JAN 2013

a) Do you think Akademi Masak Malaysias reputation as the best cooking academy in
the country would still be its competitive advantage in the long run? Use the four
criteria of sustainable competitive advantage to support your answer.
In my opinion, Akademi Masak Malaysias reputation as the best cooking academy in the
country will not be in its competitive advantage in the long run. This is based on the four
criteria of sustainable competitive advantage.
The first criteria of sustainable competitive advantage are the resource must be valuable.
Organizational resources can be a source of competitive advantage only when they are
valuable. Resources are valuable when they enable a firm to formulate and implement
strategies that improve its efficiency and effectiveness. In order for Akademi Masak Malaysia
to sustain its competitive advantage, it should improve their performance by exploit
opportunities or neutralize threats. In the long run, they cannot exploit opportunities
The second criteria of sustainable competitive are it must be rare among the firms current
and potential competitors. If competitors or potential competitors also possess the same
valuable resource, it is not a source of a competitive advantage because all of these firms
have the capability to exploit that resource in the same way. Common strategies based on
such a resource would give no one firm an advantage. For a resource to provide a competitive
advantages, it must be uncommon, that is, rare relative to other competitors. Based on the
articles, Akademi Masak Malaysia is not the only cooking academy of local delicacies and
cuisine where due to the current unprecedented growth in demand in the art of cooking
among Malaysians, there are intense competitions from the other well-known and established
cooking schools. Therefore, Akademi Masak Malaysia cannot be categorized as rare relative
to other competitors.
The third criteria of sustainable competitive advantage are inimitability which is difficulty in
imitating. If resources are inimitable, then any profits generated are more likely to be
sustainable. Having resources that competitors can easily copy generates only temporary
value. Akademi Masak Malaysia had established an academy that can easily be imitating by
other firms which resulted in growth of many well-known and established cooking schools.
Besides, there is also imitating of resources due to threaten by substitute products and
bargaining power of buyers. Competitors will eventually discover a way to copy most
valuable resources.
The fourth criteria of sustainable competitive advantage are there must be no strategically
equivalent valuable resources that are themselves not rare or inimitable. Two valuable firm
resources are strategically equivalent when each one can be exploited separately to
implement the same strategies. Though it may be possible for a firm to imitate exactly
another firms resource, it may be able to substitute a similar resource that enables it to
develop and implement the same strategy. These can be seen based on the article where there
is 24-hour Pay-Television Station that has special channel on food and learn how to cook all
sorts of cuisines. There are also numerous websites that offer virtual cooking lessons for free.

This firm not imitate exactly as the Akademi Masak Malaysia but it has same strategy with
Akademi Masak Malaysia.
b) Discuss the detail the impact of the following two forces of competition on Akademi
Masak Malaysia:
i) Threat of substitute products
Threat of substitute products is the threat of limiting the potential returns of an industry by
placing a ceiling on the prices that firms in that industry can profitability charge without
losing too many customers to substitute products. Based on the above articles, besides facing
competition from its direct rivals, Akademi Masak Malaysia is also threatened by the
substitute products since 24-hour Pay-Television station now has special channel on food
which host by experienced chef from well-known hotel and restaurants and there are also
numerous websites that offer virtual cooking lesson for free. These kind of forces of
competition will give impact on Akademi Masak Malaysia where many of their customers
will go for the virtual cooking lesson which are for free rather than paying to the Akademi
Masak Malaysia. Besides, they can decide which time they want to learn from the virtual
cooking lesson websites rather than attending classes following the time given by Akademi
Masak Malaysia.
ii) Bargaining power of buyers
Bargaining power of buyers means that buyers threaten an industry by forcing down prices,
bargaining for higher quality or more services, and playing competitors against each other.
The power of each large buyer group depends on attributes of the market situation and the
importance of purchases from that group compared with the industrys overall business. A
buyer group is powerful when it is concentrated or purchase large volumes relative to seller
sales, it earns low profit, and the products it purchases from the industry are standard and
undifferentiated. Based on the above articles, we can see that the impact from the bargaining
power of buyers. For Akademi Masak Malaysia which is it earns low profits. They earn low
profits because there are numerous websites that offer virtual cooking lessons for free. Low
profits create incentives to lower purchasing costs. On the other hand, highly profitable
buyers are generally less price sensitive. In addition, the young Internet-savvy generation is
attracted to this mode of learning and the young prefers to learn at their own time and pace.
Therefore, the product it purchases from the industry are standard or undifferentiated because
they can always find alternative suppliers, buyers play one company against the other, as in
commodity gain products.

c) Discuss two major entry barriers that Akademi Masak Malaysia can develop to
discourage new entrants from setting up new cooking schools.
i) Product/Service differentiation

When existing competitors have strong brand identification and customer loyalty,
differentiation creates a barrier to entry by forcing entrants to spend heavily to overcome
existing customer loyalties.
Since the Akademi Masak Malaysia was set up early 70s, therefore it would be no problem
to develop product differentiation since there are many of the locals already know the
existence of this academy. Furthermore, Akademi Masak Malaysia has many branches
nationwide. Using service differentiation, the learner will more accepted this academy rather
than others academy since they know about the background, the facilities and also services
offered by this academy. Since AMM developed this product differentiation, therefore it
would be difficult to new entrants from setting up new cooking school since they needs more
capital to make advertising on their services.
ii) Capital requirements
Capital requirements means the need to invest large financial resources to complete creates a
barrier to entry, especially if the capital is required for risky or unrecoverable up-front
advertising or research and development (R&D).
Since the AMM has been established since 70s, therefore the capital requirement for the
AMM will be lower because they do not required to do make extra advertising or any
research and development in order to stay in the industry. But for the new entrants, they
required a large of capital since they are new in this industry. For sure, they do not know well
about the surrounding, what should they offered for the services and how many personal
trainers that they need in order to survived in the industry of cooking school. The advantage
to the AMM which they can use their capital to improved their services and makes some
advertising to the locals about the improvement of services offered at their academy.

