Prakticum Report

UNIVERSITI UTARA MALAYSIA

BERJAYA ROASTER (M) SND BHD

CHAPTER 1: - INTRODUCTION -

1.1 ORGANIZATION PROFILE Kenny Rogers Roasters (KRR) is a leading international wood-fire roasted chicken chain in the world. In August 1993 Kenny Rogers Roasters signed a multi-million dollar venture agreement with the Berjaya Group Berhad to develop the chain. Beginning operations in April 1994 in the Asia Pacific Region, Kenny Rogers Roasters has grown to more than 80 stores in 6 countries namely Malaysia, Singapore, Indonesia, Philippines, Brunei and China. Kenny Rogers Roasters also has development agreements for the Middle East, which include Egypt, Saudi Arabia, Cyprus and Jordan. Berjaya Roasters (M) Sdn Bhd, a wholly owned subsidiary of Berjaya Group Berhad was established in Malaysia in 1993. The company is principally engaged in the development and operation of the "Kenny Rogers Roasters" chain of restaurants in Malaysia.

1.2 VISION KRR’s vision is “To provide Total Customer Satisfaction (TGS) beyond comparison, by doing the right things, in the right way, for the right reasons, by all the members of the Kenny Rogers Roasters team” (www.kennyrogers.com.my).

1.3 MISSION KRR’s mission is “To establish KRR as the leading and preferred mid-casual rotisserie chicken restaurants in Malaysia without compromising our principles and values” (www.kennyrogers.com.my).

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1.4 OBJECTIVES KRR has their own guiding principles to support them to achieve their vision. The guidelines are to provide a great work environment and treat each other with respect and dignity. Second, is to apply the highest standards of excellence from purchasing, preparation to delivery of products. Offering affordable, fresh, wholesome and nutritional food and provide enthusiastic hospitality in a pleasant ambience. Last but not least, recognizing that profitably is essential to KRR future success.

1.5 PHILOSOPHY AND CORPORATE CULTURE KRR holds the philosophy and practice a corporate culture to ensure their guests to always enjoy the best in term of food variety and quality, restaurant ambience, menu price and excellent service by their people or team member.

Beside that, they also five core values to ensure continue success in food industry. First is teamwork towards winning and success. Second, passion in everything we do. Third, integrity in everything we do. Fourth, embrace empathy. Finally yet importantly, is to have fun.

1.6 CORPORATE BUILDING KRR follows the exact structure, colour, tools, and method of making products that has determined by the KRR management. In Malaysia, all KRR staffs must wear black outfit and wear a red colour apron.

1.7

ORGANIZATION TEAM

Refer appendix (1)

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1.8

BERJAYA ROASTER (M) SND BHD

CORPORATE STRUCTURE

I practise my industrial training at Kenny Roger Roaster at ground floor, KLCC convention centre, Kuala Lumpur. It situated strategically beside KLCC Aquaria. Mostly the people who work at the Convention Centre visit the restaurant. In the school holidays and public holidays, the public will settle in the restaurant for their meals. Foreigner also comes in when their visiting the convention area.

1.9 PARENT COMPANY ORGANIZATION POSITION IN BSKL The Berjaya Group of Companies' history dates back to 1984 when it Chairman/CEO, Tan Sri Dato' Seri Vincent Tan Chee Yioun, acquired a controlling stake in Berjaya Industrial Bhd (now known as RekaPacific Bhd). The shareholding change resulted in a major change in the direction and the dynamic growth of Berjaya.

In October 1988, following a major restructuring, Berjaya Group Bhd (then known as Inter-Pacific Industrial Group Bhd) became the holding company of Berjaya Industrial. Inter-Pacific had been incorporated as Raleigh Bhd in 1967 as a bicycle manufacturer. It gained official listing in KLSE in 1969. (www.berjaya.com.my)

Through partnerships, acquisitions, JVs and new start-ups, the Group is now a major Malaysian conglomerate with an annual turnover of over RM7b. Its activities encompass financial services, local and overseas hotels, resorts and recreation development, vacation timeshare, property investment and development, consumer marketing and direct selling/services, gaming and lottery management, restaurants, industry/technology and healthcare/ education. Operations cover the US, UK, Europe and Asia. Six of its direct subsidiaries, i.e. Berjaya Land, Berjaya Sports Toto,

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Berjaya Capital, Unza, Dunham-Bush,Cosway and Matrix International (formerly known as Gold coin (Malaysia) Berhad) are also listed on KLSE.

