SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN FOUNDATION IN NATURAL BUILD ENVIRONMENT PRESENTATION TITLE: BAK KUT TEH GROUP MEMBERS: Names Student ID Number Welson Lum Wei Jiunn 0319514 Yong Sing Yew 0318766 Kong Zhen Chung 0319528 Chong Wai Loon 0319745 Principles of Economics ECN30205 LECTURER: Mr. Chang Jau Ho SUBMISSION: 25 th January 2015
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Business strategies employed The owner of Ah Cham Bak
Kut Teh opens her shop early
in the morning at 6:00 a.m. so
that the office workers can
have their breakfast there. Ah
Cham Bak Kut Teh has more
than 10 years of experience to
cook Bak Kut Teh so its
customers are used to eating
their foods. The good thing
about Ah Cham Bak Kut Teh
is the owner is generous as
she will provide free
additional soups to her
customers when needed. She
does not do any advertising to
promote her restaurant as her
customers help her to
promote it through social
media such as Facebook,
Sun Fong Bak Kut Teh opens
at 5:00 a.m in the morning to
make sure people around
Jalan Imbi have something to
eat at that time. Sun Fong
Bak Kut Teh has become the
most popular Bak Kut Teh in
Jalan Imbi because it was
established since 1971. Sun
Fong Bak Kut Teh has 4
branches where 2 of them is
restaurants in Malaysia and
the other 2 restaurants is in
Jakarta, Indonesia. The
purpose of having branches at
different places is to raise the
reputation of Sun Fong Bak
Kut Teh. The owner also
advertises his Bak Kut Teh
through the Air Asia’s
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Twitter and Instagram. magazine, Tiger Airlines and
Singapore Airlines.
The Competitors
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Ah Cham Bak Kut Teh’s competitors
Hon Ki Bak Kut Teh Ah Her Bak Kut Teh
Sun Fong Bak Kut Teh’s competitors
Ah Hee Bak Kut Teh
Yu Yi Bak Kut Teh
Obstacles Faced By New Businesses
Financing Problems
To start a business, a large sum of capital is needed. The capital includes rental, renovation and
money to buy furniture and appliances. According to the owner of Sun Fong, an estimated 200k
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is needed. Even after the business started, money is also needed for maintenance and ingredient
supplies. Finance remains the biggest problem for people that want to start a new business.
Market Competitions
Klang is a place that is famous for its Bak Kut Teh, there are more than 500 shops selling the
same product. It would be very challenging to enter this market and compete will all the existing
shops which has been around for much longer time that possess more experience and their own
loyal customers.
Quality of the foods
The communication with the food suppliers must be good so that the pork suppliers will always
supply fresh ingredients. The quality of food products sell must always maintain their originality
as well as coming out with their own signature taste. The shop must maintain their quality to
attract and keep its customers. If the food of the restaurant does not have quality, it will slowly
lose all its customers and eventually go out of business.
Getting Customers
A new business often doesn’t have any customers at the start, the owner have to advertise his
business to let people know his restaurant. To attract customers, a lot of effort must be placed in
creativity to produce some special features which are different from others.
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The Nature of the Markets
The nature market of Ah Cham Bak Kut Teh is that they have a perfect competition
which is due to the market represented by a fairly large number of market. This is because Klang
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is a place that is famous with its Bak Kut Teh. Monopolistic Competitive have a relatively weak
barriers to entry means that the new firms can enter the market and exit the market easily.
Sun Fong Bak Kut Teh has a nature market which is Oligopoly. Oligopoly is a market
that dominated by only few sellers. There are only 3 shops of Bak Kut Teh located in Jalan Imbi
and Sun Fong Bak Kut Teh is one of them. The barriers to entry the market is very strong
because Sun Fong Bak Kut Teh has already settle down at Jalan Imbi since 20 years ago and
getting more famous day by day.
Summary Table
Name of business Ah Cham Bak Kut Teh Sun Fong Bak Kut Teh
Similarities 1) Both of them sell the same product --Bak Kut Teh.
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2) Both of the restaurants do not rise their price at will
because they have their own regular customers.
Differences Menu 1) The restaurant does not
provide a proper menu.
1) The restaurant provides a
nicely designed menu.
Advertising 2) The restaurant does not
advertise in any form.
2) The restaurant advertises
through social media,
internet and also in airplane
catalogue at certain months.
Current
Branches
3) The restaurant does not
have any separate branches.
3) The restaurant currently
has 4 branches, 2 in
Malaysia, 2 in Jakarta,
Indonesia.
Price 4) The product price of the
restaurant for a single person
is RM13.
4) The product price of the
restaurant for a single person
is RM15.
Future plan 5) The restaurant does not
have any future plans.
5) The restaurant is planning
to expand to Macau or
China if the business goes
well this year.
