SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN

FOUNDATION IN NATURAL & BUILD ENVIRONMENT

Report Title: A Comparative Analysis of 2 Businesses of Similar Industry in Different Geographical Locations

GROUP MEMBERS: Michelle Tung Man Kaye (0324175)

Boon Li Ying (0323839)

Gillian Chong Yeong Lin (0323941)

Principles of Economics [ECN30205]

LECTURER: Tay Shir Men

SUBMISSION DATE: 19th January 2016

Table of Contents

No. Title Pages

1. Key Summary 1

2. Description of history of the business 2 - 3

3. Brief Bio of the Business 4 - 9

4. Comparative Analysis of the Businesses’ Competitive Traits 10 - 13

5. Recommendation 14 - 15

6.

Appendices 16 - 21

Appendix 2 22 - 25

Appendix 3 26

7. References 27

Key Summary

Throughout our research, Bak Kut Teh restaurant is a common business that is known everywhere in within the food industry in Malaysia. In this report, we have chosen 2 Bak Kut Teh restaurants. Both Bak Kut Teh restaurants are situated in two entirely different locations, the geographical difference between the two create many differences in terms of the taste, texture and overall dish altogether. This adds to our advantage as it creates multiple points of comparison for us.

The first restaurant we visited is located at SS14 in Subang Jaya, Selangor a bustling district well-known for its higher educational institutes around the area. The restaurant is located facing the busy Persiaran Kewajipan and NPE Highway in Subang Jaya, opposite of SS15. The notable restaurant, Chuan Klang Bak Kut Teh is a frequently packed during dinner hours and is quite well-knowned. Secondly, the next restaurant we visited was Restaurant Tian Hoe Bak Kut Teh. It is located in the small but growing city of Seremban, Negeri Sembilan. The restaurant is located along a quiet area with just a few shops. Although it’s located in a secluded place near an industrial and also housing areas, the exquisite restaurant offers mouth-watering Bak Kut Teh. Therefore, in our opinion, Tian Hoe Bak Kut Teh is more commercially successful because of its taste of food and the strategies they used.

Description of History of The Business

Klang, a popular shipping hotspot, not only that everyone who has been there would say that the best Bak Kut Teh is served here and those who have not been here would be eager to go and have a bite. It still remains a debate on whether it is the best Bak Kut Teh that is served in Klang Valley. There are those who would swear by a particular shop that they frequently patronise and others who have tried a few shops here and there and stuck to the best of the lot. These food lovers will scrutinise every single aspect of the dish, down to how strong the herbal taste should be in the soup or how thick the gravy should be. We found this to be true as certain people who enjoy this dish only frequent their favourite shop and do not go to other shops.

Bak Kut Teh is believed to have originated from the Fujian province of China. The introduction of the dish to Singapore and Malaysia is attributed to the Hokkien immigrants who moved to this region in the 19th century. The dish is said to have been popular with the Chinese coolies as a hearty breakfast before starting their backbreaking tasks for the day. To describe in detail, Bak Kut Teh is a soup based dish consisting of different cuts of pork meat simmered in a herb based broth for hours. Most shops will normally use pork ribs, but they are also known to include other cuts of pork into the herbal broth as well. Meat from other parts tend to be softer and delicate compared to meat from the pork ribs, though most of it will just melt away as soon as it is spooned into the mouth. The herbs and spices that are normally used to give it that distinct taste are star anise, cinnamon, cloves, female ginseng (locally known as dong guai), fennel seeds and garlic, which are boiled for hours together with the selected cuts of meat. The meat becomes infused with all the flavours from the herbs and spices, and the sweetness from the meat seeps into the broth, mellowing the tangy and sharp taste of the herbs. Other ingredients commonly found in a bowl of Bak Kut Teh are mushrooms, fried tofu puffs, pieces of dried tofu and iceberg lettuce. There are numerous variants of Bak Kut Teh with its cooking style closely influenced by the prevailing Chinese enclave of a certain geographical location. Singapore Bak Kut Teh has three popular types which are the Teochew style, which is light in color but uses more pepper and garlic in the soup. The second being the Hoklo (Hokkien), who prefer saltier food, use

more soy sauce resulting in a darker soup. The third being the Cantonese, with a soup-drinking culture, add medicinal herbs to create a stronger flavoured soup.