Stock Name is BJGROUP. Stock Code is 3395. then,

ISIN is MYL3395OO000

BJgroup listed on the Main Board under Sector Trading Services. The listing Date is on 13/02/69. BJGROUP was incorporated On 31.7.67 as a private limited company under the name of Raleigh Cycles (Malaysia) Sdn Bhd; converted into a public company on November 2, 1968. (www.berjaya.com.my)

1.10

SERVICES AND PRODUCTS

Kenny Rogers Roasters operates mid-casual dining restaurants with fire roasted rotisserie chicken as the main menu item and a variety of hot and cold side dishes; Kenny’s famous home cooked muffins, vegetable salads, soups desserts and beverages. To know more about the menu please refers to appendix (2).

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Chapter 2: - Theory Analysis -

In this second chapter of this industrial report, there were four analyses carried out namely competitive advantage, SWOT analysis, TOWS matrix and Porters Diamond Model. The analyses that had carried out for the purpose to provide understanding about the KRR and its operation environment in more detailed. In this section, i will explain about the purpose of these analyses, the objectives, the method used to carry out this analysis and other information about the analyses.

2.1 COMPETITIVE ADVANTAGE According to the Competitive Advantage model of Porter, a competitive Strategy takes offensive or defensive action to create a defendable position in an industry, in order to cope successfully with competitive forces and generate a superior Return on Investment. According to Michael Porter, the basis of above average performance within an industry is sustainable competitive advantage.

Another sources mentioned that competitive advantage is a competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. (www.tutor2u.net)

Competitive analysis is a condition which enables a company to operate in a more efficient or otherwise higher-quality manner than the companies it competes with, and which results in benefits accruing to that company. (Wall street journal)

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As mention above, Competitive advantage is something a company does especially well in comparison to its competitors and that skill gives the company an advantage in the marketplace. The purpose of this analysis is carried out is to point out KRR competitive advantage in the market place and how it can be defensive in sustaining the competitive advantage. Ismail bin Omar. (2003). The competitive advantage analysis had carried out by using a competitive advantage model according a resource-based view emphasizes that a firm utilizes its resources and capabilities to create a competitive advantage that ultimately results in superior value creation. The analysis uses the diagram that combines the resource-based and positioning views to illustrate the concept of competitive advantage. According to the resource-based view, in order to develop a competitive advantage the firm must have resources and capabilities that are superior to those of its competitors. Without this superiority, the competitors simply could replicate what the firm was doing and any advantage quickly would disappear. Krajewski, L.J.,& Ritzman, L.P. (2005). Resources are the firm-specific assets useful for creating a cost or differentiation advantage and that few competitors can acquire easily. The following are some examples of such resources Patents and trademarks, proprietary know-how, installed customer base reputation of the firm and brand equity Capabilities refer to the firm's ability to utilize its resources effectively. Vignali, C. (2001) an example of a capability is the ability to bring a product to market faster than competitors. Such capabilities are embedded in the routines of the organization and are not easily documented as procedures and thus are difficult for competitors to replicate.

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BERJAYA ROASTER (M) SND BHD

The firm's resources and capabilities together form its distinctive competencies. These

competencies

enable

innovation,

efficiency,

quality,

and

customer

responsiveness, all of which can be leveraged to create a cost advantage or a differentiation advantage. Competitive advantage is created by using resources and capabilities to achieve either a lower cost structure or a differentiated product. A firm positions itself in its industry through its choice of low cost or differentiation. This decision is a central component of the firm's competitive strategy. To achieve a competitive advantage, the firm must perform one or more value creating activities in a way that creates more overall value than do competitors. Superior value is created through lower costs or superior benefits to the consumer by differentiation. The competitive advantage for KRR is analyzed by using the competitive advantage model.

