SCHOOL OF ARCHITECTURE, BUILDING AND DESIGNFOUNDATION 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

Table of Content

Key Summary

Brief Bio of the Business

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

Recommendation

Appendices

References

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.

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 within the area and about 14 competitors within the market.

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

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 what 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 a 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. So that he could

- 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.

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 the low quantity of demand. 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 40~60

Pricing 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 Differentiated, eg. Standardized.

Standardized Product Roasted Duck that most of the firms nearby don’t

provide.

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 COMPETITION

c) 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) AnalysisIn 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 chose Hong Zai.

Recommendation Leong Shifu BBQ Chicken rice

- 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 shop situated in Penang is one that is shared with a coffee shop and with the sheer number of customers it receives especially during peak hours we suggest that the owner hires more members of staff because it is a difficult task to sort out over one hundred customers at a time. With more workers, orders can be taken quickly and their food prepared to reduce congestion in queues.

-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.

AppendicesInterview notes

Group photo with Hong Kee Roasted Duck and Chicken Rice

Business DetailsBusiness Owner: Woo Hong KaiLocation: Lot 6, Taman Islands Glades, 41700, Jelutong, PenangContact Number: +60164062380

Group photos with Leong shifu BBQ Chicken Rice

Business DetailsOwner’s Name: Yap Chee LeongLocation: PJS 7/13, Bandar Sunway, Petaling Jaya

Interview note

Photo’s of Hong Kee Roasted Chicken and Duck Rice

Detail of BusinessBusiness Owner: Woo Hong KaiLocation : Lot 6,Taman Islands Glades,Jelutong,41700,PenangContact Number: +60164062380 Photo’s of Leong sifu BBQ Chicken Rice

Detail Of BusinessOwner’s Name: Yap Chee LeongLocation : PJS 7/13,Bandar Sunway,Petaling Jaya

Competitor of Leong Sifu BBQ Chicken RiceChang Cheng Hong Kong Chicken Rice(Mentari Branch)

Detail of Competitor for Leong Sifu BBQ Chicken RiceOwner’s Name:Mr TanLocation :Jalan PJS 8/1,Sunway MentariContact Detail :0166168300

Competitor 2:Wong Seng Chicken Rice

Business Detail :Owner’s Name: Mr LowLocation :PJS7/22,Bandar Sunway