Amara Brand: Business Environment Analysis and Market Structure

This report provides a comprehensive economic analysis of the Amara brand, a lifestyle group operating in the hotel, property investment and development, and specialty restaurants sectors. The analysis begins with an introduction to the business and its general environment, including a description of the business, its main competitors, and the market structure, including price elasticity of demand and mark-up prices. The report then delves into production costs and scale, differentiating between fixed and variable factors. A key focus of the report is the macro business environment, including political stability, inflation, unemployment, and currency exchange rates. The report concludes with an examination of the sustainability practices of the business, including externalities in production and consumption, providing a thorough understanding of the economic factors influencing the Amara brand. The report is contributed by a student to be published on the website Desklib.

Running head: ECONOMICS FOR SUSTAINABLE WORLD
ECONOMICS FOR SUSTAINABLE WORLD
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Executive summary
The paper deals in the understanding of how business environment can effectively change the
profit pattern and lead to many consequences. This is done with respect to Amara Hotels who
has huge operation in Singapore and has expanded hotels in many countries.

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Table of Contents
1) Introduction to the business and general business environment.................................................3
Description of the business..........................................................................................................4
Main competitors of the firm and the market share of the firms.................................................5
Market Structure, Price Elasticity of Demand and its Mark-up Price.........................................5
2) Production costs and scale...........................................................................................................7
Fixed factors of production..........................................................................................................7
Variable factors of production.....................................................................................................8
3) Macro Business Environment.....................................................................................................9
Stability of the political system.................................................................................................10
Level of inflation, unemployment and average rate of interest.................................................11
Recent changes in the currency exchange rates.........................................................................12
4) Sustainability practice of the business.......................................................................................12
Externalities in production.........................................................................................................12
Externalities in consumption.....................................................................................................13
Reference List................................................................................................................................14

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1) Introduction to the business and general business environment
The business environment is going under a continuous change because of the rapid
changes in technology, consumer demand, production cost, sustainability practice, sale of the
product and existence of rival firms. It is important to study about the market conditions of a
company that is effective for understanding the business environment and market demand of the
firm. The aim of the paper is to undergo a market analysis of Amara Brand with respect to
various factors that affects the overall business structure (Giap, Kai, & Seng, 2015).
Description of the business
Amara brand is a lifestyle group that focuses on three business areas such as property
investment and management, hotel investment and management, specialty restaurants and food
services. The brand is well known for the creation of innovative hospitality and management
services. The company is reputed to be one of the leading integrated lifestyle group in Asia. The
offer a range of premium brands that is efficient for value, quality, style, personalized service
along with a range of product offerings. The company has a high value in terms of customer
satisfaction that has enabled the firm to create more of quality products that go beyond customer
expectation.
Teo Teck Haut founded a building in 1930 to undergo a project, Cathay Cinema. In 1970,
Teo Teck Haut Private Enterprise has been created to expand construction and property
development in several firms. The company effectively changed its name into Teo Tech Haut
Investment Private Limited and increased business operations in investment and management of
property. Slowly and steadily, the firm shifted into the tourism industry of Singapore by
engaging in hotel tourism and management services (Purwomarwanto, & Ramachandran, 2015).

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The group built hotel and shopping Centre by mid 1980s and has developed the business into
hotel and specialty restaurants.
The goal of the firm is to give a world class experience in hospitality services. The
company originally operated in Singapore and has expanded its operation in Thailand and China.
The size of Amara Brand is around 501-1000 employees. The company has a market
capitalization of about 264 million. The company has a forward dividend and yield value of 2.15
percent that has qualitative change in market in market parameters.
The firm has many hotels and resorts with a friendly and relaxing environment. Hotels
are located in places that is ideal for travelers. Amara Signature Hotels provides stylish interiors
with guest dining, art facilities and world class hotel services. Amara sanctuary offer a
rejuvenating experience for the people in exotic locations that has a culmination of traditional,
modern amenities and local elements. This in turn has led to a rise in demand for Amara’s hotel
by tourist or locals who wants a refreshing and enriching experience that has a huge impact on
the revenue and profit margins.
Main competitors of the firm and the market share of the firms
Amara has many competitors in the hotel industry who provide similar serves with
different products and choices. Amara has about top eight competitors such as Tune Hotels, Red
Planet Hotels, Ayam Penyet President, Pan Pacific, Crescentrating, Avista Hotels and Resorts,
Cross hotels & Resorts and Sukosol Hotels. These firms have a huge market share and deals in
the provision of similar services.