2.2

SWOT ANALYSIS

Scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. (www.12manage.com) The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection

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A SWOT analysis is a tool, used in management and strategy formulation. It can help to identify the Strengths, Weaknesses, Opportunities and Threats of a particular company. Strengths and weaknesses are internal factors that create value or destroy value. They can include assets, skills, or resources that a company has at its disposal, compared to its competitors. They can be measured using internal assessments or external benchmarking. While Opportunities and threats are external factors that create value or destroy value. A company cannot control them. But they emerge from either the competitive dynamics of the industry/market or from demographic, economic, political, technical, social, legal or cultural factors Any organization must try to create a fit with its external environment. The SWOT diagram is a very good tool for analyzing the (internal) strengths and weaknesses of a corporation and the (external) opportunities and threats. However, this analysis is just the first step. To really create the fit with the external environment is often the most difficult work. A SWOT analysis carried out for KRR for the purpose to reveal its own strengths and weaknesses, and the opportunities and threats it faces from the environment. Although there are many strength, weakness, threat and opportunity factor for KRR, in this analysis only the most prior factors taken into account. This SWOT Analysis is conducted based on the KRR at KLCC and also Berjaya Roaster management.

2.3

TOWS MATRIX

A TOWS matrix is a tool to combine the internal factors with the external factors. A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance at developing a competitive advantage by identifying a fit between the firm's strengths and upcoming opportunities. In

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some cases, the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity. To develop strategies that take into account the SWOT profile, a matrix of these factors can be constructed. Often in reality the two columns of the SWOT diagram are pointing in opposite directions. Strategists must still deal with the paradox of creating alignment. This can be done via Outside-in strategy formulation (marketdriven strategy) or Inside-out strategy formulation (resource-driven). The TOWS matrix is carried out to develop possible and logical strategies by combining the factors in the SWOT analysis. The strategies can be formulated by combining the S-O strategies to pursue opportunities that are a good fit to the company's strengths. Then formulate W-O strategies to overcome weaknesses to pursue opportunities. Formulate S-T strategies to identify ways that the firm can use its strengths to reduce its vulnerability to external threats. Lastly, formulate W-T strategies establish a defensive plan to prevent the firm's weaknesses from making it highly susceptible to external threats. This analysis is carried out for KRR to find its offensive move by making the most its strengths and opportunities. Then, to find it defensive moves by observing its competition closely. Beside that, to understand the necessary adjustment it has to make using it strengths and threats. Last but not least, to form its survival move by taking the possible turn around. This strategy formulate by watching closely at KRR threats and weakness.

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2.4 PORTER’S DIAMOND MODEL The Five Forces model of Porter is an Outside-in business unit strategy tool that is used to make an analysis of the attractiveness (value) of an industry structure. Michael Porter provided a framework that models an industry as being influenced by five forces. The strategic business manager seeking to develop an edge over rival firms can use this model to better understand the industry context in which the firm operates. This analysis is different than the industry analysis even though both use to analyze the industry. This porter’s model helps to identify fundamental competitive forces in the specific restaurant industry that KRR operates. The Competitive Forces analysis is made by the identification of 5 fundamental competitive forces which are Entry of competitors to know how easy or difficult is it for new entrants to start competing, which barriers do exist. Then identify the Threat of substitutes to know how easily can KRR product or service be substituted, especially made cheaper. Further more to measure the bargaining power of buyers to know how strong is the position of buyers and can they work together in ordering large volumes. Then to measure the bargaining power of suppliers to understand how strong is the position of sellers and potential suppliers exist. Lastly, to measure the rivalry among the existing players and to understand whether there is a strong competition between the existing players or is one player very dominant or are all equal in strength and size. Dana, L., & Vignali, C. (1998). With using this model, KRR can know its potential competitors, its stable status in the restaurant industry in depth.

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Chapter 3: - Findings And Discussion 3.1 COMPETITIVE ADVANTAGE

Resources

Distinctive Competencies

Cost Advantage or Differentiation Advantage

Value Creation

Capabilities

Diagram 1: competitive advantage model

The competitive advantage of KRR is analyzes by using the diagram 1 (competitive advantage model). As discussed in Chapter 2, competitive analysis had divided into

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four different aspects to analyze KRR competitive advantage. KRR is very concern in generating a superior return on investment.

3.1.1

Resources

KRR has specific assets and resources and capabilities that are superior to those of its competitors. Resources are the KRR specific assets useful for creating a differentiation advantage and that few competitors can acquire easily. The resources which are contributing to KRR competitive advantage are its trademark. Its trademarks are it food products. KRR has its own secret recipe which uses its own secret herbs, spices, citrus and marinates chicken in its own juicy marinate method. In preparing each food product KRR uses its unique method of cooking and its ingredients that is had to know by others. KRR food products have its own taste and it is made to provide healthy food consumption for the guests.