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Shop
Characteristic
6) The restaurant seating is
located outdoor with a shade
build above it and it does not
have air conditioning.
6) The restaurant is
separated into 2 parts, air
conditioned indoor rooms
and outdoor.
Analysis
Based on our group analysis on the two Bak Kut Teh restaurants we interviewed, Sun Fong and
Ah Cham, we have concluded that Sun Fong Bak Kut Teh is more commercially successful then
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Ah Cham Bak Kut Teh in Klang. The main reason is Sun Fong has a larger market because it
owns several branches whereas Ah Cham does not have any branches. Sun Fong has a strategic
location which is near to tourist hotspots like Pavillion and KLCC compared to Ah Cham which
is located in Klang, the place where Bak Kut Teh is very famous. Other than that, Sun Fong had
been in business since 1971 longer than Ah Cham which started in 1995.
Recommendation
Based on the analysis of the two restaurants we interviewed, both them still have a lot of
potential to improve. The first Bak Kut Teh restaurant that we interviewed which is Ah Cham
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Bak Kut Teh has to improve the skills and strategies in managing the business so that they can
compete with other markets and won’t suffer from loss easily. Other than that, it also has to
provide a proper menu for the customers so they can clearly know what it serves. It should also
serves different types of foods like vegetables, fried dishes, seafood and etc so customers have
more choices to choose on when having their meal. In addition, it also need to renovate to
become more comfortable. For example, set up air-conditioning, change new tables and chairs,
and etc. Currently, Ah Cham has only one shop in Klang. To enable people from other places to
taste this delicious food, the owner has to expand to other states and countries. With new
branches at different places, the customers will eventually increase too, the profit and the
reputation will bloom as well. It may cost a lot to expand but it may show results and the owner
can make more money in the long run. Furthermore, the owner should also make some
advertisements to promote the restaurant so that more people know about it. The owner can
advertise her business through social media such as Facebook, newspaper, magazines, TV
channel and etc.
For Sun Fong Bak Kut Teh, it is a higher class restaurant compare to Ah Cham Bak Kut
Teh. To make it better, the owner of Sun Fong Bak Kut Teh can expand more branches to other
countries, especially western country so that western people can know more about Bak Kut Teh
and taste it in future.
Appendix 1 (Pictures)
Ah Cham Bak Kut Teh
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Sun Fong Bak Kut Teh
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The interior view of Ah Cham Bak Kut Teh
A one person clay pot Bak Kut Teh (Dry) at RM 14.00
A three person clay pot Bak Kut Teh (Soup) at RM 39.00
Chinese Donuts (油条) at RM 1.00
Group photo after the interview
The interior view of Sun Fong Bak Kut Teh
A two person clay pot Bak Kut Teh (Soup) at RM 28.00
Appendix 2 (Interview Questions)
INTERVIEW Q&A OF AH CHAM BAK KUT TEH
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A two person claypot Bak Kut Teh (Dry) at RM 30.00
The menu of Sun Fong Bak Kut Teh
Group photo after interview
Q: When was the business founded?
A: It is first started during the year, 1995. I’ve been in this business for 20 years in Klang.
Q: Who are the key founders?
A: The key founders of this shop are me and my eldest son.
Q: Who prompted the founders to start this business?
A: My family prompted me to start this business as we were extremely poor during the early
years and we wanted to earn money.
Q: What are your main products or services?
A: The main product sold is “Bak Kut Teh”. There are two different types of style, which are
Bak Kut Teh serves with soup and sauce.
Q: Who are your customers?
A: The customers are mostly Chinese and India. Some of them come from different states in
Malaysia such as Johor, Melaka, Negeri Sembilan and many more. Besides, they also come from
different occupations such as teachers, headmasters, doctors and many more.
Q: What is the business’ annual revenue figure?
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A: The monthly and annually revenue of my restaurant are RM10, 000 and RM100, 000
respectively.
Q: How many branches and employees do you have?
A: Currently, I don’t have any branches and only have one employee who serves as waiter.
Q: Can you provide us a brief history of your business and its most recent developments?
A: It was first started during the year, 1995. During that year, my family and I were extremely
poor. Since I had the techniques of making Bak Kut Teh, my family supported me to open this
restaurant in order to search for prosperity. This business was successful and helped us escaped
from poverty. I’ve been in this business for 20 years in Klang. My business recently is not as
good as past few years as there are more competitors in Jalan Meru.
Q: Do you have many competitors? Who are they?
A: I have some competitors which are Hon Ki and Ah Her restaurants which are located a
stones’ throw away from my restaurant.
Q: How much capital is required to start this business? Do you need any knowledge or skills to
run this business?
A: The capital is RM18, 000. To run a Bak Kut Teh restaurant, you need to know the techniques
of making Bak Kut Teh and use some ingredients which are wolfberries, dried dates, dried
chilies, dried squid and many more to make it scrumptious.
