SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN

FOUNDATION IN NATURAL AND BUILT ENVIRONMENT

Principles of Economics (ECN30205)

Report Title: A Tale of Two Businesses – A Comparative Analysis of 2 Businesses of Similar Industry in Different Geographical Locations.

Group members:

Boon Yi Chung (0318300)

Tan You Liang (0320215)

Chan Tian Ji (0320831)

Tan Yong Chien (0320200)

Deong Khai Keat (0320055)

Kiraly Renaud (0320322)

Sateshraj a/l p.devaraj (0321419)

Nur Iman (0321736)

Content Page

Cover Page 1

Table of Content 2

Key Summary 3

Brief Bio of the Business 3~5

Comparative Analysis of the Business

Competitive Traits

- Number of competitors

- Brief Biodata of top 3 competitors

- Strategies of Businesses

- Obstacles faced by new businesses

- Nature of Markets

- Justifications

- Comparative Analysis Summary Table

- Analysis

6

6

6,7

8,9

10

10,11

11

11

Recommendation 12

Appendices 13,14,15,16,17,18

References 19

Key Summary

We were assigned to interview two businesses of similar industry in different geographical locations. After we had discussion with each other, we made up our mind to compare chicken rice businesses in Klang Valley and in Penang. In Penang, we interviewed a chicken rice stall named Hong Kee Hong Kong Roasted Rice at Taman Islands Glades, Jelutong. On the other hand, we also interviewed Leong Shifu BBQ Chicken Rice stall at PJS7. After analyzing all the data and information we gathered, we concluded that Hong Kee Hong Kong Roasted Rice is more commercially successful than Leong Shifu. Lastly, both businesses are having Oligopoly Competition.

Brief Bio of the Businesses

Leong Shifu BBQ Chicken Rice

This BBQ Chicken Rice business was interviewed at Bandar Sunway PJS 7/11. It is a strategic

location where it is located next to a Kuil, Petrol Station, Residences area as well as Taylor’s

University. His business stall is just right facing the coffee shop’s entrance. The interviewee

is the founder of this business, Mr. Yap Chee Leong. He founded this business in the year of

2000. It has been 15 years he manage this business. The name of his stall is basically based

on his name, Yap Chee Leong. For the past 5 years Mr. Yap had thought of opening a shop of

his own chicken rice but considering of his children are still too young, he chose not to take

the risk at the moment and currently he has his stall with 3 employees in the coffee shop

with no branches yet. Besides, his operating hours is from 10am to 3pm every day. He said

that he will open a shop for his own business in the future. Back in time, Mr. Yap used to be

a waiter to serve in the coffee shop for several years. What prompted him to start his own

business was his family, he wanted to provide his family with a financial freedom

environment thus he had the urge of starting his own business. It was a herculean task for

him to gain customers in the beginning of his business because for an oligopoly business like

his will face a lot of competitors in the market. At first, he only manage to serve a few

customers and only sells not more than 15 plates each day. Nevertheless, he didn’t give up

but to make more effort to carry on his business that’s why he made it to his

accomplishment today.(minimum of 10 chickens sold per day) Besides, he also found that it

is more interesting to manage a business instead of getting paid monthly. The main product

he sells are roasted pork and barbecued pork. The roasted pork is the most demanding dish,

of all the tables in the coffee shop, you will find majority of the people are having roasted

pork rice. Moreover, Mr. Yap will at least have 100-120 customers in a day. Especially during

lunch time, the amount of customers will be twice the amount as compared to other time,

this is why he provides take away services for the customers as well. His regular customers

are mainly from Taylor’s University students and PJS’s residences.

Hong Kee Roasted Chicken and Duck rice

Hong Zai Roasted Chicken Rice has been operating since the year of 1992 until today.

The name of his business named as Hong Kee because of his name Woo Hong Khai. He is

also recognized as the “Hong Zai” from the customers when he started his business. The

founder was Mr. Woo Hong Khai at twenty three years ago. As we interviewed with him, he

told us about the urge of why he started his business. Back in time when he first graduated

in 1990, he did not continue for further studies due to his family couldn’t afford the tuition

fees for colleges or universities. He had no choice but to get a job for himself. He was hired

as a kitchen assistant in a chicken rice shop. After years of working as he gained more

experiences in chicken rice industry, it comes to a huge turning point in his life, a friend of

