BUKU JAWABAN UJIAN (BJU)

UAS TAKE HOME EXAM (THE)

SEMESTER 2020/21.1 (2020.2)

Nama Mahasiswa : RIENALDI

Nomor Induk Mahasiswa/NIM : 023811207

Tanggal Lahir : 03/12/1990

Kode/Nama Mata Kuliah : ADBI4201 / BAHASA INGGRIS NIAGA

Kode/Nama Program StudI : 54 | Manajemen-S1

Kode/Nama UPBJJ : 10 / UPBJJ SORONG

Hari/Tanggal UAS THE : SABTU / 03 JULI 2021

Tanda Tangan Peserta Ujian

RIENALD

Petunjuk

1. Anda wajib mengisi secara lengkap dan benar identitas pada cover BJU pada halaman ini.
2. Anda wajib mengisi dan menandatangani surat pernyataan kejujuran akademik.
3. Jawaban bisa dikerjakan dengan diketik atau tulis tangan.
4. Jawaban diunggah disertai dengan cover BJU dan surat pernyataan kejujuran akademik.

KEMENTERIAN PENDIDIKAN DAN KEBUDAYAAN

UNIVERSITAS TERBUKA
 Surat Pernyataan Mahasiswa
Kejujuran Akademik

Yang bertanda tangan dibawah ini,

Nama Mahasiswa : RIENALDI

NIM : 023811207

Kode/Nama Mata Kuliah : ADBI4201

Fakultas : Ekonomi / Manajemen

Program StudI : 54 | Manajemen-S1

UPBJJ - UT : 10 / UPBJJ SORONG

1. Saya tidak menerima naskah UAS THE dari siapapun selain mengunduh dari aplikasi THE pada laman
https://the.ut.ac.id.
2. Saya tidak memberikan naskah UAS THE kepada siapapun.
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UAS THE.
4. Saya tidak melakukan plagiasi atas pekerjaan orang lain (menyalin dan mengakuinya sebagai pekerjaan
saya).
5. Saya memahami bahwa segala tindakan kecurangan akan mendapatkan hukuman sesuai dengan aturan
akademik yang berlaku di Universitas Terbuka.
6. Saya bersedia menjunjung tinggi ketertiban, kedisiplinan, dan integritas akademik dengan tidak
melakukan kecurangan, joki, menyebar luaskan soal dan jawaban UAS THE melalui media apapun, serta
tindakan tidak terpuji lainnya yang bertentangan dengan peraturan akademik Universitas Terbuka.

Demikian surat pernyataan ini saya buat dengan sesungguhnya. Apabila di kemudian hari terdapat
pelanggaran atas pernyataan di atas, saya bersedia bertanggung jawab dan menanggung sanksi akademik yang
ditetapkan oleh Universitas Terbuka.

Kaimana, 03 juli 2021

Yang membuat pernyataan

RIENALDI
 ADBI4201

NASKAH UAS-THE
UJIAN AKHIR SEMESTER-TAKE HOME EXAM (THE)
UNIVERSITAS TERBUKA
SEMESTER: 2020/21.2 (2021.1)

Bahasa Inggris Niaga

ADBI4201

No. Soal Skor

1. The black economy is all economic activity in a given economy that occurs outside or in violation of 25
the prevailing laws and regulations of society.Activity in the black economy is often illegal, usually
untaxed, and rarely recorded by official economic statistics. What problems will arise if black
economy occured in a country?

2. There are some examples of companies which are categorized as first mover in Indonesia like, 25
Aqua, Indomie, Telkomsel and Gojek. Up to now, those companies still exist while there are some
new competitors emerge to compete and grab their market. If you have a company, and you are
categorized as first mover in that industry,how to keep the advantage of first mover in your company
so that your company can beat the new competitor?

3. Indonesian Railways Company (PT. KAI) is the sole operator of public railways in Indonesia. It is 25
completely state-owned and pays track access charges to the government. It can be said that PT.
KAI monopolizes the railway industry in Indonesia since there is no competitor in that industry.
Based on that condition, What kind of monopoly that is done by PT.KAI? is it pure monopoly or
natural monopoly? Please explain the reason

4. President Joko Widodo alluded to improper practices in digital trade that have killed domestic Micro, 25
Small and Medium Enterprises (UMKM). This practice is predatory pricing, selling goods at very
cheap price in e-commerce by offering discounts to customers.What will happen to the market if
this situation continues?

