Principle of Economics [ECN 30205] - A Tale of Two Businesses

Taylor’s University | FNBE April 2014 | English (ELG 30605) | Assignment 2 | Compare and Contrast
SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN
FOUNDATION IN NATURALAND BUILT ENVIRONMENTS
Principle of Economics [ECN 30205]
A Tale of Two Businesses
Group Members:
Pang Khai Shuen 0318423
Lee Ren Jet 0319058
Ng Yi Yang 0319688
Hor Weng Lim 0319441
Felix Vong Zhi Wei 0318462
Tan Jia Yi 0319476

TABLE OF CONTENTS
Title Page
SUMMARY 1
A HISTORY OF THE OPTICAL TRADE 2
BRIEF BIODATA OF BUSINESSES 4
- Mi-Wah Superior Optical Centre Sdn. Bhd. 4
- Teo Optometry Sdn. Bhd. 6
- Comparison Table 8
COMPARATIVE ANALYSIS OF BUSINESSES 9
- Number of competitors 9
- Brief Biodata of Top 3 Competitors 9
- Strategies of Businesses 12
- Obstacles faced by new businesses 13
- Nature of Markets 14
- Conclusion 14
- Comparative Analysis Summary Table 15
RECOMMENDATIONS 17
BIBLIOGRAPHY 19
APPENDICES 20
REFERENCES 31

1
SUMMARY
Our task for this assignment is to compare and contrast two businesses of the same
industry, one located in Klang Valley and another one in a different state. After some
discussions, we decided to interview Mi-Wah Superior Optometry Centre in Sri Petaling,
Kuala Lumpur, and Teo Optometry in Pontian, Johor. We chose these two businesses as
some of our members were their customers.
We also chose two businesses in different states because we wanted to show the contrast
of the same business in varying locations. We wanted to see how location affects a
business.
In this report, we try our best to convey our findings in an organised manner in order to
be understood by all readers.

2
A HISTORY OF THE OPTICAL TRADE
Glasses, also known as eyeglasses and spectacles, are used for vision correction.
Nowadays, 8 out of 10 people in the world are wearing spectacles. Some wear it for
vision correction, some wear it for fashion purpose.
The history of glasses began when the first vision aid was invented by an
unknown inventor. It was called a reading stone which was a glass sphere on top of the
material. Back then it was only used to magnify letters. In the 13th
century, hand-held
magnifying lenses are produced from solid glass and wooden frames. In 1267, an English
monk called Reegan Bake made hand-held spectacles to be used to read the Bible, but it
wasn’t widely applicable yet. Inspired by him, Salvino D’Armate, from Italy, invented the
first wearable glasses in 1284.
However, the Crystal Processing Trade Consortia in Venice had made the
regulations that glass could not be used to make lenses for spectacles as they are
counterfeit of crystal. So when glass was first used in lenses manufacturing, the
spectacles were made under the condition of "spectacles for reading" and marked “made
of glass”. In 1498, Nuremberg started the trading of spectacles and had spread the sales of
spectacles all over Germany and the Europe. A lot of manufacturers had set up branches
in central European cities, and later in the whole world.
The variety of spectacles began when sunglasses were introduced in year 1752 by
James Ayscough. Later on, American scientist Benjamin Franklin, who suffered from

3
both myopia and presbyopia, invented bifocals. A few years later, the first lenses for
correcting Astigmatism were designed by British astronomer George Airy. In the 1930s,
sunglasses became widely available and popular in demand. In 1929, Edwin Land
introduced polarizing sunglass lenses. It had polarizing celluloid which reduced light
glare in sunglass lenses. As fashion sense increased throughout the world, doctors and
optical firms in Europe cooperated in developing practical contact lenses in 1940. In 2008,
Joshua Silver designed the AdSpecs, which are eyewears with self-adjustable corrective
glasses.
In a nutshell, glasses these days are not only for vision correction., but also a
means of fashion. We might not notice it, but spectacles play a major role in people’s
daily life. We should appreciate this amazing invention.