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Market Structure, Price Elasticity of Demand and its Mark-up Price
Market structure of the business is oligopolistic where there a few number of large firms
who offer a high price. It can be closer to perfect competition if only the market for luxury hotels
are being considered. However, it is in no way near to monopoly market structure where there is
one firm who alters the market price. Although, customers can get various options in tourism
industry, the range of luxury firms are in less numbers due to the world class services and
expansion in various countries (Prajogo, 2016). People prefer the company due to its world class
services that is luxurious and effective for the effective allocation of resources. Firms under this
system refer to compete by various ways other than pricing strategy where firms keep a much
lower price. Products provided by Amara are differentiated by its quality services, which cannot
be provided by other firms under the similar industry.
The price elasticity of demand measures the degree of a change in quantity demanded
with respect to price. The price elasticity is inelastic because it a branded company where the
change in price does not have much impact on the quantity demanded by the customers. The firm
has expanded operations in various sectors like specialty restaurants that serves various
extraordinary dishes for the customers (Trivedi, 2017). This enables the firm to charge high price
without getting a negative impact on the revenues.
Markup price is the price charged for service buyers from online before reaching the
venue, which raises the price of the service. According to customer reviews, Amara charges a
price that is much lower than its rival firms. This is why customers prefer Amara because they
get quality services at prices lower than the other luxury hotels (Seetaram, Forsyth, & Dwyer,
2016). They don’t charge a price for parking cars. The mark up price for spending a night hugely
differs according the country or place location, although Amara is well known for its price and

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luxury services. Amara also offers a discount for early online buyers and keep their customers
happy and satisfied. Moreover, Amara keeps its hotel location near to airports such that
customers can access various markets and other places for buying the essential needs which
lowers the overall cost of staying (Chiu, 2018). The Sanctuary Hotels generally charges a high
price, yet the location of the hotel at extraordinary places matches the deal.
2) Production costs and scale
The revenue of a firm can be denoted by its size and operations in sectors that can
effectively improve the performance of the firm. Production cost plays a crucial role as a higher
production costs leads to fall in profit margin. The production cost is related to the scale of
production which is denoted by the size of the plant, production techniques and number of plants
installed. This can be related to economic concepts like economies of scale where each firm
wants have an efficiency in production which increases the cost advantages.
The hotel industry needs several factors each day to source its products. Since the
performance of the firm is based on the service of each firm, they effectively change their input
factors (Morcol et al., 2017). Therefore, Amara has to pay for various fixed and variable costs.
Total cost is the summation of fixed and variable costs.
Fixed factors of production
Fixed factors of production are those where only one factor of production can be change
such as labor and not capital. This generally occurs in the short run. Fixed factors does not
change when when the output is changed, which mostly comprise of capital and equipment,
infrastructure, furniture, interiors. Fixed cost of firms under the hotel industry comprise of
infrastructural facilities such as luxury experience that needs great tools and innovative

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infrastructure. It comprise of land which is fixed and cannot be changed in the short run
(Navarro, 2016). Amara has structured its infrastructure with creature furniture, tools, equipment,
venues, interior decoration which remained steady in short run. In long-run, these factors can be
changed and does not remain as fixed factors.
That is why the company has stared its operation in Singapore but effectively structured
the infrastructure with various furniture, tools, equipment, design that cannot be changed one
when they are built. Amara spends on bed sheets, blankets, pillows, telephones, beds, desks,
refrigerator, dinner sets, tables and lounges. Amara has to bear huge fixed costs that comes from
maintenance of the hotels. The bills of electricity, Wi-Fi connection, Air Conditioner, Electricity,
pest management practices, fire protection system and management of security system (Azam,
Alam, & Hafeez, 2018). Maintaining Gymnasium machines, telephone plans and other
extravagant services such steam bath, coal bath needs a continuous maintenance because
otherwise the machines will not perform effective and Amara will have to arrange for new
machine installations.
The firm needs to bear these costs irrespective of revenue and profit. For maintaining the
restaurants, Amara bears a constant cost of inputs which is regularly delivered to the hotels. Cost
of entertainment such as television, music, recreation rooms. The forms bear cost of financing
the interest on loan amounts, payroll, reservation, sales and advertising costs, newspaper
subscriptions and the yearly external auditing cost. With the change in time, these factors can be
changed as per the consumer demand (Belousov et al., 2017). But in short run firm cannot
change these factors as it will hamper their coordination and management practices effectively.
For restaurants and food sector, the firm calculates their expenses effectively that will go for
buying the inputs such as vegetables, fruits, creams, drinks and a range of products.

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Variable factors of production
Variable factors comprise of variable production costs that can be changed. This occurs
in the long run where goods are effectively sourced from its variable factors such as land, labor,
capital and entrepreneurs. Hotels provide hospitality serves and therefore needs to provide with
basic needs daily. These cost comprise of toilet equipment, personal care, cleaning materials, dry
and liquid cleansers, swimming garments, bed sheets, blankets, and cost of managing laundry
which varies regularly as per business requirements. These hotels needs effective management
practices where employees are regularly trained about hospitality and other caring needs in order
to maintain their efficiency such that customers are happy with the service.
Amara has various partners from where they buy the drinks, fruits, juice, ingredients,
dairy products, fish and meat. These goods are delivered daily because the goods have early
expiration dates. Moreover, the demand for these products vary with time and Amara fixes the
deal weekly. Amara organizes various services to their guests and needs to bear the fixed costs
like flower arrangements, guest room amenities, stationeries in front desk and food court,
decorations, banquet costs and several costs that changes as per the management practices.
Therefore, it can be concluded that Amara’s fixed cost is higher than the variable costs.
However, these costs are constant and nothing can be predicted for the variable costs because the
value of variable costs varies hugely. The profit depends on the value of variable costs which
keeps changing (Fang et al., 2016). The management practices are to be improved such that
goods can perform effectively without affecting the profit margins.