Malaysian’s own variant of Bak Kut Teh, is usually in a dry form and has also recently become increasingly popular, especially in Klang. Although called dry, the broth is in fact reduced to a thicker gravy, to which other ingredients such as wolfberries, dried dates, dried chillies and dried squid are added. Unlike the original rib soup, the dry version has a tangier, sharper taste and is more akin to a herbal stew than the classical broth. It is often recommended locally in Malaysia as an excellent hangover cure. A less fatty variation of Bak Kut Teh is made with chicken instead of pork is called Chik Kut Teh. It also serves as a halal version of the dish catered to Muslims, whose religion forbids them to consume pork. Throughout the years, creative traders have come to realize that some patrons do welcome the idea of having side dishes along with the main dish. It is now common to find these restaurants now offering dishes like blanched iceberg lettuce drizzled with a mixture of oyster sauce, fried shallots and a little bit of the oil from the fried shallots and other dishes to their customers. The restaurants also offer additional ingredients like enoki mushrooms, chicken feet, fried strips of dough or locally known as youtiao for dipping into the soup or even meatballs at additional prices. It is normally eaten with fragrant rice and sprinkles of fried shallots and raw garlic. Some shops also serve it with yam rice as an alternative to plain rice. To pique the interests of Bak Kut Teh lovers, another version of this dish was introduced. It is fascinating to see how a simple dish like this became a famous and widely eaten staple in Malaysia. This dish was supposed to be a nourishing dish for Chinese coolies who came to Port Klang to work during the British colonial era. Herbs and spices said to be good for health were gathered, with pork added to add flavour to the broth, resulting in this dish. Hot tea is always drunk together with this meal as it is believed that the high amount of fats in the dish is removed because the tea is able to flush out excess oil from within the body. Most Bak Kut Teh lovers will request extra bowls of soup. Some shops are very generous with their soup, obliging customers with their repeated requests. Others will kindly but firmly tell the customers that soup refills are limited as it is very precious. There are even rumours that some of the soup pots are continuously refilled with fresh soup every day, to keep the intense flavours from the day before inside the pot, thereby making it even more mouth-watering.

Brief Description of The Business

Business 1: Chuan Klang Bak Kut Teh

Current Location: No.66, SS14/2, 47500, Subang Jaya, Selangor.

Business hour: 10.45am – 12am

Number of branches: 0

Number of employees: 7

Main products sold: Klang bak kut teh, braised pork’s leg, chicken wine soup, black pepper stomach soup, home steamed fish head

Estimated current number of customers: <100

Chuan Klang Bak Kut Teh was founded by Ivy Chong, whom we managed to interview and has been established since 2006. The design of this restaurant looks like a normal restaurant, there is no any special design.

The capital required to start their business is around RM100,000. Their business’ annual revenue figure is not more than RM500,000. There have no any specialized field of knowledge they need to run this business. They only learn some medicinal materials that are related to bak kut teh. The reason of they chose this location to start the business is because it is near to their house and it will be more convenient to them in running this business. They have no any others branches and this is the only shop they have.

Their target customers consist of family, students and office workers. This restaurant has 6 competitors in the same area. Nevertheless, the feature of this restaurant is they will not use any strategies to compete with their competitors. The reason is all of them use different medicinal materials in cooking the bak kut teh. They will discuss together if one of them want to increase the price and they will increase the price together if one of them decides to do this. No matter how, it is an illegal activity for them to do that.

The most challenging part in this business is when the business is bad. They have no any recent development and also will not often release a new product.

Products sold by Chuan Klang Bak Kut Teh:

There are different types of food and tea:

bak kut teh dry bak kut teh braised pork’s leg chicken wine black pepper stomach soup home steamed fish head

Famous Klang Bak Kut Teh and their special Dry Bak Kut Teh

Business 2: Tian Hoe Bak Kut Teh

Current Location: 347, Taman Yoon Fook, Jalan Tampin 70450, Seremban, Negeri Sembilan.

Business Hour: 9.30am – 2.30pm (Closed on Monday)

Number of branches: 0

Number of employees: 4 (Tuesday to Saturday), 5 (Sunday)

Main products sold: bak kut teh, braised pork’s leg, chicken wine soup, clay-pot chicken rice, herbal tea

Estimated current number of customers: > 150

Tian Hoe Bak Kut Teh was founded by Siew Kon Sin in 1981. The person who accepted our interview is Siew Kon Sin’s son, Ken Siew. Their restaurant looks like a traditional shop, there are a lot of medicinal materials arranged orderly in a glass frame cabinet. This restaurant is well equipped with different sizes of cooker along with a hygienic place.