Hong Zai offers him an opportunity to operate a stall that sells chicken rice in his coffee

shop. Therefore, Hong Zai began his business with the support from his friend. So far Hong

Zai has 2 branches in Penang which located in Taman Islands Glades, Jelutong, Penang, a

well-known place for its local food. He said he couldn’t expand more branches at the

moment due to the limited employees he has currently, only 6 employees, 2 business

partner, one of them is his blood-related sister. During the very first few years of his

business he only sells normal chicken rice, but as time goes by he received numerous of

feedback from the customers to sell various type of chicken rice as others are doing. Today,

not only chicken rice but he also provides roasted pork as well as roasted duck. Roasted

Duck has become the main plate for his business. Approximate of fifty percent of his

customer came up just to have a taste on his signature and delectable Roasted Duck rice.

Moreover, residences that live nearby are his regular customers whose visit his stall up to

few times a week. In his recent business result among these few years, the average portion

that he sold per day is about 150 ~ 200 plates or above.(each branch) As the clocks strikes

twelve sharp in the noon, he began his busiest time for the day. The customer will all queue

up to make orders. We even waited 3 hours for him just to finish his work to get into our

interview session.

https://www.youtube.com/watch?v=203H9H9FTZs&feature=youtu.be

Interview session video

Comparative Analysis of Businesses Competitive Traits

1) Number of competitors in their respective markets

- Leong Shifu BBQ Chicken Rice, located at Bandar Sunway PJS 7, Selangor. In Subang, there are over 60 competitors in the market and about 14 competitors within the area.

- Hong Kee Roasted Duck and Chicken Rice, located at Taman Islands Glades, Jelutong, Pulau Penang. In Jelutong, there are about 40 competitors in the market and about 8 competitors within the area.

2) The market share of the business and its top competitors

- In Subang, Leong Shifu’s market share is small considering of his child is still young and its top competitors in the market would be Garlic Roasted Chicken Rice Shop which is at Bandar Sunway PJS 11/7, and The Chicken Rice Shop as well as Ipoh Nga Choy Chicken 1977 both located in Sunway Pyramid mall.

- In Jelutong, Hong Kee’s market share is small because he has only two branches with his two partners to manage his business. There are a few of competitors when he running this business and the top competitors would be the Peng Yang Chicken Rice which is a well-known chicken rice shop in Penang Island which located at Jalan Pancur, Jelutong. Another top competitor will be the Kim Poh Roasted Chicken Rice and finally the nearest chicken rice shop from Hong Kee which located at Jalan Slim, Jelutong.

3) Brief Biodata of Businesses Top 3 Competitors

Leong Shifu:

a) Garlic Roasted Chicken Rice Shop which located at Bandar Sunway PJS 11/7 is famous for their unique style of roasted chicken. As we know from its name, the chickens are marinated with garlic sauce before the roasting process comes in. Moreover, it’s barely to get a plate of chicken rice at only RM4 within Subang area, due to its affordable price and the unique taste of the chicken meat, those are the factors that attracts the crowd.

b) The Chicken Rice Shop in Sunway Pyramid is a well-known chain restaurant in

Malaysia. With the consideration for the Muslims, this restaurant provides a completely halal menu for us. Although the restaurant is getting more commercialised compared to the others, they still serve traditionally prepared steamed, roasted, braised and honey barbecued chicken as its signature products.

c) Ipoh Nga Choy Chicken 1977 located in Sunway Pyramid is famous for their signature bean sprout chicken. There is a choice of kampung chicken or ordinary chicken cooked either by roasting or boiling. The boiled kampung chicken has a smooth and soft texture, along with their special homemade sauce which makes it their recommended dish at this place. Along with their friendly services and the environment in the restaurant, it’s air-conditioned thus more comfortable to have your meal in the restaurant.

Hong Kee:

a) Peng Yang Chicken Rice located at Jalan Pancur, Jelutong is famous for their homemade chicken rice for the past few years. Almost every citizens in Penang will probably knew or heard of this shop before. Their unique chicken rice and the taste of Peng Yang chicken rice attracted not only local customers. Even tourists were also suggested to visit this shop. It was famous with roasted chicken served together with the homemade sauce, it tasted a bit salty and with slight sweetness in it.

b) Boo Kee Chicken Rice that originally located at Air Itam, Penang, soon shifted to Jalan Perak, Jelutong which is just fifteen minutes of walking distance from Hong Kee. As Boo Kee located in Jelutong, it becomes one of the top competitors for Hong Kee. Boo Kee is famous for their steamed chicken rice and braised chicken rice. These chicken rice are served with a small bowl of specially mixed up minced onion and minced garlic in soy sauce. The sauce is the main reason that made the chicken rice tasted so delicious even when steamed chickens are tasteless.

c) Kim Poh Roasted Chicken which is at Taman Yew Lean, Jelutong is famous of its roasted pork and friendly services. Their roasted pork tasted differently from any other shops. Because he did not buy the prepared roasted pork to be served. He roast the chickens and pork himself with his own signature method. The soup they serve inclusive of spices that makes the soup tastes better and it works perfectly with the roasted pork.