Skor Total 100

1 dari 1
Soal 1

1. The black economy is all economic activity in a given economy that occurs outside or in violation of the
prevailing laws and regulations of society.Activity in the black economy is often illegal, usually untaxed, and
rarely recorded by official economic statistics. What problems will arise if black economy occured in a
country?

Jawab.
1. The black market economy is a commercial activity that operates outside of laws, regulations, and taxes. It's
also called the shadow economy, the underground economy, or the informal economy.
• A black market economy is any income not legally reported to tax authorities
• Cash or cryptocurrency is the preferred payment mode
• It usually involves money laundering
• Underground economic activities are unrecorded and untaxed
• The U.S. black market economy is the largest in the world

Three Characteristics
There are three characteristics that describe the black market economy. First, some aspect of it is illegal. It
may provide goods or services that are prohibited by law. It could provide legal goods or services that avoid
taxes. Often, it does both.

Second, cash is preferred. That way, payments avoid detection by law enforcement, bank compliance
officers, or tax authorities. In 2013, about $76 billion of illegal activities used Bitcoin.2 That's accounted for
46% of all Bitcoin transactions at the time, though the proportion of illegal activity conducted on the Bitcoin
network has fallen drastically since 201.3

Third, the black market economy uses money laundering to convert payments to a legitimate form.4 Money
laundering has three steps:5

a) Deposit funds into a legitimate bank. Cash deposits less than $10,000 don't attract federal attention. For
larger sums, shadow businesses comingle the illegal gains with funds from a cash-heavy legal business.
b) The layering of transactions to disguise the source, ownership, and location of the funds. They may
create overseas shell companies that are only used to launder the cash.
c) Integrate the funds into society in the form of holdings that appear legitimate. Many use funds to buy
real estate.

The goal of money laundering is to move the money from the illicit business through many transactions to
obscure the money trail. It prevents bank compliance officers and federal officials from recognizing the signs
of an underground business.

Motivation
Sellers want to engage in the black market economy to make more money than they could legally. They may
also do it to gain prestige, power, and self-esteem. Most are in an environment where it is socially
acceptable, if not encouraged, by their peers. Some others have been socially conditioned to believe this is
the only way they can get ahead.

Buyers have three motivations. For many, the shadow economy is the only way to obtain an illegal good or
service.

Others want to obtain a legal good or service at a lower price or faster delivery. For example, the cost of
stolen or smuggled goods is lower than the cost of manufacturing these goods. There are no taxes paid. You
just pay for transportation, plus a fee to cover the seller's risk. Often they are sold on the street corner.

Some want to obtain a legal good or service that's in short supply. In these instances, the good or service will
cost more in the black market, but it's more readily available.

Examples
Examples of illegal services include illegal gambling, human trafficking, and prostitution.6 In 2016, trafficking
affected 40 million people.7 Of those, 15.4 million have been trafficked into forced marriages.

A growing illegal service is the digital black market and cybercrime.

Examples include stolen personal and financial information. It's used to gain access to bank accounts and
credit cards or to establish new lines of credit. Cybercriminals are highly skilled, under the age of 25, and
often recruited from universities. Europol estimates it costs corporations 750 billion euros a year.1 2

Illegal goods include street drugs, weapons, human organs, endangered species, and counterfeit money.
Other examples include pirated movies and CDs, ticket scalping, and many goods sold on the street.

Global Financial Integrity estimated the maximum that illegal international trade made in the top 10
sectors.1 3

a) Counterfeiting: $1.13 trillion

b) Drug Trafficking: $652 billion
c) Illegal Logging: $157 billion
d) Illegal Mining: $48 billion
e) Illegal Fishing: $36.4 billion
f) Illegal Wildlife Trade: $23 billion
g) Crude Oil Theft: $11.9 billion.
h) Light Weapons Trafficking: $3.5 billion.
i) Organ Trafficking: $1.7 billion.
j) Trafficking in Cultural Property: $1.6 billion.

When added to human trafficking, the total is $2.2 trillion.

A third example of the black economy is legal goods and services that are shielded from taxes. It includes any
work done "under the table." It includes any income that isn't reported to tax authorities. For example, a
construction worker engages in the black market economy if he takes a cash payment and doesn't report it
on his taxes. The work is legal, but his tax avoidance isn't.
The Internal Revenue Service estimates that 16.3% of taxes owed are not paid.1 4 As a result, tax evasion cost
the federal government $441 billion per year from 2011-2013. The IRS recovers $60 billion, reducing the tax
gap to $381 billion annually. Not all of these are black market participants, but the IRS estimate does give a
ballpark idea of how much is lost to these illegal activities.