The capital required to start this business is around RM20,000. Their business’ annual revenue figure is approximately RM200,000. The thing that they need to run this business is good interpersonal relationship. They also need to have the knowledge about some medicinal materials. The current location of this restaurant is the first shop of them and they have no any branches.

This restaurant is specialized in traditional favour of bak kut teh. Their target customers is family and office workers. They are famous and sometimes, will have some Hong Kong Stars come and taste their cooking.

They are the only one restaurant sells bak kut teh in this area so they have no any competitor sell the same types of food with them. Their competitors are nearby food court and tea restaurant. The most challenging part in their business is the location of their restaurant. They located at a remote area, not in the centre of a town or city. They have no any recent development but they have plan to renovate their restaurant like paint and do some interior decoration.

Products sold by Tian Hoe Bak Kut Teh:

There are more different types of food and tea:

bak kut teh braised pork’s leg chicken wine clay-pot chicken rice herbal tea

Herbal Tea Bak Kut Teh Special sauce

Comparative Analysis of the Businesses’Competitive Traits

Item Chuan Klang Bak Kut Teh Tian Hoe Bak Kut Teh

1. Competitors There are four competitors in the area:

(a) Da De Bah Kut Teh(b) Chuan Chiew Bah Kut

Teh(c) Ming Siang Bak Kut

Teh(d) Yu Kee Bak Kut Teh

There are two competitors in the area:

(a) Restoran Seremban Garden

(b) Kedai Sin Thow Yuen

2. Brief of Competitors

(a) Da De Bak Kut Teh-Their main products is Bak Kut Teh -Also one of the oldest Bak Kut Teh restaurant in that area-Their restaurant is much more newer due to renovation.

(a) Restoran Seremban Garden- This is “kopitiam” which they sell different kind of food such as toast, economic rice and so on.

(b) Chuan Chiew Bah Kut Teh

-Their main products is Bak Kut Teh and some Chicken rice.

(c) Kedai Sin Thow Yuen -Their main products is seafood and also famous for its “Siew Pao”

(d) Ming Siang Bak Kut Teh

-Their main products is Bak Kut Teh and also Curry Fish Head.

(d) Yu Kee Bak Kut Teh -Their main product is Bak Kut Teh and

also braised pork’s feet

3. Competition strategies

Pricing

-they discuss together to ensure the prices are the same

-they set its prices higher than the other competitors

Advertising

-advertised via word of mouth -advertised via word of mouthProduct variety

- 100% Klang Bak Kut Teh- Dry Bak Kut Teh- Braised Pork’s Leg- Chicken Wine Soup- Black Pepper Stomach Soup- Home Steamed Fish Head

- Bak Kut Teh - Chicken Wine Soup- Braised Pork’s Leg- Clay-pot chicken rice

Taste of Food

-the taste of the Bak Kut Teh soup is quite tasteless

-the taste of the Bak Kut Teh soup is much more heavy compare to the other

4. The obstacles faced by new business

Need to have a large amount of capital to start the business. It is difficult to overcome the obstacle because the standard of living is very high nowadays.

The location is not crowded. It is difficult to overcome the obstacle because it doesn’t increase the annual revenue of the business.

5. Nature of their Markets

Perfectly competitiveChuan Klang Bak Kut Teh is operating at place full of competitors. If they increase their price of products, they will lose a lot of the customer.

OligopolyTheir competitors will not have a very big impact to their business.

6. Summary table to compare the similarities and differences between the two business.

Business (Similarities) Chuan Klang Bak Kut Teh Tian Hoe Bak Kut Teh

Main products sold Bak Kut Teh Bak Kut Teh

Branches None None

Business (Differences) Chuan Klang Bak Kut Teh Tian Hoe Bak Kut Teh

Founder Ivy Chong (First generation) Ken Siew (Second generation)

Location No.66, SS14/2, 47500, Subang Jaya, Selangor.

347, Taman Yoon Fook, Jalan Tampin 70450,

Seremban, Negeri Sembilan.

Employees 7 4 on Tuesday to Saturday5 on Sunday

Customers Less than 100 More than 150

Business Hour 10.45am – 12am (midnight)Everyday

9.30am – 2.30pmClosed on Mondays

Annual Revenue Less than 500,000 More than 200,000

7. Conclusion

Based on our analysis, these two business are different in many ways. Chuan Klang Bak Kut Teh need to broaden their knowledge in the area of medicinal materials, so that they can improve their taste of food. Besides that, they have a lot of competitors in the same area, they need to create more new products to compete with their competitors. They can cut off the number of employees when the normal and only hire more employees in the weekend to reduce their salary expenses.