Further more, KRR has a good reputation among the guests. as a mid-casual rotisserie chicken restaurant KRR has gain a special place in its guests heart as a third place for them beside home and work place. A lot of people likes to dine-in in KRR because they have trust in KRR food that are fresh always and KRR provide a clean and healthy environment to relax peacefully while having their meals. Kenny Rogers Roasters has been awarded three times in a row (1996, 1997 and 1998) the America’s Choice Award Winner for the Best Chicken Chain by Restaurants & Institutions Magazine. Kenny Rogers Roasters was also awarded the Master Franchisee of the year 2000/2001 by Malaysian Franchise Association. (www.berjaya.com.my).These

resources

had

differentiated

KRR

from

its

competitors.

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3.1.2

BERJAYA ROASTER (M) SND BHD

Capabilities

Beside that, KRR has it own capabilities to give a competitive advantage from its competitors. KRR products are well known for its healthy way of cooking and its method of preparing its products with less fat, less salt and less calories. It’s a unique and most important aspect of KRR to gain its own loyal guests. Nowadays people are more concern in consuming healthy food and price of the product doest really taken into account.

Furthermore, KRR is giving a priority in making quality products. KRR is the only restaurants that are running a quality inspection from time to time to ensure that the guests always receive the best and quality products. KRR always give An Attractive Price and a Value Relationship where it offers the quality of a full service meal at the prices and convenience available at quick-service restaurants. In short, value for money.

In addition to that, KRR create consumer awareness where it strives to set Roasters into the minds of consumers as ‘the place for Rotisserie chicken’ through marketing efforts that emphasize on the various attributes of the Roasters menu and restaurant design, including the association of Kenny Rogers. As mentioned above KRR is give the full effort in making KRR as guests conscious environment roasters restaurants are designed and managed, to provide the level of service, comfort and ambience of a full service restaurant with the convenience of a quick service restaurant. The restaurant design showcases a brick-enclosed, wood-fire rotisserie, memorabilia and photographs together with sounds of lovely music which are designed to create a warm, comfortable and lively atmosphere. In addition, the

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training programs encourage its employees and hostess to interact with guests and provide a high level of friendly customer service.

3.1.3

Differentiation advantage

The resources and KRR capableness to use the resources effectively has given a KRR a defendable position in the restaurant industry. Even though, food is something we can substitute easily, but KRR has created its uniqueness when people think about having meal foe a special occasions or looking for a healthy and comfortable environment KRR is the place that they are looking for.

3.1.4

Value creation

Since KRR has its own uniqueness the money is not the matter for the guests that dine-in at KRR. KRR has created its own value creation that is quite difficult for any other competitors to take it place. It’s clear mission and vision and it professional management has create the unique value for KRR.

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3.2

BERJAYA ROASTER (M) SND BHD

SWOT ANALYSIS

STRENGTHS

WEAKNESSES

1. Strategic location

1. Still using filing system

2. Appropriate training provided and

2. Fail to curb the restaurant operation in

Ongoing development.

the busy situations

3. Quality processes and procedures (Hazard analysis critical control

3. Less innovative 4. Staffs not provided with proper

point)

uniforms and name tag or

4. Delicious food and healthy food.

Identifications.

5. Proper management.

5. Less commitment from the staffs

6. Clear menu card.

6. Not providing any additional benefits for the guests 7. Less effective feedback method.

OPPORTUNITIES

THREATS

1. More business meetings and

1. Delay of suppliers.

function To be held in the convention

2. Potential competitors.

area.

3. Competitor has a new, innovative

2. Aquaria in KLCC.

substitute product or service.

3. Moving into new attractive market Segments. 4. Change of consumer

4. Regulations to use wood in preparing the foods. 5. More cheaper products.

behaviour. 5. More fresh graduates looking for jobs. Table 1: SWOT analysis for KRR

3.2.1

Strengths

S1: Strategic location

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Figure 1: Kuala Lumpur Convention Centre

KRR Kuala Lumpur Convention Centre is located very strategically at one of the most popular place in Malaysia. Firstly, it is at the centre of the Kuala Lumpur town, and it is situated at the world tallest tower namely Kuala Lumpur City Centre (KLCC). This KLCC is the most favourite place for the tourists who came to Malaysia and for the local people of Malaysia.

