%
0%
5%
15%
20%
(0)
(3)
(0)
(18)
(3)
(3)
(3)
(0)
(3)
(9)
(12)
5%
5%
10%
15%
30%
5%
0%
20%
5%
5%
0%
(3)
(3)
(6)
(9)
(18)
(3)
(0)
(12)
(3)
(3)
(0)
0%
0%
20%
15%
15%
30%
5%
10%
5%
0%
0%
(0)
(0)
(12)
(9)
(9)
(18)
(3)
(6)
(3)
(0)
(0)
0%
5%
5%
5%
15%
10%
40%
5%
10%
0%
5%
(0)
(3)
(3)
(3)
(9)
(6)
(24)
(3)
(6)
(0)
(0)
10%
0%
0%
0%
0%
10%
10%
40%
15%
10%
5%
(0)
(0)
(0)
(0)
(0)
(6)
(6)
(24)
(9)
(6)
(3)
0%
5%
0%
0%
10%
5%
5%
15%
35%
15%
10%
(0)
(3)
(0)
(0)
(6)
(3)
(3)
(9)
(21)
(9)
(6)
0%
0%
15%
5%
5%
15%
5%
5%
5%
40%
5%
(0)
(0)
(9)
(3)
(3)
(9)
(3)
(3)
(3)
(24)
(3)
0%
0%
10%
5%
0%
15%
5%
0%
10%
15%
40%
(0)
(0)
(6)
(3)
(0)
(9)
(3)
(0)
(6)
(9)
(24)
Table 1: Factors affecting the demand for tuition services (Percentage of each ranking)
Page 76 of 76

Extended Essay Economics

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Extended Essay Economics

Uploaded by

Copyright:

Available Formats

Extended Essay Economics HL

To what extent are the tuition centres in

Ahmad Kamal, Syanaz Bazil