As for Tian Hoe Bak Kut Teh, their shop need to be relocated in a more strategic place. This can help them to increase their income and it is more accessible for their customer. Not only that, they also need to create a new product in the future, so that they can attract more customer come and try their new product. In terms of its prices, they should decrease their price of products. These improvements can help them to increase their income and the customer will more willing to come again to their restaurant.

Therefore, in both restaurant, we certainly believe that Tian Hoe Bak Kut Teh is more commercially successful. The reason is because Tian Hoe Bak Kut Teh their restaurant is more delicious. This is the main reason why the customer will come again to their restaurant. The design of their restaurant will give the customer a traditional feel and is more eye-catching than Chuan Klang Bak Kut Teh. They also used the right way to reduce their expenses which are hire one more employee on Sunday only. This is because usually Monday to Saturday will not have too much customer but Sunday will have more customer compare to another six days.

RecommendationBased on our analysis regarding to the two restaurants, Chuan Klang Bak Kut Teh and Tian Hoe Bak Kut Teh, we have provided a few recommendations on improving the competitiveness of each business.

Chuan Klang Bak Kut Teh

Current Area of Improvement RecommendationEnhance the taste of food The owner should concentrate more on

the taste of the Bak Kut Teh soup. This way, it will have their own uniqueness of taste and also can increase the number of customer.

Expansion of the space Owner should upgrade and expand the space of the restaurant. So that the customer have a better environment and a comfortable place for them to enjoy their meal.

Employ Chinese workers Owner should employ Chinese workers which they can more easily to communicate and understand what the customer needs.

Tian Hoe Bak Kut Teh

Current Area of Improvement RecommendationLocation of the restaurant Owner should have change their

location or have another branch, so that it’s more convenient for the people to access their restaurant.

Increase number of workers During our interview with Mr. Ken, we found that they have only 4 employees including himself. Mr. Ken

should increase the number of workers. The reason for it is allow its system to be more organized, where all of their employees will have their own specialized jobs. Thus, when peak hours it’s enough worker to help around.

Renovation Owner should renovate the restaurant although it is full with traditional feel. This will provide a more comfortable environment to the customers.

AppendicesA compilation of some interview notes, contact details of the businesses and pictures (e.g. business premises, current owners, employees, products or service sold, promotional advertisements, etc) in the process of studying and comparing the two Bak Kut Teh restaurants and also minutes of the group meetings.

(1)Chuan Klang Bak Kut Teh

I. Pictures

The entrance of Chuan Klang Bak Kut Teh

We’ve tried some of the main dishes as shown in the picture. 100% Klang Bak Kut Teh, Dry Bak Kut Teh and also a famous side dish called “you tiao”

These are Chuan Klang Bah Kut Teh’s nearby competitors, Da De Bah Kut Teh, Chuan Chiew Bah Kut Teh, Ming Siang Bah Kut Teh and Yu Kee Bah Kut Teh.

II. Interview Notes

III. Name Card

(2)Tian Hoe Bak Kut Teh

I. Pictures

The entrance of Tian Hoe Bak Kut Teh

The menu of

Tian Hoe Bak Kut Teh

These are Tian Hoe Bah Kut Teh’s nearby competitors, restoran seremban garden and kedai Sin Thow Yuen.

We’ve tried some of the famous dishes like “Chicken wine” and also the must try dish “Bak Kut Teh”

II. Interview Notes

III. Name Card

Appendix 2: Survey Questionnaire and Results

(1) Chuan Klang Bak Kut Teh

1) When was the business founded?Answer: The business founded in 2006.

2) Who are the key founders? Answer: Ivy Chong

3) What prompted the founders to start this business?Answer: The main reason is to earn money.

4) How much capital is required to start this business? What, if any, specialized field of knowledge do you need to run this business?Answer: The capital required is one hundred thousand. We have no any specialized field of knowledge, but we need to know some medicinal materials that are related to Bak Kut Teh.

5) Why did you choose this location to start this business?Answer: I am living nearby this area, this location is more convenient to me.

6) What are your main products?Answer: Bak Kut Teh

7) Who are your customers?Answer: Any age, such as family, students and office workers.

8) What is the business’ annual revenue figure?Answer: Less than five hundred thousand.

9) How many branch offices/stores do you have (if applicable)?Answer: We have no any branches.

10) Can you provide us a brief history of your business and its most recent developments?Answer: No history can be provided and we have no any recent development.