4) How do the businesses compete with their competitors

Leong Shifu

Mr Leong knew he was in for some tough competition when he opened his stall in the year of 2000. After 15 years of managing, today his business is still growing and developing. It became a familiar chicken rice for the people within this area.

- First of all, Mr Leong found an area with few competitors that don’t serve food similar to his. For instance, at the year of 2000, there was no other stall or restaurants that sells chicken rice within this area. He then survived with other types of restaurants without having to fight each other.

- Subsequently, his business delivers a service that nearby competitors can’t match, such as higher quality and faster service as well as offering lower prices than his competitors without compromising the quality of the food and service.

- Mr Leong himself also spend some time with his customer to receive positive and negative feedback for himself to reflect on.

- Furthermore he also considers of more variety of food for the customers such as roasted pork and barbeque pork instead of chicken only. Meanwhile he also spends his weekend creating more interesting and delectable dishes such as his signature dish (roasted pork rice) as well as his homemade recipe sauce for his business.

- Considering about the hygiene and freshness of the product, Mr Leong will not serve customer overnight food. He would rather wake up earlier in the morning to prepare and cook so that his product is guaranteed fresh and delectable for the consumers.

- Lastly, price of his product is set at an affordable price and doesn’t raise significantly over all these years to ensure the consumers eat happily.

Hong Kee

Mr. Woo knew that starting this business by opening a new shop needed a bigger capital as compared to open a stall. Therefore he chose Jelutong, Penang to start his duck rice stall business as the population density there is higher as compared to other cities as it consists of more residential area.

- At the first few months as he started his business. His working hours was more than twelve hours which occupied half of his days. He spent most of his time to work on his own recipe and the taste of the product. The purpose is to create his own signature taste for his product and stall so that he will gain more customers.

- Moreover, not only the quality of only one food have to be delicious. Hong Zai also provided many variety in chicken and duck rice category such as roasted duck, roasted pork, barbeque pork and also roasted chicken. He wanted his customers to have more variety so that they will not get bored of his product.

- He wakes up earlier in the morning and starts his roasting job up to 3 hours long. Hong Zai refuses to sell overnight food as he know that it is unhealthy and the quality of food will drop. He ensures 100% fresh of products.

- Furthermore, Hong Zai also considers about the cleanliness and hygienic of his stall. Everyday before setting up the stall, he wipes and cleans up to ensure that the stall that he sells his product is clean enough. He did the same thing as he closes his shop.

- He trained his employees to be friendly when they serve the customers. He wanted the consumers to eat happily so that they are willing to come back next time. Moreover he is also glad to receive both negative and positive feedback from the customers in order to make more improvement in the future.

5) What are the obstacles faced by new businesses who wish to enter their markets today? Are they easy or difficult to overcome? Why?

To enter the chicken rice market is relatively easy as it does not require a very high capital to start off the business. However Mr Leong pointed out several obstacles that new businesses will encounter, for instance they will need to get a chef or to equip themselves with good cooking skill. Besides, one of the biggest obstacles faced by new businesses is that the supply is more than the demands which means that the customers are too less and the unsold food have to be expelled. Hence, they will have to estimate the specific amount of stocks that he have to order to prevent wastage. Another obstacle would be the complaints and irritation from those arrogant customers that not only make complaints, however they also spread the negative comments to the crowd. As words spread, it requires time and some positive comments to recover their reputation. Another obstacle is because of the presence of other businesses providing the same products, therefore customers will make comparison of the products. Moreover, getting raw materials from a good supplier is also one of the main consideration. Not only about mastering their cooking skills, they also have to be innovative to cook new products in order to attract more customers.

6) What is the nature of their markets

Both of their markets are Oligopoly Competition. In a market of Oligopoly Competition, it is easy to enter and this firm has many competitors, but each one sells slightly different product and both have some price difference as well.

