Business Solutions for Beautifico: Analysis of Macau Market Challenges

This report analyzes the business challenges and potential solutions for Beautifico, a private beauty company operating in Macau. It begins with an introduction to business solutions and the specific context of Beautifico's operations, including its services and market positioning. The report then delves into key economic concepts, such as economic problems, the benefits and disadvantages of private companies, and the impact of taxes and duties on the business. It explores concepts like value-added tax, custom duty, and corporate tax. Furthermore, the analysis includes supply and demand dynamics, economies of scale, price elasticity of demand, and diseconomies. The report also discusses financing options for the company and the role of government in addressing market failures. It examines factors like consumer price index, durable goods orders, and GDP. The report concludes by considering the impact of currency exchange rates and fiscal/monetary policies on Beautifico's operations. The report provides a comprehensive overview of the challenges and opportunities facing Beautifico in the Macau market, offering valuable insights into strategies for growth and sustainability.

Macau Business Solutions

Table of Contents
INTRODUCTION...........................................................................................................................3
Q.1...............................................................................................................................................3
Q.2...............................................................................................................................................4
Q3................................................................................................................................................7
Q4................................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business solutions refers to marketing research, investigation, advertisements etc. as
business owner tries to solve the hurdles that impacts on the growth and profitability of the
company. Be a ut i f i c o private company which is providing hair salon, beauty cares, treatments
and other services. In this report the discussion will be based on the challenges that Be a ut i f i c o
faces for expansion and growth of business.
Q.1
Q1a)
Economic Problem is problem related to the limited resources which have multiple uses.
Problem mainly arises due to scarcity of resources. The needs and wants of people are unlimited
which is endless to satisfy. Problem arises when there is choice of making optimum use of
limited resource. For example choice for what to produce, how to produce and for whom to
produce.
Q1b)
Benefits of private company
 It is easy to start the private firm as it requires less legal works as compared to public
firms.
 Private firms have right to keep full profit with them as business is own and controlled by
the business owners.
Disadvantages of private company
 private firms have no limits for rise the liabilities as they take unlimited liabilities.
 Private firms faces difficulties in rising fund because they have limited investors for
company.
The problem of B ea ut i f i c o is that it aims on many objectives to achieve them but
not able to achieve it. The company established its business in highly competitive
market where there are already thousand of beauty saloons in the market due to
which the company has to reduce its price from from others to get competitive
advantages in the market (Macdonald, Kleinaltenkamp and Wilson, 2016).
B ea ut i f i c o operates its business with small channel of distribution creates less
awareness of brand. The company needs to import its herbs, natural oils and

moisturisers from other countries like India, china, Australia, etc. to maintain its
brand images in market which cost very high like exchanges rates, custom duties,etc.
The company occasionally earns more profit then normal days when increase in
tourism or demand in home country.
Q1c)
Value Added Tax: On each step of manufacturing of product the value is
added till the point of sale of product (Wilkins and Ferrer, 2018). At each point
consumption tax is being levied.
Custom Duty: it refers to tax which is levied on transfer of product across
other country.
Corporate Tax: company earns more income and increases the prices of
product the government tries to reduce the prices that are being increased by the
firms.
Increase in value added tax and custom duty will impact the company to increases its
prices of its services in the market which will decrease the profit of the company due
to shift in consumer demand in highly competitive market. Decrease in company tax
will impact Be a ut i f i c o company to reduce its services prices which impact to the
situation of loss for company.
Q1 d)
Basis Changes in demand Change in quantity demanded
Meaning Changes in demand and supply
of the company with price
remain constant.
Changes that happens due to
changes in price which
changes demand and supply of
the company in product.
Effects of price No price effect Demand curves
shifts at the same price
demand increases.
Negative price effect move the
demand curve. Demand
increases when price is less.
Q1e)

Difference between short run and long run is that in short run the company can
fulfil its variable demands and in long run the company can easily expand its
business by changing fixed variables.
Q.2
Q2a)
S1-Original supply
S2-changed supply
D-Original demand
P1-Original price
P2-Changed price