Secondly, in the Twin Tower the KRR is placed at the Convention Centre’s food court. The restaurant is often occupied by the people working in the convention centre offices and also by the people who comes to attend the events arranged in the convention centre.

Beside that, in the weekdays and public holidays the KRR restaurant will be filled with schoolchildren and parents, teenagers and friends who came to enjoy their meal after visiting the Aquaria, which situated beside the restaurant. It also a plus point for the restaurant.

S2: Complete training provided

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KRR is very concern in giving 100 percent knowledge about their vision, mission, objectives, products and their current activities to their new staffs to ensure that their staffs is equipped with tools and resources , to ensure that the guests receive a quality product, great service and leave enthusiastically. To ensure their staffs receives the proper tools and resources, KRR provide complete training workshop and workbook for those staffs that joins in the KRR family. The staffs who newly join KRR must attend first two classes in within a week from the day they join KRR. The staffs provided with ‘core program Learning Journey Workbook’

The workbook must be finished with 100 hours of employment. The workbook contains nine modules namely ‘first impression, KRR experience, communicating products, legendary service, service deployment, server, front of the house station, register, back of the house station. After this session, KRR staffs will be able to perform more professionally.

S3: Quality processes and procedures (Hazard analysis critical control point) KRR practices to give best quality product and service to its guests in order to give a legendary service to them. It believes that legendary service could tie up a promising bond and gain the guests loyalty towards KRR. Since the KRR daily operation is about giving service to guests, it tries to give its best in doing so.

KRR ensures that its guests always receive legendary service and to differentiate them with other fast food restaurant, KRR follows the HACCP guidelines and procedures in handling its daily operation. This had made KRR a recognizable restaurant for cleanliness and healthy and safe environment to dine in.

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To monitoring the quality KRR food products, the quality assurance teams

are

responsible in a continuous round of visits, inspections and audits, announced and unannounced, to all production facilities, distribution centres and restaurants. A very tight specifications has been done to every supplier to ensure that the detail of exact quantity and quality of raw ingredients and the dimensions of the finished product. KRR also regularly take samples of stock at distribution centres to ensure that they conform to specifications. The quality controls continue when the food arrives at restaurants, no delivery is accepted until a series of quality and safety checks is completed. A comprehensive training in food safety, hygiene and food preparation procedures is designed to all of the restaurant staffs. This is a global practice and is one of the distinguishing features of KRR as a fast-food restaurant.

S4: Delicious and healthy food Beside that, KRR is well known for its delicious and healthy roasted chicken and its twelve hot and cold side-dishes and it KRR mouth-watering homemade muffins. All KRR products is contains ‘less fat, less calories and less salt’. This had given a significant competitive advantage from its competitors. The fat is removed naturally by roasting the chicken inside rotisserie for forty-five minutes to let the fats to melt away and giving the guests tasty and healthy chicken meal.

Besides that, KRR make sure each time the guests are consuming the fresh products and it practices the ‘first in, first out ‘concept. With this, the guests always enjoy a healthy and delicious food. At KRR restaurant any product that exceeded its life period will be disposed immediately even the cost is high.

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S5: Proper management team KRR management is recognized as one of the best management in the subsidiary of Berjaya Group. The management always aware of each restaurants activity progress and always visits the restaurant. The management gives moral support and open to listen to any problems of the KRR team members at anytime. The management team always focuses on creating a very effective two way communication system since their main required skill is connecting oneself with the guests. For example, KRR KLCC has been visited more than 5 times by the Area manger, Deputy General Manager in the period of my industrial training there for 10 weeks. S6: Clear menu card I should admit that KRR has a very clear complete menu card. It is designed with separating into four parts where it is divided according with its type of food namely, lite and easy selections, great meals, desserts and beverages. The menu card has hard covers and eliminated pages to make sure it’s not easy to get dirty or torn. The menu card contains each items mane, with its price and a picture of the product. This is very much help for those who are new to the KRR. The menu card can be said people friendly.

3.2.2

Weaknesses

W1: Still using filing system While all the organization moving beyond the expending modern technology arena, KRR is still using manual filling system in dealing with its daily activities in the restaurant. The files had taken a big space in the small office room and it is delaying a task to find the correct document. The files such as daily profit or loss statement, ordering files, staffs attendance fail, stock files is not only delaying daily activities but

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also give the opportunity for human errors that affect the restaurant performance overall.

