QUESTION 3

In recent years bubble tea has become a craze among Singaporean consumers, leading to

many new firms entering this market either as new Singaporean startups or as established

firms from aboard. There are now over 50 competitors in Singapore each of which sell their

own variations of bubble tea with different flavours, colours, ingredients and packaging. Using the theory and models of market structure, examine this industry. Should government be

worried about any aspect of how an industry with this market structure will perform?

QUESTION 4

You have become the owner-manager of a small local bubble tea seller that has outlets in 10

prime shopping-center locations across Singapore. Given the structure of this market

discussed in question 3, you are considering vertical and horizontal integration. Using the

theory of the optimal boundary of the firm, discuss the make-or-buy decision as well as the

scope for horizontal integration and diversification of your firm. What stages of the vertical

chain should you consider conducting inhouse? What other horizontal markets may you

integrate into?