Advantages
The shadow economy provides jobs and income to people who might not have good options in the legitimate
economy.1 5 For example, a street market allows dozens of entrepreneurs selling similar products to
compete.

It allows people to afford medicine, health services, and other essential products they could never obtain
otherwise. For example, a doctor in a country illegally can provide low-cost health care on a cash basis
because he doesn't pay taxes.

It also helps countries survive economic downturns.1 5 When people lose jobs, they turn to the shadow
economy to survive until the recession is over.

Disadvantages
The shadow economy drives out legitimate industries that can't compete with the lower costs of illegal
operations. Some black market players deliberately create shortages in legal goods to force people to
purchase from them.

The tax-free nature of the black market means the government loses revenue. These funds could have been
used to provide services to the country's citizens. The underground market economic activity is not counted
in government statistics. As a result, the country underestimates its gross domestic product.

Workers don't receive benefits or legal protection. As a result, many are exploited.
These workers aren't included in the nation's count of employment and unemployment. They aren't counted
in the labor force.

For example, increased drug use is one reason why the labor force participation rate has declined since
1999.1 6 Yale professor Alan Krueger did a study of prime-aged men who weren't in the labor force. Professor
Krueger found that 20% of the LFPR decline for these men was caused by increased use of opioid medication
between 1999 and 2015. Almost half of them take pain medication daily to treat chronic health conditions.
One third were forced to take illegal heroin when their prescriptions ran out and they became addicted.

Another study found that 1 million people are heavy users of opioid drugs.1 7 That's 0.5% of the labor force. It
cost the economy $44 billion a year and slowed economic growth by 0.2%.

Risks to Those Involved in the Transaction

Both buyers and sellers risk punishment, including fines and jail time, for engaging in illegal activity. If the
good or service itself isn't illegal, then the tax evasion or theft is.

Buyers have no recourse if the product isn't satisfactory. There are no receipts, warranties, or guarantees.
For example, the product could be counterfeit. They could become a victim of crime themselves. They can't
appeal to the government for any protection.
 Buyers and sellers could be exposing themselves to violent consequences. Since the activity is illegal, the
strongest survive. That includes the threat of force when necessary.

Pros

• Provides jobs
• Often offers goods and services at a lower price
• Helps countries weather recessions

Cons

• Exploits workers, especially women and children.

• Encourages violence and drug abuse
• Government loses revenue and miscounts employment estimates

Soal 2

2. There are some examples of companies which are categorized as first mover in Indonesia like, Aqua, Indomie,
Telkomsel and Gojek. Up to now, those companies still exist while there are some new competitors emerge
to compete and grab their market. If you have a company, and you are categorized as first mover in that
industry,how to keep the advantage of first mover in your company so that your company can beat the new
competitor?