W2: The management fails to curb the restaurant operation in the busy situations The restaurant management fail to handle the increase of guests during ‘peak hours’ on function days. The restaurant management has less communication with the convention area management people about the functions held: to know the details of the events arranged at the convention area and the number of people that would attend the functions. This often lead to unexpected increase number of guests at KRR restaurant and make the situation worst with unprepared products, tools and shortage of staffs and it create a tensed situation for all the team members.

W3: Less innovative and less choice of food From the day KRR started its operation in Malaysia until now, it has obviously reduced its number of product whereas it should have come up with new products. It has loses its competitive advantage in competing with it’s competitor who undertake to provide new and different product to its customers. For instance, Nando’s had introduced almost more than 10 different products for the taste of its customer. This has shown that KRR is using the profit strategy under stability strategy where; KRR is just concentrating at the company’s current problems and being passive.

W4: Staffs not provided with proper uniforms and name tag or identifications. KRR does not have a standardize uniform that show identity of a staffs who work at KRR restaurant. Staffs are also not providing with nametag or identification card to identify them as KRR staffs. Sometimes guests who wear all black are mistaken for

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the KRR staffs. The staffs do not carry the image of KRR staffs as Starbuck staffs do even though both the companies are under the same management.

W5: Not providing any additional benefit or packages to the guests demands KRR fail to meet most of guests’ demands who wish to dine in as a big family around 20-25 people for a specific functions. They often ask for a discount or any pacific packages for families. One of their demands is for the drinks to provide in a jug for the family. Beside that, any toys for the children and so on. The failure of KRR to the requests, a wrong perception occurs within the guests that KRR is not a family oriented restaurant. This had led KRR to losing its promising guests.

W6:

Less effective feedback method

KRR practices to get themselves closely to the guests. In their serving concept, they conduct a ‘table visit’ part to visit the entire guests at the table and ask their opinion about their experience at KRR. Even though it’s a friendly way to ask about their comments but it is not the effective way to gain the guests feedback. The ‘table visit’ method not only consumes a lot of time and the feedback that the staffs gain is not appropriate.

W7: Less commitment from the staffs Common points of view within publics are KRR is fast food restaurant and it is suitable just to work as part-time or temporary only. There so many school leavers, students who are waiting for education results and waiting for Universities intake and so on are finding work at KRR. Due to this situation, there are not many staffs that can rely on. Since the staffs are working part-time and based on hours, they intend to come in for work as they wish and they show less commitment in their work. This not only creates difficulties to KRR but also affect KRR reputation.

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3.2.3

BERJAYA ROASTER (M) SND BHD

Opportunities

O1: More business meetings and function are held in the convention area Convention area in KLCC designed to held function and meetings. It has two big halls that has place for more than 25000 people and ballroom, and meeting room. It has recognized as one of the best place to hold up any official event because it is easy access it has a big food court and the convention management prepare food upon requests. Last year, the biggest event that held in the convention area is the ‘PC Fair ‘and it has gave KRR a huge increase in its profit. Recently, events like Pikom 06’, REX06, companies annual meetings and so on had successfully held in KLCC convention centre and gave a hit in KRR profits. Furthermore, the convention area at KLCC expected to have more and more business functions and meetings and other events in the future. This will automatically penetrate more guests for KRR at KLCC restaurant.

O2: Aquaria in KLCC

Figure 2: Aquaria KLCC

Aquaria (as shown in Figure 2) are KRR restaurant’s backbone at convention area. Most of people realized there is KRR restaurant at KLCC because of Aquaria. Aquaria often visited by foreigners, local people, teenagers and group of tourist. KRR is getting more guests if Aquaria come up with any special promotion or events.

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Aquaria eventually come up with new events and bring in new and rare water life almost every month. Recently they had announced a special promotion price during the school holiday and it has attracted mote people from local and outstation. This kind of events will ensure KRR profit maintains and gets higher.

O3: Moving into new attractive market segments KRR main motive is to attract mid age people but it is now became more like a coffee shop for the business people, family gathering place for families and kids place for kids. KRR has a great opportunity to attract all aged people by giving them more suitable meals for them. KRR has the capability to entertain more attractive and profitable market segments.

