Malaysian Case: E-Pay, An Analysis
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MALAYSIAN CASE: e-PAY
What are the functions of “product families” in the cases of Toshiba
and Sony Walkman?
In the above mentioned cases, “product families” were considered as
vital and important to be combined and associated with appropriate
strategies in achieving business sustainability. Purposeful strategizing
based upon families of products has been empirically proven to
increase a companys performance over time. In large corporations
such as Toshiba and Sony, the existence of a favorable “internal”
environment to support the development of products families and the
use of appropriate strategies to manage their markets are critical.
It is learned that having both the strategic vision and conducive
environment for innovation led to success of the Toshibas laptop
and notebook families in the marketplace. In addition to this, the Sony
Walkmans case portrayed that having multiple product models that are
backed by a strategy that focused on their “longevity”, which is having
shelf lives compared to those of similar competitors models are
significant towards its success.
What business is e-Pay in? Explain e-Pays revenue and cost
e-Pay involves in mobile prepaid system started with the electronic mobile
prepaid top-up system that used wired platform and delivered via POS
terminals. Its service familys grower further followed by a second
platform innovation (wireless-based system). This includes top-up values
delivered via mobile phones or PDAs especially to cater the markets in
remote areas in Indonesia. E-Pays expanded its service by introducing
payment software solutions in 2004. The service family then completed by
its fourth platform innovation (plastics cards applications) which finally
turned the company into a comprehensive electronic payment provider. E-
Pays business is now serving multiple geographical markets, including
Indonesia, Thailand, Pakistan and China.
e-Pays revenue initiated from the margin of top-ups values that it sells to
the retailers. The airtime values was bought in bulk from the telcos at a
discounted rate that enable e-Pay to generate revenue margins based on
their agreement. The retailers are also required to pay deposit for terminals
installed at their sites. By early 2007, e-PAY had over 15,000 POS
terminals and about 18,000 mobile agents (enterprising individuals or
companies) for its wireless-based system. The company not only managed
to dominate the local market but also expanded their business to
Indonesia, Thailand, Pakistan and China. e-PAY was listed in Australian
Stock Exchange (ASX) in 2005 and had also listed in the Alternative
Investment Markets (AIM) in London. It had also expanded its product
portfolio and generates income from selling of payment software solutions
which have been sold worldwide by 2007. Previously, in 2005, e-PAY had
launched its fourth platform innovation and generated revenue from
plastics card application.
e-PAYs cost structure ranging from firms infrastructure (in Kuala
Lumpur and Sydney), administration, human resources (IT, admin,
research and technology development, software
procurement of ICT hardware and software, logistics,
operations, marketing and sales, after-sales service, maintenance and
customer support. e-PAY also has to bear the cost of buying the airtime
values in bulk from the telcos and distributing profit shares for the
Describe e-PAYs original innovation.
The e-PAYs original innovation is an electronic terminal system-based
mobile phone prepaid top-up system that connected the companys system
to point-of-sale (POS) terminals located at multiple locations such as BP
Amoco kiosks, 7-Eleven convenience store chains, Petronas, ProJet and
Guardian pharmacy chains. The company acts as an intermediary between
the mobile operators and the prepaid subscribers, by buying the prepaid
values in large quantities from the operators and distributing them via the
POS terminal systems. Distribution is performed using computer-
generated PIN numbers and conducted upon the customers requests. A
PIN number is used as the “top-up” codes for a customer to add and
maintain the required monetary value for a pre-paid mobile phone prior to
its usage. This provides more convenience steps to the retailers, as they are
able to avoid the problems associated with the physical-card management.
How was it possible for e-PAY to achieve profitability within a short
period of time (9 months)?
e-PAY had managed to achieve profitability within a short period time of
9 months due the following strategies and advantages;
Exclusive agreement with DIGI which core business is prepaid mobile service has given them the advantage in dominating the market. It was the right strategy undertaken by e-PAY as DIGI major customers consist of prepaid subscribers that would fit the target market.
Collaborations were simultaneously made with dealers of hand phone shops and the telcos. All parties involved which is e-PAY, retailers and telcos been able to enjoy the discounted rate, high availability and guaranteed profit margins in accordance to their agreements.
The terminal system enables retailers to request for new PIN stocks automatically, which are delivered to their terminals in under 20 seconds. This allows them to make the stocks continuously available in contrary with the conventional physical-card environment.
The system had also benefited retailers particularly in the East Malaysia that could overcome problems associated with logistics resulted from their remote locations.
Audit trail function is also enabled by the usage of the terminal system to facilitate in producing daily transactions information.
With the telcos continue to denominate their top-up amounts into smaller values; this online process is vital as it ease the top-up retail transactions which are hard to perform manually. This provides more convenience steps