Jawab
2. how to maintain a first mover advantage in your company so that your company can beat new competitors.to
keep the advantage of first mover in your company so that your company can beat the new competitor with
the Effective Business Strategy to Win in the Competition, Currently, business competition is getting tougher,
so it must be faced in a healthy way and in accordance with existing regulations. The existence of competitors
or competitors in a business is normal. What needs to be done in winning the competition is to think and
carry out special strategies so that consumers can switch to using your product instead of competitors. There
are several effective business strategies that you can do to be able to win the competition easily. What are
these strategies? Check out the complete information below;
1. Growth Strategy
Growth strategy means constantly introducing new features from existing products. Often companies are
required to modify or become more innovative in order to continue to be competitive in their industry.
Otherwise, customers will run to competitors' products that offer more sophisticated technology. Not only
large companies, MSMEs can also adopt this growth business strategy. Sometimes, a company can find a new
market for their product by accident. For example, a dab soap company conducts market researchand the
results show that their products are most favored by factory workers. That way, companies don't need to
focus on selling their products at large retailers, but can focus on selling them in stalls or small retailers around
factories or industrial areas.
2. Product Differentiation Strategy
Product differentiation strategy is one of the most effective strategies in business for MSMEs. Through this
type of business strategy, companies can strategically explore the factors that differentiate products and
services from competitors. The differentiating value in this strategy does not necessarily result in the
company spending more to capitalize on it. Product differentiation can be born from how to do business
models, how to make products, or apply approaches to services. And all of that does not have to incur
additional costs if in-depth research is carried out carefully and more strategically.
3. Pricing Strategy
Pricing strategies often involve imposing higher product prices than competitors, especially when in the early
stages of product introduction. MSME actors can use this strategy and make it a motor for accelerating
production and advertising capital reversal that might have been carried out if successfully implemented.
However, don't forget to make sure that you really have something special in your product or service when
implementing this strategy. If you are in a market environment where there are not many players or even
you are the only one there, then this strategy can be an effective strategy. Because customers will only see
your brand.
4. Acquisition Strategy
Business people who have large enough capital can use this acquisition business strategy. An acquisition
business strategy means buying an additional company and/or production line from an existing product. The
advantage of this strategy is that with large capital, a company can more freely assess the business potential
of the company to be acquired in accordance with the vision of the company that owns the capital.
5. Content Strategy
In this increasingly sophisticated digital era, content strategy is an effective business strategy that must be
carefully developed and implemented properly. When your business uses a clear business strategy through
content, then your content will work efficiently. This is because the content developed will be more specific.
This content strategy will at least involve developing blog content, email marketing , and social media
activation that is relevant to your business. One of the most important aspects of this strategy is that you
don't just produce and distribute content, but you also have to be responsive to every interaction that occurs
from each content.
How to Face Business Competition
1. Offer Competitive Prices

The price offered for your business product or service is not far from the competitor's price. Product prices
that are much higher than market prices will be difficult to develop a managed business. Unless the business
you are building has a target market of the upper middle class with the support of luxurious facilities and so
on.

2. Don't Drop Your Competitors

Do not make statements or issue opinions that bring down competitors. If a customer tempts you to speak
ill of your competitors, try not to help. Answer in a polite manner, as long as you don't be indifferent or seem
unconcerned with the customer's outpourings.

3. Providing Good Service to Win Business Competition

Starting from making service SOPs and providing training to all your employees. Ask your employees to
serve customers well, starting with a smile and ending with a smile back.

4. Expand Target Market

The importance of expanding the market is like adding product types by planning new target markets. For
example, if your target is only teenagers, producing or adding products that are often used by housewives
can be done to expand the market.
 5. Doing the Right Promotion

Before choosing the type of promotion for your business, do some research on the competitors first.

After understanding various effective business strategies, now you don't need to hesitate to run and manage
a business. With the right strategy, you can be sure that the business you are in will find it easier to achieve
success. To help you manage your business finances, use an online accounting service that is easy to use.

Soal 3

3. Indonesian Railways Company (PT. KAI) is the sole operator of public railways in Indonesia. It is completely
state-owned and pays track access charges to the government. It can be said that PT. KAI monopolizes the
railway industry in Indonesia since there is no competitor in that industry. Based on that condition, What kind
of monopoly that is done by PT.KAI? is it pure monopoly or natural monopoly? Please explain the reason

Jawab
we know that PT. KAI is a service company, Definition, Purpose, and Characteristics of a Bureau of Companies
(Perjan) - Perjan is a BUMN whose entire capital is included in the state budget which is the right of the department
where Perjan is under the department. Perjan aims to serve and serve the interests of the people who aimed at
the general welfare without neglecting the requirements of efficiency, effectiveness, and economy as well as
satisfactory service.
PT Kereta Api Indonesia (Persero) (abbreviated as KAI or PT KAI) is an Indonesian State-Owned Enterprise that
provides rail transportation services. PT KAI's services include passenger and freight transportation. At the end of
March 2007, the DPR passed the revision of Law No. 13/1992, namely Law No. 23/2007, which stipulates that
private investors and local governments are given the opportunity to manage rail transportation services in
Indonesia. Thus, the enactment of the law legally ends PT KAI's monopoly in operating trains in Indonesia. On May
8, 2020, Didiek Hartantyo was appointed as President Director to replace the previous position of Edi Sukmoro.
KAI has a membership status in the International Railway Union (UIC) since 2009.
it can be concluded that PT KAI is part of a natural monopoly, where the definition of a natural monopoly is as
follows:
Understanding Natural Monopoly in the Economic World