-Justifications

a) There are at least 60 competitors within Subang area. This proves that there are many firms in this market thus easy to enter.

b) They have different prices in this market as well. Smaller business like Leong Shifu, he employs lesser workers and supplier. Large business such as Hong Zai hires more employees and has more supplier to provide various type of raw material. This is why differences in price is formed, as compared Hong Zai would be slightly more expensive.

Competitive Traits Hong Kee(Penang Based)

Leong Shifu(Klang-Valley Based)

Number of Competitors 20~40 40~60Pricing Power Weak(Price Taker)

The price he set will not affect the market price.

Weak(Price Taker)If their price is higher than market price they will lose

customers due to numerous competitors around.

Barrier to Entry Strong- Penang is well-known for its famous historical local food

therefore new stalls will be slashed by the old stalls.

Strong- they have had their original customers. Most

customers will not risk to try new stall.

Differentiated or Standardized Product

Differentiated, eg. Roasted Duck that most of the firms

nearby don’t provide.

Standardized.

Other Characteristics No close product substitutes nearby, inconstant

advertising.

Mutual dependence, due to they are operating with other stalls in the same

restaurant.Inconstant advertising.

Verdict OLIGOPOLY COMPETITION OLIGOPOLY COMPETITIONc) Lastly, the market also sells various types of dishes, in order to compete

against competitors, market like Hong Zai sells more than 2 variety that is chicken, pork as well as duck.

7) Analysis

In a nutshell, we concluded that Hong Zai would be more commercially successful. This is mainly because of its business’ annual revenue is higher as compared to Leong Shifu. Even though they both sell the similar product, but Hong Zai offers more variety of menu as compared to Leong. Due to its strategic location which located in the main town of Penang, they are more likely to have more customers as compared to a lesser population area in PJS 7. Nevertheless, both of them are quite famous in their own state. It wasn’t easy for us to make decisions but we still have to make a choice. Eventually, we’ve chosen Hong Zai.

http://youtu.be/WlQs238bt2U

Comparative Video link

Recommendation

Leong Shifu

- Firstly seeing as the business has a considerable amount of customers in the nearby region it would be most beneficial towards the business to advertise his products and services to a larger crowd in further more distant areas. This can be done in an old school way by manufacturing posters and flyers or online using social media such as Facebook and twitter to promote the business exponentially.

- Another area of improvement can be the price. At first glance there would be nothing wrong with affordable prices thus creating higher demand for his business but seeing as there are 14 other chicken rice shops within close proximity and he prides himself on selling freshly made products which must cost quite a bit of money buying fresh produce everyday. Therefore we recommend that he increase his price on par or if not a little higher than other competitors which will create more competition over the long run and he can make more profit.

Hong Kee

- The chicken Rice situated in Penang is one that is shared with a coffee shop and with the sheer number of customers it tries to accommodate we suggest that the owner considers hiring one or two more workers because taking orders and preparing the food of over one hundred people at a time from a stall especially during peak hours must be very difficult and tiring especially for two people.

- Another point is to go on is to provide more options to his customers. By this we mean introducing set meals or new recipes and also incentives such as discounts at peak hours to increase his current customer base and also adjust his menu to appeal to a wider demographic such as adding vegetarian products.

https://www.youtube.com/watch?v=FYWsMxhMZgQ&feature=youtu.be

Recommendation Video link

Appendices

Interview notes

Group photo with Hong Kee Roasted Duck and Chicken Rice

Business Details

Business Owner: Woo Hong Kai

Location: Lot 6, Taman Islands Glades, 41700, Jelutong, Penang

Contact Number: +60164062380

Group photos with Leong shifu BBQ Chicken Rice

Business Details

Owner’s Name: Yap Chee Leong

Location: PJS 7/13, Bandar Sunway, Petaling Jaya

Leong Shifu BBQ Chicken Rice

1) When was the business started?- In the year of 2000.

2) Why was the shop name as? Is there any meaning?- Yes there is, it’s based on my name Yap Chee Leong

3) Who is the founder of this business?- Me myself

4) What factors that prompted you to start this business?- To Provide my family a financial freedom environment- I find it more interesting to have my own business rather than just getting paid

monthly.

5) Do you have any branches?- Currently no.

6) How many employees do you have?- I have currently 3 employees to help me with this business.

7) What is the main product?- Roasted Pork, Chicken and BBQ Pork.