O4: Change of consumer behaviour The people are becoming more health conscious and health consciousness becomes major topic of discussion among customers these days (Luis, R, 1995). People are very particular in consuming healthy and full nutrition food. Therefore, they are more knowledgeable and aware of the suitable food for their healthy life. KRR is well known for it tasty and healthy products. The methods for making the products are very clean and KRR food service is certified by the health ministry of Malaysia.

O5:

More fresh graduates looking for jobs

There are a lot of fresh graduates are looking for jobs that can promise them continues growth in their carrier. More challenged and graduates with good communication skills are looking for job at this tough moments where there a limited jobs available nowadays. There are a lot of graduates are willing to work in the fast food industry and most of them realize that there a carrier growth opportunity at KRR.

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3.2.4 T1:

BERJAYA ROASTER (M) SND BHD

Threats Delay of suppliers

KRR faces threats from it suppliers. KRR ordering its raw products from almost 10 different suppliers namely English Hotbread Sdn. Bhd for muffins, Ven Trading for vegetables and fruits, PAP Marketing for the gravy, and F&N for the drinks. Sometimes the supplier cannot provide more products when ordered in a short notice. Sometimes, the amount of guests will exceed than the anticipated and as the result, the service breakdown. Sometimes, product sent to different outlet out wrongly sent or incorrect amount of products. These affect KRR restaurant daily operation and service to guests.

T2:

The occurrence of Potential competitors

Since convention centre at KLCC is becoming a ‘hotspot’ for foreigners and visitor it is also becoming a potential business area for food-oriented business. The food court at convention centre already occupied with variety of food and beverage stalls. There are rumours that a ‘chicken rice’ restaurant will be opened soon at the convention centre right in front of KRR restaurant. This could result a tough fight between KRR and the chicken rice restaurant in the future.

T3:

Competitor has a new, innovative substitute product or service

Possible threat for KRR is the price, compare to their competitor around it. Since the KRR KLCC is situated in the food court, there are more foods and beverages with the image of local sold in the stalls at the food court. There are all kinds of food sold there, such as mixed rice, lamb chop, chicken rice and so on. There also provide partially table service where the customers only have to place their orders and the food will be sent to them when its ready and the staffs will clear the plates after the guests’ meals.

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T4:

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Regulations in using wood in preparing the food.

Besides that, the basic image of KRR, which is a roasted chicken using wood, is not in practice anymore except in one or two outlets of KRR. These changes are due to the regulations of the government and to follow the environmental friendly policies. So, KRR has lost its own specialty in preparing their roasted chicken.

T5:

Cheaper food available

KRR is considered as a mid-casual restaurant and it applies 5% government tax and 10% service charge. The prices of the product are much higher than other competitors at the KLCC Convention area food court. Normally, most of the people who come to the convention area in a big group or big-membered families prefer to eat at the food court since the price of the foods are cheaper.

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3.3

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TOWS MATRIX STRENGTHS

WEAKNESSES

1. Strategic location 2. Appropriate training provided and ongoing Development. 3. Quality processes and procedures (Hazard analysis critical control point) 4. Delicious food and healthy food . 5. Proper management 6. Clear menu card.

1. Still using filing system 2. Fail to curb the restaurant operation in the busy situations 3. Less innovative 4. Staffs not provided with proper uniforms and Name tag or identifications. 5. Less commitment from the staffs 6. Not providing any additional benefits for the guests 7. Less effective feedback method

OPPORTUNITIES

SO:

WO:

1. More business meetings and function to be held in the Convention area. 2. Aquaria in KLCC 3. Moving into new attractive market segments 4. Change of consumer behaviour 5. More fresh graduates looking for jobs

1. (S1, S5,S4, O1, O2)

1. (W2.W5,O5)

2. (S3,S4, O3,O4)

2. (W6, W3, O1,O2)

ST: 1. (S2,S3, T2,T3)

WT: 1. (W1, W7, T1, T5)

Internal Factors

External Factors

THREATS 1. Delay of suppliers 2. Potential competitors. 3. Competitor has a new, innovative substitute product or service 4. Regulations to use wood in preparing the foods 5. More cheaper products

Table 2: TOWS Analysis

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3.3.1

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SO Strategies

SO 1: Product Development Strategy KRR should provide more variety of food products its growing numbers of guests. A strategic location of KRR KLCC is able penetrate more guests and KRR should serve them according to their needs and current trend of food consumption. KRR can prepare light meals for breakfast or evening meals because there are a lot of office people will have meeting in the convention area and they looking forward to KRR will have something for them. So, KRR is capable of fulfilling guests’ needs because it has a situated in very strategic location, has a professional higher management, and can provide delicious food to the guests.