APRIL 2006 (Q1)

a) Which two environmental segments: demographic, economic, political/legal,
sociocultural, technologies or global have caused the closure of the cinemas in the case
above? Explain.

i) Technological
Developments in technology lead to new products and services and improve how they
are produced and delivered to the end user. Innovations can create entirely new industries and
alter the boundaries of existing industries.
Based on the above case, technology has caused the closure of the cinemas. This can
be proved where there are changes in technology which introduce the home entertainment
which enabled family members and friends to enjoy a good movie in the comfort of their own
homes. Besides that, after the existence of home entertainment, it is easier to access chap
pirated VCDs and DVDs, the dawn of interactive computer games and the advance userfriendly technology of the internet had contributed largely to the dwindling number of
patrons in cinema halls. The surge of cheap pirated VCDs and DVDs acted as a catalyst in the
ultimately closure of these once bustling centres of entertainment.
ii) Political/Legal segments
Political processes and legislation influence environmental regulations with which
industries must comply. Political or legal segment of the general environment is how a
society creates and exercises power including rules, laws and taxation policies.
According to the above case, there are surge of cheap pirated VCDs and DVDs in the
country. This show that the rules and regulations are not that tighter enough to control the
pirate of VCDs and DVDs. The citizen also did not pay attention toward the seller of pirated
VCDs since they collaborate with them by buying the piracy of VCDs and DVDs. Indirectly,
pirated CD sellers will produce more CDs piracy because of high demand among consumers.
In conclusion, the environmental segments that have caused the closure of the
cinemas in the above case are technology and political/legal segments.

b) The continuous process of the external environmental analysis is aimed to helping a

firm understand the general environment that it is in. The process includes scanning,
monitoring, forecasting, and assessing. Explain any two of the four activities that may
have helped the owners of cinemas to prolong the survival of the cinema.

i) Scanning Process
Environmental scanning involves surveillance of a firm external environment to predict
environmental changes and detect changes already under way. This alerts the organization to
critical trends and events before changes develop a visible pattern and before competitors
recognize them.
The owners of the cinemas may use scanning process in order to prolong the survival of the
cinema. The owners should have several ideas regarding the changes of technological which
will affect the number of people who come to watch a movie. If the owner applies the
process, he should be able to predict on what he would plan in futures in order to address the
shortage of people who come to the cinema.
Using this process, the owner of cinema should be able to come out with brilliant ideas on
how he is going to make improvement so that can attract people to come to the cinema. He
should know what people needs and wants if they are at cinema. Of course, as a customer we
wants a better services from the management so that the management of the cinema should
take an action on how to fulfil the needs and wants of the customer so that can attract them to
come to the cinema. They should improved their services such as provide better system sound
so that the customer can heard well without any problems during movies.
ii) Competitive Intelligence (CI)
CI helps firms define and understand their industry and identify rivals strengths and
weaknesses. This includes the intelligence gathering and associated with collecting data on
competitor and interpreting such data. Done properly, competitive intelligence helps a
company avoid surprise by anticipating competitors moves and decreasing response time.
The owner of cinema always should keep on track of their competitors in order to know the
amount of information that is available on the internet. Since the technology has become a
part of our daily routine, so the owner must be aware with the changes of the technology in
order for the cinema to prolong the survival of the cinema. This information can be used in
their marketing, pricing and production strategies. The management of the cinema should
improve their marketing strategy such as do more advertisement of the movies. In terms of
pricing, they should decrease the ticket price by select any day where the price will be
cheaper than other days. Therefore this strategy will attract more people to come to the
cinema instead of buying pirates VCDs and DVDs.

c) According to the Resource-Based model of above-average returns, what should a firm

do to earn above-average returns?
In order to achieve the above-average returns, a firm should consider some of the
following matters which are the firms resources, firms capabilities, competitive advantage,

an attractive industry, and strategy formulation and implementation so then only they will
enjoy superior returns. The firm should identify their available resources which they have to
study its strength and weaknesses and compares with their competitors. Next, they have to
determine the firms capabilities. The question that they have to answer is what does the firm
capabilities of which allow them to do better than their competitors. Then they have to
determine the potential of each resource and capabilities in term of competitive advantage
which what they can do to outperform their competitors. After that, they have to locate an
attractive industry which can be exploited by their resources and capabilities. Lastly, they
have to select a strategy that best to allows the firm to utilize the resources and capabilities
relative to opportunities in the external environment only when those matters have been
consider by the firm, they can enjoy a superior return which earning of above-average
returns.