Whereas in the world of economics and business, natural monopoly is a type of monopoly that exists because of
the high initial costs or strong economies of scale in running a business in a particular industry. A firm with a
natural monopoly is the sole provider of a product or service to an industry in a given geographic area.Natural
monopolies arise in industries that require unique raw materials, technologies, or similar factors to operate. This
monopoly can run all the time following market conditions, but unfair business practices can hinder competition.
Some monopolies are sometimes deliberately created to seek profit by cheating. For example, the practice of
collusion, mergers, acquisitions, and takeovers in an unsportsmanlike manner. Collusion itself can involve two or
more parties to conspire to gain market advantage, through price fixing or price increases that are very well
coordinated and structured. Thus, there will be obstacles for new companies to meet market needs, resulting in
a natural monopoly. This is in line with what Ari Sudarman mentioned below:

• Producers have more than one required resource and keep it secret, or hold certain knowledge of
production techniques that is unknown to others.
• Producers who do monopoly have patent rights for every output produced.
• Manufacturers get special permits by the government. In this case, the government appoints certain
companies as producers as well as sole distributors of certain products or services. However, the
 company operates under government law in certain aspects of its operating practices. The government
also sets tariffs, the aim is to prevent the entry of similar goods from abroad.
• The market size is too small to be served by more than one firm. An example of a market that can only
be served by one optimum production scale company is transportation, electricity, and communication
companies.
• Manufacturers apply a limit pricing policy, which is a policy of setting prices to the lowest level. This policy
is used to prevent new companies from entering the market.
• To make a profit, producers need production on a large scale or known as economies of scale. Thus, it
is difficult for new companies to enter the market.

Reasons Natural Monopolies Are Allowed and Examples

A natural monopoly is permitted when a firm can be a supplier of a product or service at a lower cost than potential
competitors, and a volume capacity that can serve the entire market.

Natural monopolies use industry's limited resources efficiently to offer low prices to consumers. This is
advantageous in many situations in natural monopolies.

For example, there is a utility industry is a natural monopoly. The utility monopoly provides water, electricity,
natural gas, and oil that is supplied to all areas of the country. The initial costs required to set up a utility plant
and product distribution are enormous. Thus, the cost of capital becomes a strong deterrent to potential
competitors.

In addition, society can benefit from the natural monopoly by the utility company. Examples of companies that
fall into the natural monopoly category are electricity poles and water pipes because they require some
distribution for each competitor. In addition, the industry is regulated to ensure consumers get fair prices and the
right service.

Another example of a natural monopoly is a railroad company. This industry is sponsored by the government, in
other words the monopoly that is carried out is licensed because it provides efficiency for the public interest and
will continue to be developed. Considering the resources needed by the railway industry include land for train
lines, train stations, fuel, and others.

More modern examples of natural monopolies are social media platforms, internet search engines, and online
retail. Companies like Facebook, Google, and Amazon have built natural monopolies for various online services
for the most part. first mover advantage. In contrast to traditional utilities, some countries do not yet have legal
rules for natural monopolies.

Natural Monopoly Regulation

Firms with natural monopolies can usually exploit benefits by limiting the supply of goods, raising prices, or using
power in other ways. For example, utility companies that seek to increase electricity rates to accumulate greater
profits for owners or executives.

Another example, internet service platforms can use monopoly power over information, online interactions, and
others to sell to other parties. Regulations on natural monopolies are made to protect the public from abuse.

But unfortunately, natural monopolies that run under the law and risk abuse, are still allowed as long as the
industry provides services to the public.

Public operators are usually required to provide open access without restricting supply or discriminating against
customers. In return it is allowed to operate as a monopoly, as well as protected from liability for potential abuse
by customers.

For example, landline telephone companies that serve every household in their respective areas without
discriminating, both in terms of the content of the conversation and the way of speaking. Otherwise the company
will not be responsible if any customer uses the service for prank calls.

In some cases, monopolies are permitted by the government and there is a regulatory body in each region that
serves as the protector of the public. Utilities are usually regulated by departments or commissions administered
by the state.

For example, the US Department of Transportation is largely responsible for the safety of rail travel. The US
Department of Energy is responsible for the oil and natural gas industry.

Examples of Potential Natural Monopoly

The manufacture of airplanes, although currently included in a duopoly, is close to a natural monopoly. The
industry requires very high fixed costs associated with manufacturing aircraft on a global scale and requires two
major manufacturers to support it.

The digital platform, in some countries Uber dominates the online taxis that can be ordered online. Fixed costs
are not very high, but the company provides dominant benefits such as network economy, increased economy,
and lower average prices.