Q: What are the obstacles faced by your business?
A: There are some obstacles to run this business. For example, there are no customers sometime
and the leftovers cannot be reused. This really wastes our money as some of the ingredients like
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pork is very expensive. Besides, during H1N1 pandemic, many customers don’t dare to eat pork
and this affects our business negatively.
Q: What strategies do you employ to
promote your product?
A: I don’t have any strategies because
most of my customers help me
to promote my restaurant. Some of
them promote my restaurant through social media such as Facebook, Instagram and Twitter.
Q: What is the future plan for your business?
A: I don’t have any future plan for her business. This is because I want my children and
grandchildren to find better occupations and it’s not easy to find successor to continue this
business.
INTERVIEW Q&A OF SUN FUNG BAK KUT TEH
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Q: When was the business founded?
A: This business is start since from 1971.I’ve been in this business for 45 years in Kuala
Lumpur.
Q: Who are the key founders?
A: This business is founded by my beloved father, Low Kok Cheng.
Q: What prompted the founders to start this business?
A: My family prompted me to start this business as we wanted to earn money for a better life.
Q: What are your main products or services?
A: We sell Bak Kut Teh which serves in different styles which are soup and sauce. Besides, we
also sell seafood, fried dishes and porridge.
Q: Who are your customers?
A: The customers that come to my restaurant is local people and tourist.
Q: What is the business’ annual revenue figure?
A: Sorry, I cannot answer this question, it is not available to let you all to know.
Q: How many branches do you have?
A: So far I have 4 branches include this restaurant. 2 branches at Malaysia and 2 branches is at
Jakarta, Indonesia.
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Q: Can you provide us a brief history of your business and its most recent developments?
A: Sun Fong Bak Kut Teh established since 1971 by Mr Low Kok Cheng which is my father. At
first this business was starting from a small stall until a restaurant now. We serve a variety of
Chinese cuisines with their special “Bak Kut Teh”. The main essence of my restaurant is derived
from the secret soup recipe. The reason of starting this business is because my father wanted to
let more people taste the real traditional Bak Kut Teh even expand to other countries like Macau,
China, Australia and etc.
Q: Do you have many competitors? Who are they?
A: Yes, there are two Bak Kut Teh restaurants around my restaurant which is Yu Yi Bak Kut
Teh and Ah Hee Bak Kut Teh. But we have our own customers, because different people have
different taste. It depends on the taste of the customers.
Q: How much capital is required to start this business? Do you need any knowledge or skills to
run this business?
A: To start a business I think we need at least RM 200k to 300k to renovate the restaurant.
Q: Generally, do you feel it is easy or hard to enter this market? Why?
A: It’s hard when starting and I’m not sure that whether the business will be successfulas there
are too many restaurants in Kuala Lumpur. Besides, it also depends on the location.
Q: What strategies do you employ to promote your product?
A: We promote our restaurant on the Air Asia magazine at Malaysia and Indonesia. We also
promote on the Singapore airline magazine.
Q: What is the future plan for your business?
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A: In the future I will open some branches at Jakarta, Indonesia again and maybe we will open
some branches at Macau or China. In the future we will build a VIP room for celebrities.
Appendix 3(Comparative Analysis Table)Competitive Traits Business A
(Ah Cham’s Bak Kut Teh)Business B(Sun Fong’s Bak Kut Teh)
1.Number of competitors
Approximately 800 shops of Bak Kut Teh.
2 to 10 Bak Kut Teh shops
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2.Barrier to entryHave a weak barrier to entry.This is because Klang is a place that famous with Bak Kut Teh and the market have unlimited number of Bak Kut Teh Shops
Have a strong barrier to entry. This is because in Jalan Imbi there are only few close substitute products.
3.Differentiated or standardized products Sell standardized product Sell differentiated products.
For example, sea foods, fried dishes, and porridges.
4.Pricing powerIt has a weak pricing power. This is because most of the customers treat the Bak Kut Teh in Klang is the same so they will only go to the shop with the lowest price of Bak Kut Teh. Therefore they have a weak pricing power.
It has a strong pricing power. This is because in Jalan Imbi there are only 3 shops of Bak Kut Teh. So the products sell in Sun Fong Bak Kut Teh’s products have no close substitutes. Therefore they have a great pricing power.
5.Other characteristics Although Ah Cham Bak Kut Teh do not have a great pricing power but they strive to differentiate their products like they provide a good customer service so that the customers will come back again and introduce the shop to their friends.
It have a constant advertising which Sun Fong Bak Kut Teh will advertise their products through Air Asia Airlines and Singapore Airlines.
6.VerdictPerfect Competition Oligopoly
References
1) Bak Ku Teh. (n.d.). Retrieved from http://my.openrice.com/klangvalley/restaurant/sun-fong-