4
Brief Biodata of Businesses
Mi-Wah Superior Optical Centre Sdn. Bhd.
One of our choices of business for this assignment is Mi-Wah Superior Optical Centre Sd.
Bhd. It is currently located in Lot 2037, 2nd
Floor, Endah Parade, Taman Sri Enda, Bandar
Baru Sri Petaling, 57000 Kuala Lumpur. Founded in 1997, this businesses is brought up
single-handedly by Mr. Mah Kin Fatt. Mr. Mah wanted to start this business as there were
few competitors back then and he had the right skills and knowledge to venture into the
optical trade. He also thought that this business is decently profitable.
This business has no branches as is it only a small-scale family-run business. Mr. Mah
also wants to keep his overheads low in order to stabilize his prices. He has no

5
employees and therefore the only one working in the shop. Also, Mr. Mah emphases he
importance of keeping his overheads low and also providing a good after-sales service.
These aspects are important to maintain his regular customers.
Mr. Mah’s business focuses on usual glasses, sunglasses, and various other types of
eye-protection. He also provides vision test to his customers. The total number of
customers is about 1000 and a majority of them are regular customers that has been
receiving his service since years ago. He also has customers from all races.
The sales of Mr. Mah’s business is more or less stable, experiencing some peaks during
the emergence of a new product, for instance, Transition lenses. This business has an
annual revenue figure of roughly RM 300 000. Whenever a new product comes by, he
passes it on to his customers whenever they visit his shop. (K.F. Mah, personal
communication, December 30, 2014)

6
Teo Optometry Sdn. Bhd.
The next choice of our business is Teo Optometry Sdn Bhd. It is located at 30, Jalan
Bakek Jaya, Taman Bakek Jaya, 82000, Pontian, Johor. The business is owned by Teo
Sock Hoon, and it was founded in year 1997. During early period, the business was not
hard to enter the market as they have less competitors. The motive for starting business is
merely to start her own business and earn more income.
The business doesn’t have any branches currently as the owner considers about
her children who are still small and need parental care. Hence, she was forced to give up
her idea of planning a new branch of the business. The business has 4 employees include
the owner herself who act as an optometrist as well in the shop.
The main products sold by the business are spectacles, contact lens and sunglasses.
Services such as vision test and dispense contact lenses are provided in the shop. The
business has over thousands customers currently. Its customers are mostly people who are

7
having short-sightedness. In addition, the business has an annual revenue figure of RM
720 000. It also releases new product every 2-3 months.
Besides that, the business has brought in Zeiss machine I-terminal progressive
dotting technology recently to offer accuracy and comfort for both the technician and
patient. The machine can help patient to optimize vision, reduce eye strain and have
better fixing lenses by provides all of the data necessary to objectively create lenses for
your unique features. Many details need to be taken into account during the process when
adjusting lenses to frame, such as the distance between eyes and pupils, the proportions of
the face and even posture. Up to 40% of valuable visual activity can be lost without these
accurate measurements. The business hopes to bring in more Zeiss machines in the future.
(S.H. Teo, personal communication, January 2, 2015)

8
Comparison Table for Brief Biodata of Businesses
Busines Names Mi-Wah Superior Optical
Centre Sdn. Bhd.
Teo Optometry Sdn. Bhd.
Current Address Lot 2037, 2nd
Floor, Endah
Parade, Taman Sri Enda,
Bandar Baru Sri Petaling,
57000 Kuala Lumpur
30, Jalan Bakek Jaya, Taman
Bakek Jaya, 82000, Pontian,
Johor
Number of Branches 0 0
Number of Employees 0 3
Main Products/
Services Sold
Spectacles Spectacles
Estimated Number of
Customers
~1000 ~4000
When were the
businesses founded:
1997 1997
Who are the founders: Mr. Mah Kin Fatt Ms. Teo Sook Hoon
Motives for starting the
business:
- Had the experience.
- Thinks it is profitable.
- Wanted to start her own
business.
Recent Developments: Not much development. New equipments etc Zeiss
Machine.

9
Comparative Analysis of Two Businesses
i) NUMBER OF COMPETITORS
Teo Optometry Sdn. Bhd which is located in Pontian, Johor has only a few
competitors (around 3 to 5) around the area. This is due to the fact that
quantity of demand in the area is low due to the low density of population in
Pontian compared to Klang Valley. Hence, there are not many of same
business in the area.
On the other hand, Mi-Wah Superior Optical Centre Sdn. Bhd faces quite a
few competitors, around 5 to 7. Sri Petaling is a rapidly growing town and
more shop lots are being built. This means the population density is increasing
and therefore more spectacle shops will be joining the market.
ii) BRIEF BIODATAS OF BUSINESSES’ TOP 3 COMPETITORS
At Johor, there are only 3 main competitors, which are The Vision Optometry
& Contact Lens Centre, You & Eyes and Eye Box Eyewear Sdn. Bhd. These 3
shops are all located in Billion Mall, Pontian. They are a competition for Teo
Optometry because their location is only within 3km from the business.