Bus services in certain areas, the number of bus companies in an area tends to charge relatively higher. However,
providing practical and efficient services such as service duplication, congestion at peak times, oversupply at off-
peak times. However, in some cities have more than one bus service, this can be called a competition, but can
also be called duplication.

Then the gas company can be said to be a natural monopoly at the distribution stage. This is because there are
several companies that use one national network. However, at the retail stage, there is likely to be a lot of
competition.

Natural Monopoly Advantages

At first glance, if there is a monopoly, it is very scary. But in fact there are several advantages from there:

Ease of Market Access

Companies that practice natural monopoly have the freedom and convenience to enter and exit the market. This
low barrier provides opportunities for new companies to enter and enliven the competition.

This ease of entry and exit is used to ensure that no single producer dominates and uses power to exploit
consumers.

However, the existence of freedom of entry and exit makes the competition even tighter. This condition can be a
whip for companies that play in monopolistic markets, so the company is required to continue to be creative and
innovate in creating products or services that prioritize quality and quality.

Obtaining Copyrights, Patents, Brands

Another advantage of natural monopoly practices is that companies get copyrights, patents, and brand rights.
Copyright is a protection given to companies that produce a product or service that is useful and beneficial to the
wider community.

Copyright can also be said to be a special right given to companies to publish and reproduce the products or
services that are created.

While patents are not much different from copyrights, special rights granted to companies in improving the
process and production results. Patents are used to protect products or services created from being copied by
others without permission. So, the products produced by a company have protection rights.

The product or service created by the company must have a brand. Companies that have natural monopolies get
brand rights. The purpose is to differentiate from other company's products. Names and trademarks that have
been registered with the Directorate General of Patents or the Directorate of Trademarks and Copyrights cannot
be imitated by other parties.

Finally, companies that have natural monopolies have no competitors. That means, the conflict caused by
competition in the market can be reduced. If the monopoly is held by a state-owned enterprise, it will be easier
to create a just and equitable need.

Disadvantages of Natural Monopoly Markets

Indeed, there are many advantages of natural monopoly market practice. But the downside is also not small.
Among them:

Created a Black Market

One of the drawbacks of natural monopolies is that it triggers the creation of a black market or illegal transactions.
The black market affords consumers accommodation for the same goods at very low prices.

This is because the goods offered in the monopoly market are considered too even, especially for the lower
middle class people. In addition, goods tend to be difficult to obtain.

Exploitation Happened
Natural monopoly markets are at risk of exploitation by both companies and sellers. This can happen because
the company or seller sets a price that is relatively high compared to its marginal price.

Thus, potential consumers have to pay for the product or service at a much higher price. This condition causes
workers to get lower wages. Not commensurate with the high workload.

Injustice Happens
 Natural monopoly practices can lead to injustice committed by companies to consumers. This happens because
the company has absolute power. In this type of monopoly market, it also allows for injustice to the producers
who offer similar products in the market.

Waste
Waste is often done by companies that monopolize the market. Usually, companies tend not to pay attention to
efficiency in production activities. Just focus on large-scale production and how the product should sell. Thus,
costs tend to swell in the production process.

In this case, consumers who rely on products or services marketed in monopoly trade cannot ask for more.
Consumers must accept the decision of the company. If prices soar up, consumers must continue to buy at high
prices. Although most companies are sponsored by the government, it is possible that something like this can
happen.

For example, a fuel oil company, when raw materials are scarce and difficult to obtain, the selling price is doubled.
While almost everyone needs fuel for their activities.

Certain monopoly markets, companies still need costs to survive in competition such as advertising and
incentives. Usually the promotion strategy that is carried out is not right on target so that a lot of costs are wasted.
Intensive costs such as providing discounts also require additional budget.

Soal 4
4. President Joko Widodo alluded to improper practices in digital trade that have killed domestic Micro, Small and
Medium Enterprises (UMKM). This practice is predatory pricing, selling goods at very cheap price in e-
commerce by offering discounts to customers.What will happen to the market if this situation continues?
Jawab
In every industry, there must be competition. The purpose of the competition itself is to control product quality
and of course increase market share by attracting more customers. The existence of competition will trigger
players in the industry to provide the best to their target market, both in terms of product quality and service.
Therefore, it is necessary to apply a strategy to be able to win the competition. One of them is predatory pricing
strategy .