Q2b) Economies if scale refer to the production of goods and services at large scale
by the company. The economies of scale are low cost which produces high
production.
Two possible economies of scale for Yullia's business can be the company can
increases its economies of scale by reducing the cost of production like raw
materials that are being imported from other countries can be purchased from home
country the company will able to get discount and will eliminate the import taxes on

raw materials. Another possible economies of scale can be that company can
improve its technical services like using of highly advance technologies with
advance beauty treatment for the customers. The company can also use online
services for attracting large public through company websites, it is one of the cheaper
way to increases the sales of the company.
Q2c)
Price elasticity of demand refers to percentage change in quantity with relation
to percentage change in price. Price elasticity means the changes in price are high
which affects changes in demand and supply (Sullivan and Robinson, 2017). Price
inelasticity means less changes in price which not affects the changes supply and
demand with relation to its price.
Implications on B ea u t i f i c o company is that it when company reduces its price
from its rivals it increases the demand and supply in the market for its product and services.
When the prices of the product increases like impose of VAT,custom duty, etc. the demand
and supply of the company will reduce due to increase in price of product.
Q2d
Answer- In case of Yulia there are two possibilities of diseconomies for Beautifico (Jantunen
and et.al., 2019). These diseconomies issues are marketing diseconomy and diseconomy of
Strain on Infrastructure. Both of these are related to her business.
Marketing Diseconomy
This type of diseconomy is about the investment she need to made for expanded
organization. For expansion in larger area company have to improve its budget to perform
marketing operation and cost of marketing increases with level of marketing.
Diseconomy of Strain on Infrastructure
For Beautifigo in expansion process she need more funds for developing infrastructure
and this is can force her to increases price of company product to gain larger marginal profit to
make proper arrangement for expansion.
Q3
Q3a
Answer- The factors that can be used by bank to provide loan to beautifigo company.
1. Background of Company

2. Financial status of company
3. Market image of organization
4. Income Sources and their Regularity
there are different term and condition are decided by bank before approving loan for organization
(Milani, 2019). Good credit rating of organization improve the chances of getting larger loan to
company and bad credit rating can prevent the bank to provide loan to company.
Q3b.
Answer-
Market Failure- It is a situation where the allocation of goods and services provided by free
market is not efficient and often this lead to net social welfare loss.
Types of Market Failure- There are six type of market failure that are-
1. Productive and Allocative Inefficiency- Market fails to produce and allocate scarce
resources in the most efficient way.
2. Monopoly Power- Market lose control duet to monopoly of organization.
3. Missing Markets- It occurs when market fails to form in any case.
4. Incomplete Market- In this failure market fails to produce enough merit goods like
education and healthcare.
5. De-Merit Goods- Market fails due to lack of control on certain products.
6. Negative Externalities- Market fails due to less accountable operation of consumer and
producers.
7. Property Rights- Failure due to improper allocation of property rights.
8. Information Failure- Failure due to providing less information during market
transaction.
9. Unstable Failure- Failure in case of high instability in market place.
10. Inequality- Inequality leads to market failure cause unequal allocation of profit (Ranz
and et.al., 2016).
Government can control market failure by using different steps. This steps are-
1. Control Monopoly Power- By using price capping, yardstic competition and preventing
growth of monopoly power.
2. Government can improve the process the process of right allocation to recover market
failure.

3. By providing better market government can prevent missing market failure.
Q3c.
Answer
Consumer price Index- To much flickering in price can affect the profit of company because
this is not ideal condition for business.
Durable Goods Orders- This indicators of are important to know the market trends. Change in
this indicator can force the organization to make change in business procedure.
Gross Domestic Product- Strong and weak GDP can Affect the profit and profit rate of
organization.
Q3d.
Answere- In the business cycle inflation is maximum at recession stage and it cause gradual
decrease in demand due to increase in price.
Q4.
Q4a.
Answer-
1. Easier Access to funding
2. Clear and effective Legislation
3. Protection for share holders, creditors and employees.
4. Reduction In administration burden on Businesses
5. Better Market stability
Q4b.
Answer
The Currency exchange rate is inversely proportional to GDP and as increment in
Currency exchange rate reduce exportation and slower down economy and Gross Domestic
Product rate (Macdonald, Kleinaltenkamp and Wilson, 2016). Increment in exchange rate has
negatively affected the business and economy of country and in future it is going to be tough for
UK economy to maintain stability.
Q4c.
Answer
Contractionary Fiscal Policy is a policy that is used by government to fight inflation pressure.
In this process by increasing taxes and decreasing expenditure of govern or by doing both

government tries to control inflation. This policy will help the Yulia to maintain sales to earn
profit.
Contractionary Monetary Policy is a form of economy policy that is used to fight inflation by
decreasing money supply to increases the cost of borrowing that decreases GDP and dampers
Inflation. This will increases the borrowing rate which can prevent Yulia in investment.
CONCLUSION
This report is concluding various business solution for business case that is consist of a
small organization Beautifigo whose owner is Yulia. Various advantages and disadvantage of
operating in private market has been evaluated in report. Different aspects like sales, demand and
supply are explained for company of Yulia. Different factors in Uk economy has been studied to
evaluate future of small business organization.