10
The first competitor, The
Vision Optometry & Contact
Lens Centre, was founded
since year 2007, by Mr. Ng
Peng Hua. There are 3
employees in the shop. The
shop in Pontian, Johor is one of the ten branches. The headquarters of the
business is located at Batu Pahat, Johor.
The second competitor of the business is You & Eyes which was founded in
year 2008 by Irene Tan. There were 5 employees in the shop. The business has
3 branches, and the shop in Pontian is the headquarters of the business.

11
The third competitor of the business is Eye Box Eyewear Sdn.Bhd. This
business was founded since year 2009, by Terence Tan and Grace Tong. There
were 3 employees in the shop. This business does not have any branches.
At Kuala Lumpur, we found 3 other optical businesses in the same shopping mall,
Endah Parade. There were a few more outside of shopping mall but we decided to
feature these :
Optimal Optical Centre is
owned by Andy. This outlet,
opened 2 years ago in 2012, is
one of the total of 14 branches.
Compared to our target business,
this shop has more variety of products and covers a wider area as it is located at a
newly-renovated area.

12
1 Optical Point opened up 4
years ago in Endah Parade and
still does not have any branches.
It is located on the ground floor
and has a more open layout to
the store.
The only optical centre as
old as Mi-Wah Superior Optical
Centre Sdn. Bhd is Vision
Bright, owned by Mr. David
Chan. This shop opened in 1998,
just one year after Mr. Mah’s business. Today, Vision Bright has already started 4
other branches.
iii) STRATEGIES OF BUSINESS
Teo Optometry Sdn. Bhd does not advertise. However, most of their
customers are regular customers as their business had started since year 1997.
The business also appreciate a lot with customers who recommend their shop
to family and friends. Besides, the business emphases on vision care and has
also brought in high technology machines, such as the Zeiss machine for
I-terminal dotting.

13
Similarly, Mi-Wah Superior Optical Centre Sdn. Bhd does not advertise at all.
It depends mostly on regular customers. Mr Mah also emphases the
importance of after-sales service and keeping overheads low. He does not hire
any workers but instead looks after the business himself. This way, he can
keep his prires low and his customers happy.
iv) OBSTACLES FACED BY NEW BUSINESS
One of the obstacles faced by new business to enter the market is the low
quantity of demand due to the low density of population in the area. Another
obstacle is due to the presence of many other businesses providing the same
services and products. Hence, customers will compare the prices of the products.
In addition, the majority of customers are regular customers who tend to visit the
same opticians. This situation is a problem faced by new businesses as the
businesses that has existed for a longer time period has a larger amount of
regular customers. Moreover, the service provided by optical business is more of
less private. For instance, the opticians has a record of all customers and how
their eyesight changes throughout the years. This means that the optician knows
his or her customers well. Lastly, it is difficult for new businesses to achieve
economies of scale, which is defined as the point where the revenue of a
business is the highest as a result of constantly reducing costs. New businesses
do not have the chance to get benefits from suppliers such as discounts.

14
v) NATURE OF THE MARKETS
The nature of the market of Teo Optometry Sdn. Bhd is monopolistic
competition, which is a market containing a large number of small firms. This
business has many competitors, but each one sells slightly different products.
Besides, this business also has the characteristic of monopolistic competition,
which each firm makes independent decisions about the price and output, based
on its product, its market, and its costs of production.
vii) CONCLUSION
Based on our analysis, we concluded that Teo Optometry Sdn. Bhd. is more
commercially successful. First of all, this business has more customers compared
to Mi-Wah Superior Optical Centre Sd. Bhd. This contributes to more revenue to
the business. Teo Optometry also had more advanced equipment to provide
better service to it’s customers. Most importantly, customers are willing so visit
the business even though it is hard to reach without automobiles. In our
interview with Ms. Teo, she told us that some customer took a walk from the bus
stop - about 11 minutes of walking from the business.