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3) Macro Business Environment
The macro environment comprises of all the macroeconomic factors that effectively
changes the performance of the business environment. These factors comprise of all the factors
relating to inflation, employment, Gross Domestic Product, rate of interest and the overall
political structure that can affect the sale of the product. Thus, it becomes important for Amara to
have a qualitative analysis of the macroeconomic environment that can enhance the productivity
of the markets.
Stability of the political system
Amara has most of the business in Singapore which is one of the most efficient
economies for tourist visit and economic purpose. The country does not have much corruption
and operates with a low tax rate which makes it one of the most preferred destinations of the
tourist. The country ranks as third in economic terms such as per capita GDP as a measure of the
purchasing power parity. Singapore economy is stable for business because of lower political
conflicts and lesser regulation of government on business operations (Zhu & Lim, 2018).
Changes in political system effectively hampers business because the income, output, production
is detrimental to purchasing power, consumer demand and income effect. If government puts
policies that is not lowers consumer demand and purchasing parity, people will not spend on
luxury hotel visits like Amara. This will in turn will lower the level of positive profits for Amara.
Tourism is one of the most successful business in Singapore which attracts more than
17.4 million international tourists. Moreover, the openness of trade policies acts as a positive
power to the market outcomes which helps to develop the core business statistics. This has
helped Amara to attract more tourists and renovate its infrastructure. Hotels in Shanghai and
Bangkok also runs efficiently due to the environment friendly business culture. Amara has

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expanded its operations in areas which is famous for the tourist destinations who afford luxury
hotels with a wider range of amenities than its competitors. This has adequately helped the firm
to foster economic development. Shanghai is now known as a place of tourist attractions which
generates huge revenues (PLEȘOIANU & Diaconescu, 2016). The political structure in Bangkok
and Shanghai is comparatively stable and government does not put much regulations because
any changes will hamper the overall business venture from which government generates huge
revenues.
Level of inflation, unemployment and average rate of interest
Singapore has stable inflation rates with a value of about 0.44 percent, which is
successful for generating super normal profits in business. The rates are expected to go up to the
level of 1.4 percent that is still good for the economy. Inflation is an important parameter in
determining the functioning of the economy as it can qualitatively change the values of other
macroeconomic parameters like unemployment, purchasing power, income level, per capita and
GDP level. Inflation is rate of increase in the aggregate price level.
If the price level becomes high than people will stop buying more goods which lowers
the aggregate demand and therefore profit level. Similarly, people will stop hiring employees
which leads to unemployment. A rise in consumer demand raises the price of goods because then
producers can make big profits. A minimum inflation level is good for the economy which
denotes the consumer demand over goods. Unemployment rates have gone down from 2.3 to 2.2
within a year and is assumed to go down in the near future which raises the demand for goods.
This proves how the economy is flourishing and the demand for luxury hotels will continue to
rise according to the economic theories.

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The effectiveness of these parameters is detrimental to the performance of the economies
is the interest rate. If interest rate goes up, people keeps more of their money in banks and lower
their expenditure which negatively affects businesses and vice-versa. Thus, the interest rates are
changed from time to time in order to balance the economic profit level (Yoshino, Kaji, &
Asonuma, 2016). The rate has been low in 2016 which has been increasing continuously till the
mid of 2019, after which the rates started dropping slowly and accelerated business development
of Amara. Low interest rates increases the expenditure level and attracts investors to invest in
more deals. As a result, Amara has received huge profits from its operation in Singapore.
Although the interest rates are comparatively higher in China, the fall in unemployment rates
have developed the business of Amara.
Recent changes in the currency exchange rates
The exchange rate has gone down in the last years which is good for businesses. This
makes business profitable as it makes exports cheaper and people will visit more of Singapore.
Tourists does not to need to spend more anymore and rates are expected to fall as business have
already started developing. Currently, Singapore operates with an exchange rate of about 0.19
dollar. According to the above parameters, the business market will grow and Amara can
efficiently improve its sales over various things (Abdoh et al., 2016). These goods are luxurious
and acts like normal goods such that demand will fall during recessions. This will change the
way goods are sourced from various economies. Amara has expanded operations in many small
countries and cities that has good locations like hilly areas or beaches where people look for a
luxuries experience from their hotel itself.