NUR FATIHAH BINTI ZAINUDDIN (244142)

In your opinion, since margin for fuel business only generate 6% compared to

convenience store (20%), do you agree convenience store subsidise the fuel business?

Provide your arguments and evidence.

In my opinion, I do not agree if convenience store be subsidise with the fuel business. This is

because Baron Service Station (BSS) fuel business average sales is higher than convenience

store. For example, the average sales of BSS in 2009 is RM1.7million where RM1.6million

came from fuel business. This prove that fuel business still dominates the profit received by

BSS despite having low gross profit margin. Besides, this situation happens due to the inability

of BSS to determine the selling price of fuels by themselves. As everyone knows that fuel

prices are being controlled by Government Malaysia. Even though the cost to buy the oil is

increase, BSS cannot increase the price without permission from Government. While, for the

convenience store business; if the cost of goods sold to customer increase, BSS can consider

to increase the price selling to customers.

Moreover, as BSS main operation is petrol station more people come to fill in their

car’s tank rather than do shopping inside the convenience store. In conclusion, the fuel business

contributes more profits than convenience store.

What happen to GEZ if credit card sales reduced from 40% to 20%? Discuss.

In 2009, 1% fees required to be paid to the bank for every 40% of total sales. If the credit card
sales reduced to 20%, the more profit will be received by GEZ. Thus, it will decrease the
amount of fees that need to pay to the banks. This also can be said that liability in GEZ will be
decrease as the amount of fees that need to paid to bank decreases.