15
Comparative Analysis Summary Table
Similarities:
Competitive Traits Both Businesses
1. Number of
Competitors
2 to 10
2. Barrier to Entry (Weak
or Strong? Why?)
Weak. This means that many competitors can enter the market
easily.
-No legal barrier which is regulated by government in optometry
industry, such as patent.
-No strategies barrier because most of the businesses will not
adopt aggressive strategic moves to prevent new competition.
-No “first mover” or ownership in the industry. There are no first
firm that get established or a firm which control majority of
production equipment that are needed to produce a product, so it
is not difficult for new firm to make the same product and
compete in the market.
3. Differentiated or
Standardized Products
Differentiated products (Spectacles, contact lens, sunglasses)

16
4. Pricing Power (Price
Maker or Taker? Why?)
Low. -According to law of demand, quantity of demand will
decreases when price increases. Customers will switch over to
other spectacle’s shop in case that the business raise the price of
their products. Pricing decision will also be affected by
competitors. So business cannot simply adjust their prices.
-The business has high price elasticity of demand, which means
that a small percentage of price difference will lead to a big
percentage of quantity demanded. In this situation, business has
low pricing power because when the price of their product goes
up, customers will buy a great deal less of it.
5. Other Characteristics
(e.g. Any close product
substitutes, mutual
dependence, constant
advertising)
There are not much of substitute goods for their product as people
who has long-sightedness or short-sightedness problems has no
second choice besides wearing spectacles unless they go for laser
eye surgery. However, laser eye surgery has certain risks so
people will not simply make decision to do surgery.
6. Verdict (Monopoly?
Oligopoly? Perfect
Competition?)
Monopolistic competition
-Large amount of small firms
-Each selling products that are differentiated from one another.
-Weak barriers to entry

17
Recommendations
Our recommendations for the 2 businesses are as follows:
1) Mi-Wah Superior Optical Centre:
a) Move the business to a location more easily accessible by people. Endah Parade
is an old shopping mall with few shops left. It is not a location people would go
for shopping on weekends. Also, the shop is hard to reach as the visitors have to
park in the basement parking before taking the lift. By moving to a place with
more people, the business can acquire new customers and also allow existing
customers to visit the shop more easily.
b) Purchase more advanced equipment. Compared to Teo Optometry Sdn. Bhd.,
Mii-Wah Superior Optical Centre has less advanced equipments, and this may
interfere with the accuracy and effectiveness when testing the vision of its
customers. Advanced equipment can help the business provide better spectacles
to its customer by making precise measurements.

18
2) Teo Optometry Sdn. Bhd.
a) Open up more branches. Teo Optometry Sdn. Bhd. has the financial ability to
open up another branch. This does not only increase their sales and also their
number of customers. Some of their existing customers complain about their
location that is difficult to reach without automobiles as it is located in the last
street of shops.
b) Make more advertisements about their new machines. Teo Optometry can
actually provides very good vision tests with their new equipment, but not many
people know about their advanced services. If they advertise, more customers
will be attracted by their service because in Pontian, their competitors do not
have such good machines. They have an edge with their superior equipment.

19
Bibliography
1. Ilardi, V. (2007). Renaissance Vision from Spectacles to Telescopes. American
Philosophical Society. Available at:
https://books.google.com.my/books?id=peIL7hVQUmwC&pg=PA117&lpg=PA1
17&dq=spectacles%20trade%20history&source=bl&ots=0nT4mOYvW6&sig=K
XJ79-kcvqEzI8M9gzS7tlO3K1g&hl=en&sa=X&ei=5jupVJ7yDJSRuATqtIDgCQ
&ved=0CC4Q6AEwAw#v=onepage&q=spectacles%20trade%20history&f=false
[Accessed 11 January 2015]
2. Rosenthal, J. W. (1996) Spectacles and Other Vision Aids : A History and Guide
to Collecting. Norman Publishing. Available at:
https://books.google.com.my/books?id=lp4LAAAAIAAJ&printsec=frontcover&d
q=spectacles&hl=en&sa=X&ei=Y-uxVPflA8K9uASD2oLICw&ved=0CCAQ6A
EwAQ#v=onepage&q=spectacles&f=false [Accessed 11 January 2015]
3. Kvale, S., & Brinkmann, S. (2009). InterViews : learning the craft of qualitative
research interviewing / Steinar Kvale, Svend Brinkmann. Los Angeles, CA :
SAGE, c2009.
4. Alvesson, M. (2011). Interpreting interviews / Mats Alvesson. London : SAGE,
2011.

