Ayamas was established in 1982 and it started its first branch in Kuchai Lama, Kuala Lumpur. It was known as KFC Food Processing Sdn Bhd and its function is to supply chicken products to all Malaysian KFC outlets. This was the first company in Malaysia to introduce the sales of chicken and chicken based products such as roaster, chicken rice set, fresh chickens, frozen chickens and etc.
In
1987, the construction of the second branch began. It was named as Ayamas Port
Klang, and it was fully operational after one year. The products produced from
branches were sold on the open market and it extended it’s business by selling
products in public by retailing it with the formation of Ayamas Convinience
Store Sdn Bhd known as Kedai Ayamas Sdn Bhd and Rasa Gourmet Sdn Bhd known as
Rasa Ayamas Sdn Bhd in 1996. (Halal Exported 2011)
On
November 19 1993, the company changed its name from KFC Food Processing Sdn Bhd
to Ayamas Foor Corporation Sdn Bhd. After a month, it became a public limited
company. An underwriting agreement for public was signed in the late of 1994. (Halal
Exported 2011) Thus on the 3rd of November, the second board of the Kuala
Lumpur Stock Exchange was listed. However in 2004, it supplies chicken products
to the domestic market as well to the export markets such as Singapore,
Bangladesh, Brunei, Hong Kong and the Middle East.(Investing Business Week
2013)
Every
product that the company offers are all HALAL, high quality branded chicken
that is hygienically processed. Furthermore, today it has 74 stores nationwide.
More and more outlets are being planted every year due to the sale of high
quality readymade chickens. (Ayamas 2012)
There
are a few economic concept would be applied into our firms today to calculate
profit or loss. Law of demand and the law of supply are applicable to all
firms. Demand is basically what a person want which he or she desire and they
could afford it and definitely plan to buy it. For example, a person who
desires a car at a price of RM 50,000. He or she earns roughly of RM 10,000 per
month hence this shows that he or she would be able to afford it and they are
planning to buy it for future use.
Furthermore,
the law of demand applies to our daily lives today. As the price of goods
reduced, the larger the quantity demanded. Which stands for the understanding
of a person who would increase the amount of products by buying it due to drop
in price. For example, when the price of product X falls in a large amount,
hence people who desire for product X would buy more. Thus in 12 July 2013, the
demand for chicken increase from 1.2 million chickens a day to 2.2 million
during Ramadan till Aidilfitri. (New Straits Times 2011). Figure 1.1 shows the
demand before Ramadan and figure 1.2 shows the demand during Ramadan. Hence
this shows that the demand curve shifts to the right.
Figure 1.1
Figure 1.2
There
are two reasons for this law which is known as the income effect and the
substitution effect. The income effect meaning the person will fell much more
poor, hence they won’t be able to buy so much of good as the price of good
increases due to constant income. With this effect, it would decrease the
demands of Ayamas chicken due to price increase. Which then leads to the
substitution effect meaning a person would buy the product which is relatively
cheaper. For example, as price increases, the demand of chicken decreases.
Customer are willing to find other chicken product which is relatively cheaper
as a substitude. According to Siti Nurhariza, a local citizen. She’s willing to
buy Al-Harumi chicken which is cheaper compare to the chickens in Ayamas due to
the increase in price of Ayamas chicken.
Supply
is basically goods that are being produced to make profit. The law of supply is
the understanding of a firm would produce more as the price of goods increases.
The supply curve is the relationship between quantity supplied and price of
goods which is the opposite of the demand curve. There are a few determinants
which effects the supply curve which is the price of factor of production,
prices related goods product, number of suppliers and technology. The increase
of the number of suppliers and the advance in technology in Ayamas would
increase the amount of product produced. Hence today we have more than 74
Ayamas stores operating nationwide. This would cause the supply curve to shift
to the right. According to Jeffrey Ng in July 23rd 2013, the cost of
production of chicken increases from RM4.67 per kg to RM 5.12 per kg. (The Malaysia
Insider 2013) Hence this would decrease the amount of chicken produced by
Ayamas. This shows that the supply curve would shift to the left, which means
the decrease in quantity supplied. Figure 2.1 shows the supply curve. Figure
2.2 shows the supply curve when number of suppliers increases to increase products due to technology. Figure 2.3 shows the supply curve when the increase of cost of
production, hence decreases the amount of production
Figure 2.1
Figure 2.2
Figure 2.3
No
matter what effects the demand and supply curve of a firm. The firm will always
try to supply what the people demand. Hence this would meet market equilibrium.
For example, on 29th of May 2013, bird flu strikes in Malaysia. This
decreases the demand of chicken , thus Ayamas produces less chicken. According
to Tan Jian Hong a local worker who worked at Ayamas industry. He said as bird
flu strikes, Ayamas introduced more new products instead of producing chicken.
Products such as frozen food and readymade food. Thus this increases the demand
which caused the demand curve to shift from left to the right to its original
position to meet market equilibrium. Figure 2.4 shows the market equilibrium
curve.
Figure 2.4
Other
than that, due to the increase in demand of chicken in Malaysia due to the
increase of population and it was during Ramadan and Aidilfitri period. The
price of chicken in the farmer’s market
shot up from RM 7.50 to RM 8.50. Hence the government, set a price ceiling of
RM 7.80 which is below the equilibrium price to protect the consumers. According
to survey done in Selangor and Kuala Lumpur, most of the citizens are still
buying chicken with a price of RM 9 just before the government set the ceiling
price due to fact that is during the Ramadan period. According to one of the
locals who bought chicken at RM 9.00 in Ayamas, Rogayah Ahmad, she said it’s
normal for the price of chicken increases due to the festive season. If the
government didn’t set a ceiling price, there would be a market failure due to
underproduction. Underproduction is caused by when production is lower that the
equilibrium quantity, MSB is larger than MSC. MSB stands for marginal social
benefits which meant by as additional goods being consumed, society incur
additional social benefit. While MSC stands for marginal social cost which
meant by as additional goods produced, society incur additional social cost.
Due
to the cost of production of chicken increases as mention above, Ayamas are not
willing to supply more chicken which causes underproduction. According to
Jeffrey Ng, he asked ‘Have you
ever encountered a situation where you run out of chickens in hypermarkets and
wet markets?’ (The Malaysian Insider 2013)
References
Ayamas (2013) About Us
[Accessed 24 October 2013]
Halal Exporter (2013) Listing
[Accessed 24 October 2013]
Investing Business Week (2013)
Available from :
[Accessed 24 October 2013]
New Strait Times (2011) Latest
Available from :
[Accessed 24 October 2013]
The Malaysian Inside (2013)
Available from : http://www.themalaysianinsider.com/malaysia/article/chicken-prices-up-on-wages-weak-ringgit-not-shortages-say-poultry-farmers
[Accessed 24 October 2013]