8) Which category is the best seller?- Roasted Pork Rice.

9) Estimate your customer number.- Approximate of 100 ~ 120 per day

10) Do you have any regular customers?- Yes, they are mainly PJS Residences and Taylor’s Uni Students

11) Competitors- Garlic Roasted Chicken Rice, The Chicken Rice Shop and Ipoh Nga Choy Chicken

1977.

12) How do your compete with your competitor?- Creating my own unique method of roasting my products, as well as recipe for

my products.- Set the prices at an affordable price for the students and residences nearby.

13) Was it easy or hard to enter this business?- It was quite easy to enter this market as it doesn’t require big capital to operate.

14) Do you encounter any difficulties when you start up this business?- Yes, the hardest part was to maintain and grow the business. At first I will need

to gather more information and feedback from the customers to improve my product.

15) Will your pricing decision get affected by your competitor?- No, I believe the customers would rather choose the taste better than the price

as the prices will not make much differences to the consumers. Regular customers of mine would prefer the ones they used to visit.

16) What is your future plan?- To have my own shop when my children grow up. Probably with more branches

around Subang area.

17) What is the business’ annual revenue figure?- Minimal of RM12,000 nett.

Hong Kee Roasted Duck and Chicken Rice

1) When was the business started?- In the year of 1992.

2) Why was the shop name as? Is there any meaning?- it’s based on my own name Woo Hong Khai

3) Who is the founder of this business?- Me myself

4) What factors that prompted you to start this business?- My friend was the main factor that motivated and supported me to start a

business of my own. He offered me the opportunity and place for me to operate my stall.

- In the old days my family background was poor and that’s part of the reasons that urged me to make a change for my life. I want create my own business to have more earnings.

5) Do you have any branches?- Currently 2 branches in Bukit Jelutung.

6) How many employees do you have?- I have currently 6 employees as well as 2 business partners to help me with the

business.

7) What is the main product?- Roasted Duck, Pork.

8) Which category is the best seller?- Roasted Duck Rice.

9) Estimate your customer number.- Approximate of 150 ~ 200 per day (each branch)

10) Do you have any regular customers?- Yes, they are mainly from the residences nearby and foreign tourists.

11) Competitors

- Peng Yang Chicken Rice, Boo Kee Chicken Rice and Kim Poh Roasted Chicken.

12) How do your compete with your competitor?- By selling product they don’t provide such as Duck Meat.-

13) Was it easy or hard to enter this business?- It was easy to enter this market as it doesn’t require big capital to operate.

14) Do you encounter any difficulties when you start up this business?- Yes. Before you know, there is already a few competitors around and it was really

hard to get more customers as most of the customers were already taken by them.

15) Will your pricing decision get affected by your competitor?- Yes, People around here especially tourists will be more thrifty on food thus if we

raise the price of our product we might lose customers.

16) What is your future plan?- To expand more branches in Penang in places like Georgetown.

17) What is the business’ annual revenue figure?- Minimal of RM50,000 nett.

References

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- Jose, J.O.S.E. .C.A.P.E.L.O. (2014). Business and Entrepreneurial News. Retrieved 19 May, 2015, from http://www.marketingquery.com/main-obstacles-barriers-starting-business

- Lisa, L.I.S.A. .F.U.R.G.I.S.O.N. . (1996). Business and Entrepreneurial News. Retrieved 18 May, 2015, from http://articles.bplans.com/start-successful-restaurant-guide/ In-text citation: (Lisa, 1996)

- Demand media , S.T.A.N. .M.A.C.K. (2015). How to Gain Competitive Advantage in

the Restaurant Business. Retrieved 18 May, 2015, from http://smallbusiness.chron.com/gain-competitive-advantage-restaurant-business-24162.html In-text citation: (Demand media , 2015)

- Foursquare. (2015. Retrieved 18 May, 2015, from https://foursquare.com/v/new-restaurant-ipoh-chicken-rice-%E6

- Happy walker. (2014). A Growing Teenager's Diary. Retrieved 18 May, 2015, from http://www.reloadfood.com/2014/12/ipoh-nga-choy-chicken-since-1977-new-restaurant-ipoh-chicken-rice-mid-valley-megamall-experience.html In-text citation: (Happy walker, 2014)

- Woo Hong Kai (2015) Interviewed 2 May, 2015.- Yap Chee Leong (2015) Interviewed 18 May, 2015.