20
Appendix

21
Video Submission:
Link: <https://www.youtube.com/watch?v=KIkQxY809Qw>

22
Name : Mah Kim Fatt
Job position : Owner
Office phone number : 0395430829
Email address : n/a
When was the business founded?
I started this shop in 1998.
What made you want to start this business?
What made me wanted to start this business is because I find the job much easier. I don’t
have to stress so much as it is mostly an indoor business and I don’t have to carry things
up and down. Secondly, I find this business very profitable.
Can you provide us a brief history of your business?
Before I started in the optical business, my job was related to sports because I liked it.
Then, I started working with other people in this same business in 1987. By 1997, I
started my own business which is this shop until now.
Are there any competitors in this building (Endah Parade)?
There’s a shop run by an old uncle below. He has been here for quite some time. But I
believe that I am the longest one here.

23
What strategies do you use to compete with your competitors?
I provide good customer services. To me, customer service is very important. I treat all
my customers like my friends. Secondly are my prices. To have a good business, I
“squeeze” everything down into a low overhead, that’s why I can sell my products
cheaper.

24
Name : Teo Sock Hoon
Job position : Owner
Office phone number : 076863236
Email address : shteo1319@gmail.com
What were you doing before you start this business?
I was doing this same business in Singapore. I studied ophthalmology in New Zealand,
then I went to Singapore to work for 3 years before coming back to Johor.
How long have you started this business?
1997. 17, 18 years? 17 years.
Were you the first one to open?
No. Pontian’s population is actually quite small. My shop was the 5th
to open. I wasn’t
sure if I could survive the competition. Not only that, my first location was less
noticeable by normal customers. Back then I was thinking about whether the customer
can find parking easily. After that I received feedback from my customers saying they
have transportation problem getting to the shop. But I appreciate some customers would
walk all the way from the bus stop to my shop.
So which of your goods receive the most attraction by customers?
The brands that are quite famous among the customers are Lee Cooper Eyewear, Hammer
Eyewear, and BORNEO Eyewear.

25
So most of your customers are old aged?
Yes. Most of our customers are regular customers. Usually, customers will introduce
other customers about us. But still, customers will grow up or graduate and leave this
place. So we can’t just rely on the customers that we have now. I’m very grateful that
some customers will introduce or recommend us to new customers. We don’t really do
advertisement, flyers these sort of things.
Are there any major changes in the optical trade these years?
Yes. Back then there wasn’t many types of lenses. One company might only have a few
types of them only. But as technology grows and people’s taste of glasses start to differ.
For example, some people want to have e-lens, some elders want reading glasses for
Presbyopia. So now, one company will have at least A to Z types and numbers of lenses
and we’ll have to keep updating ourselves with the new product by attending seminars.
How do you think of the competition here?
To me, business is not a competition. I’ll just try to do my best.
Are there any other similar shops nearby?
Yes. Billion Shopping Centre already have two or three optical shop there. I believe there
is three optical shop there. Just Billion Shopping Centre itself already have three of them.

26
Do you think it’ll be tough for others to open this same business here?
I think it all depends on what kind of customers are they targeting. There are many types
of customers. Some of them emphasize on customer services, some of them look at your
qualifications, some of them only look at your pricings.
What are the problems faced when you were doing this business?
Before you know it, there’s already new competitors in Pontian. When I first opened this
shop, there are five optical businesses in Pontian. Now there’s already ten or more. When
I first started, there was also financial problem. Because my shop was still new, I have to
make payment when the stock arrives as we couldn’t ask for loan. The machineries were
also very expensive. That’s why I asked help from my six partners. But they are mostly
silent partner, which means they invest their money while I look after the shop.
What tactic do you use to attract customers?
We try to provide our customers with good quality lenses. In terms of pricing, I wouldn’t
say ours is the cheapest or the most expensive ones. We have reasonable prices, because
we are a profit-making business.
Can you explain a bit of your machineries used?
The main functions of our machines is to scan your eye. Here we also check on the health
of your retina. We invested on a machine that checks the condition behind your retina.
Here we have our latest machine call IT2. Its main function is to check and identify the
eye’s vision and mark it down.