11) Do you have many competitors? Who are they? Who are your top 3 competitors?Answer: Yes, there have 6 Bak Kut Teh restaurants in this area. The top 3 competitors are Da De Bak Kut Teh, Chuan, Chiew Bak Kut Teh and Ming Siang Bak Kut Teh.

12) How big is your market share as well as your top competitors?Answer: I don’t know.

13) Is the business constantly facing strong competition from other competitors? What strategies have they used to compete with you?Answer: No, usually we discuss together the method to increase the customer and if any one of us suggest to increase the price of products, we will increase it together.

14) How do you compete with your competitors (i.e. what strategies do you employ to divert customers away from your competitors?Answer: We have no use any strategies. We will solve the problem together.

15) Are your pricing decisions strongly affected by your competitors?Answer: No, because all of us have almost the same price of products, we will not increase or decrease the price before discuss with each other.

16) Generally, do you feel it is easy or hard to enter this market? Why?Answer: Hard, because there are a lot of sellers and you are difficult to earn a higher profit.

17) What are the most challenging part in your business?Answer: When the business is bad.

18) How often do you release a new product (note: this assume the business sells differentiated products)?Answer: We have no release the new product in a certain time.

19) What do you think of this business as the need to improve it?Answer: Yes, but it needs some times to reach the target.

20) What are the goals that you want to attain in the future?Answer: Increase my annual revenue.

(2) Tian Hoe Bak Kut Teh

1) When was the business founded?Answer: The business founded in 1981.

2) Who are the key founders? Answer: Siew Kon Sin

3) What prompted the founders to start this business?Answer: To earn money.

4) How much capital is required to start this business? What, if any, specialized field of knowledge do you need to run this business?Answer: The capital required is twenty thousand. We only need to know some medicinal materials and the most important thing is we need to have a good interpersonal relationship.

5) Why did you choose this location to start this business?Answer: Because we have a lot of customers from this area.

6) What are your main products?Answer: Bak Kut Teh

7) Who are your customers?Answer: Any age, but most of it are older people.

8) What is the business’ annual revenue figure?Answer: Approximately two hundred thousand.

9) How many branch offices/stores do you have (if applicable)?Answer: We have no any branches.

10) Can you provide us a brief history of your business and its most recent developments?Answer: We have no any recent development.

11) Do you have many competitors? Who are they? Who are your top 3 competitors?Answer: Yes, there are few restaurants around this area but we are the only one Bak Kut Teh restaurant.

12) How big is your market share as well as your top competitors?Answer: Sorry, I don’t know.

13) Is the business constantly facing strong competition from other competitors? What strategies have they used to compete with you?Answer: No, it depends on customer favour.

14) How do you compete with your competitors (i.e. what strategies do you employ to divert customers away from your competitors?Answer: I set a higher price than other restaurant.

15) Are your pricing decisions strongly affected by your competitors?Answer: No.

16) Generally, do you feel it is easy or hard to enter this market? Why?Answer: Hard, because nowadays running a business, it needs a lot of capital and you must have a good interpersonal relationship.

17) What was the most challenging part in your business?Answer: My shop is located far from the city.

18) How often do you release a new product (note: this assume the business sells differentiated products)?Answer: We planning to serve a new dish in the future.

19) What do you think of this business as the need to improve it?Answer: We will try to improve the taste of food and have a renovation.

20) What are the goals that you want to attain in the future?Answer: Hope that the business is getting more better.

Appendix 3: Comparative Analysis Summary Table

No. Competitive TraitsBusiness 1 (Chuan Klang Bak Kut Teh)

Business 2 (Tian Hoe Bak Kut Teh)

1. Number of Competitors (in ranges e.g. 2 to 10, 10 to 50, 50 to 150, etc.)

4 to 6 2 to 4

2.Barrier to Entry (Weak or Strong? Why?)

Strong, because Chuan Klang Bak Kut Teh are surrounded by lots of competitors.

Weak, because Tian Hoe Bak Kut Teh is located in the area which is not very crowded.

3.Differentiated or Standardized Products (if differentiated provide 2 to 3 examples)

Standardized Products

Standardized Products

4.Pricing Power (Price Maker or Taker? Why?)

Price Taker, because all businesses have to accept the price that is set by the market and firms are not allowed to set their own price.

Price Taker, because all businesses have to accept the price that is set by the market and firms are not allowed to set their own price.

5. Other Characteristics (e.g. Any close product substitudes, mutual dependence, constant advertising)

No No

6. Verdict (Monopoly?Oligopoly? Perfect Competition?) Perfectly competitive Oligopoly

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