Definisi predatory pricing

Predatory pricing is defined as a pricing strategy in which the price set for a product or service is very low from the
industry market price with the aim of reaching new customers, eliminating competitors, or creating barriers for
potential new competitors to enter the industrial market. From this definition, predatory pricing strategy looks like
a normal strategy in business. However, it cannot be realized.
Predatory pricing strategies are often considered as illegal actions in an effort to win the competition. This is
because by setting the price of a product or service so low it will eliminate healthy competition so that the market
is more vulnerable to monopoly. The implementation of this strategy is seen as a deliberate attempt to damage
the market.
Jurisdictions in many countries consider that the implementation of a predatory pricing strategy is illegal because
it is considered anti-competitive, which is contrary to the laws and regulations on competition. Although in reality
it is quite difficult to prove, because industry players who apply this strategy argue that price reductions are normal
in business competition.
Benefits of predatory pricing
The implementation of predatory pricing strategy certainly has certain objectives, both to win market competition
and reach new customers more broadly. If this is the case, then what benefits will the company and customers
get from implementing this strategy?

For companies, predatory pricing clearly provides an opportunity to seize and dominate market share. By setting
the price of products and services as low as possible from the market price, it will attract more customers and of
course the sales volume will increase drastically.

Price wars in the implementation of predatory pricing strategies are good for consumers as long as industry
players are able to survive. This is because consumers will have more choices of products or services to meet
their needs. In addition, consumers can also consume products or use quality services at very affordable prices.

The impact of predatory pricing on the industry

Behind the benefits of setting a low price in a predatory pricing strategy , there are also risks and even threats of
negative impacts. In the struggle for the market, generally the competition will be won by players who are able to
survive to the end in offering quality products and services at low prices. Because this strategy requires a lot of
sacrifices, where the company must be willing to reduce profits and even bear losses due to high production
costs. For companies that already have a strong financial foundation, it is certainly not a problem. However, it is
different for companies that are new players in the related industrial market.
If the price war in the industry continues, sooner or later there will be players who are unable to survive so they
have to withdraw or even disappear from the competition because they are unable to bear bigger losses. As a
result, the market will be dominated by a small number of players or even leaving only one of my players who is
financially strong. Furthermore, this will create market dominance which is known as monopoly.
The retreat or even the loss of competitors will certainly loosen the competition. As a result, the monopoly power
is getting bigger and bigger. Players who are able to survive in this price war will certainly be the winner as the
ruler of the industrial market so that they have the flexibility to regulate the market, especially in determining
prices.
In order to recoup the high costs of production and increase their profits again, the firms that win the price war
and the monopolists tend to raise the prices of their products and services even higher. This condition is certainly
less favorable for consumers. In addition to being affected by high prices for products and services that can last
in the long term, consumers are also faced with a lack of choice.
In principle, the price war in competition is not always bad, it can even have a positive impact if all industry
players are able to survive. However, the implementation of the predatory pricing strategy is considered to only
benefit consumers temporarily. In fact, predatory pricing actually 'kills' many industry players, especially new
players and players who lack a strong financial foundation. If conditions are like this, then the price war that
initially had a positive impact on consumers, then turned into a disadvantage.

Examples of implementing predatory pricing strategies

The presence of new players in the industry who are actually able to enliven and provide more choices to the
market often becomes a 'scourge' for the old players who have even controlled a large part of the market share.
They apply various strategies to win the competition and even get rid of their competitors. The predatory pricing
strategy is one of them.
Not only applicable in a country's local industry, predatory pricing strategies are also used to compete in the
international market. For example, call it the practice of dumping . Dumping can be understood as a trade policy
that sets the selling price abroad much lower than the normal price, even from the prevailing price in the export
destination country.
In the practice of dumping , companies that apply predatory pricing strategies or known as predators try to
conquer new foreign markets by selling their products in export destination countries at lower prices than those
charged in that country. The risks and challenges of this predatory pricing strategy are trying to prevent
'discarded' goods from being bought abroad but then resold in profitable local markets.

A predatory company that implements a predatory pricing strategy must be able to get rid of even 'kill' competitors
so as to win the competition. Not necessarily. If the competitor is actually stronger than expected, the predatory
company is faced with two choices, namely extending or ending the implementation of the predatory pricing
strategy . When extending, it must have sufficient strength both from financial reserves and other sources of
income. However, when it ends, predatory companies must be generous in sharing market share with their
competitors.