27
Do you have any plans for the future?
If I get the chance, I’ll would open new branches. But I can’t find a nice locations. If I
want a new branch, I need to find a nice location first.

28
MINUTES OF THE MEETING
Meeting #1
DATE: 17/12/2014 Wednesday.
TIME: 2.00pm-4.00pm
VENUE: Student Life Center, Taylor Lakeside.
Attendees Full Attendance
Discussion Topic Briefing and Business Selection
Meeting #2
DATE: 29/12/2014 Tuesday
TIME: 3.00pm-5.00pm
VENUE: Student Life Center, Taylor Lakeside.
Discussion Topic Interview Preparation, Video planning and
Schedule for interview

29
Meeting #3
DATE: 2/01/2015 Friday
TIME: 10.00am-10.30am
VENUE: Student Life Center, Taylors Lakeside
Campus
Attendees Full Attendance except Ng Yi Yang
Discussion Topic Interview planning, discussion about journey
to Johor.
Meeting #4
DATE: 5/01/2015 Monday
TIME: 11.00am-3.00pm
VENUE: Library, Taylors Lakeside Campus.
Discussion Topic Video editing, role distribution, report writing.

30
Meeting #5
DATE: 08/1/2015 Thursday
TIME: 11.00am-5.00pm
VENUE: Library, Taylors Lakeside Campus.
Discussion Topic Presentation Slides, Report Writing,
Additional research
Meeting #6
DATE: 12/01/2015 Monday
TIME: 12.00pm-4.00pm
VENUE: Student Life Center, Taylors Lakeside
Campus.
Discussion Topic Presentation rehearsal, Report printing and
wrapping up our presentation slides.
NAMES OF GROUP MEMBERS TUTORIAL GROUP ROLE
Pang Khai Shuen Tuesday Report
Lee Ren Jet Thursday Slides
Gwen Tan Jia Yi Tuesday Slides
Felix Vong Zhi Wei Thursday Video
Ng Yi Yang Tuesday Video
Hor Weng Lim Tuesday Report

31
References
1. About Money. (n.d.). The History of Eye Glasses or Spectacles. [online]
Available at: http://inventors.about.com/od/gstartinventions/a/glass_3.htm [Accessed
4 January 2015]
2. Glasses History. (n.d.). History of Eyeglasses and Sunglasses. [online] Available
at: http://www.glasseshistory.com/ [Accessed 4 January 2015]
3. The College of Optometrists. (n.d.). The Invention of Spectacles. [online]
Available at:
http://www.college-optometrists.org/en/college/museyeum/online_exhibitions/spectac
les/invention.cfm [Accessed 4 January 2015]
4. What Man Devised That He Might See. (n.d.) [online] Available at:
http://web.archive.org/web/20020201215836/http://www.eye.utmem.edu/history/glas
s.html [Accessed 4 January 2015]
5. Teo, S.H. (2015, January 2). Personal interview.
6. Mah, K.F. (2014, December 30). Personal interview.
7. Eger, Milton J. “Now It Can and Should Be Told.” Journal of the American
Optometric Association 60, no. 4 (1989): 323–26.
8. Gregg, James R. History of the American Academy of Optometry. Washington,
D.C.: American Academy of Optometry, 1987.
9. Sutton, Amy L., ed. Eye Care Sourcebook: Basic Consumer Health Information
About Eye Care and Eye Disorders. 3d ed. Detroit, Mich.: Omnigraphics, 2008.
10. Millodot, Michel. Dictionary of Optometry and Visual Science. 7th ed. New
York: Butterworth-Heinemann/Elsevier, 2009.
11. Weissman, B. P. (2013). Optometry. Magill’S Medical Guide (Online Edition),

Principle of Economics [ECN 30205] - A Tale of Two Businesses

Recommended

Recommended

More Related Content

Similar to Principle of Economics [ECN 30205] - A Tale of Two Businesses

Similar to Principle of Economics [ECN 30205] - A Tale of Two Businesses (20)

More from Pang Shuen

More from Pang Shuen (20)

Recently uploaded

Recently uploaded (20)

Principle of Economics [ECN 30205] - A Tale of Two Businesses