SO 2:Maintain Distinctive Competencies Strategy KRR should sustain its quality assurance to differentiate KRR with any other competitors. KRR should wisely utilize it strength to grab the opportunity it has. The training that KRR providing is a complete training and prepare themselves to attend the guests with confident and more knowledgeable about the KRR operation and its products. Besides that, KRR should continuously ensure that quality and the taste of their products are always up to the expected level. The growing awareness among the public for a healthy life can create a quite huge numbers of loyal guests for KRR.

3.3.2

WO Strategies

WO 1: Human resource strategy management KRR can overcome the shortage of committed staffs by realizing the opportunity that lies around it. It should hire more fresh graduates to be the part of the team because the graduates are able to penetrate some excellent ideas since they are from different background and well educated. KRR should come with more skill

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challenging programs and some arrange brainstorming programs to gain a better feedback from the staffs.

WO 2: Marketing Strategy Further more, KRR must concentrates on marketing strategies to create awareness of KRR products and the message should always be in the peoples mind all the time to make KRR as the ‘third place’ as KRR objective. KRR should advertise its products in television and news paper to always reminding the people of its delicious products and to think of KRR when they thinking of enjoying a tasty and healthy food at a comfortable place.

3.3.3

ST Strategies

ST 1: Cooperative Strategy KRR can share its knowledge in quality management and proper training method with other companies in the restaurant industry to gain the latest information in the food industry, trends of food consumption and the preferences of people. This is because in the fast moving world, it is difficult to survive if ones not willing to share its expertise and it might left behind in its industry.

3.3.4

WT Strategies

WT 1: Financial Strategy To face the threat and to overcome the weakness of KRR it should practices a cost reduction financial strategy. KRR should try to reduce cost in its purchasing, and make that products in a restaurant is enough and there is no exceed orders and all the product that are sold are tally with the daily report of the restaurant. KRR must

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note all the wastages occur at the restaurant and fine its possible causes to save cost. 3.4

PORTER’S DIAMOND MODEL

New Entrants

Threat of new entrants Bargaining Power of Suppliers

Bargaining

Industry Competitors

Power of Suppliers

Suppliers

Buyers Intensity of Rivalry

Threat of substitutes

Substitutes

Figure 2: Porter’s Diamond Model

3.4.1

Threat of new entrants

KRR is in the food industries: specifically in fast food restaurants industry. Even tough, KRR is identity itself as a mid-casual chicken restaurant, in people’s eye it fall

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under fast food restaurant category. Therefore, KRR has to battle up with the existing restaurants and new upcoming restaurants. KRR foothold in Malaysia by franchising and nowadays there are a lot of similar restaurants enters Malaysia in the same method. As analysis the Malaysia Franchising industry, it clear that government of Malaysia also open arm for these kind business by providing financial support, less regulations and give guidance to encourage more and more Malaysia to participate in business. Barney, M.(n.d).

Since restaurant industry is an easy access industry and it has a potential market growth, KRR faces a serious threat from newly entering restaurants because they are more advanced in technology and more innovative and bringing up products that is more familiar with taste of locals. For example, now the Chicken Rice restaurant is opening its branch almost all over the ‘hotspot’ places. The name of the restaurant is shows that it is more to localise food products and all easily accept the image of the restaurant. Beside that, restaurants like Chicken King and more chicken meal oriented restaurant are popping out everywhere like mushrooms.

3.4.2

Threat of substitutes

KRR restaurant at the Convention Centre is placed at the food court. Eventually there are many choices of food there for the people who wish to have their meal. Food is something can be substitute easily according to the preference of a person. Even though chicken is one of most favourite food item of Malaysian but there are more choices of chicken there and spaghetti and other food that is price cheaper than KRR because they do not apply taxes as KRR do. KRR and other food stalls at the Convention area give a similar taste and satisfaction for those take their meal there. Therefore, the customers easily substitute the products of KRR with the other food.

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Beside that, there is no cost in involved for the customers in switching to the substitute product. 3.4.3

Bargaining Power of Suppliers

Raw materials and other components at KRR are supplied by other parties or suppliers. Mostly involved suppliers are those supplying raw items like chicken, vegetables, cooking powders and so on. Well, KRR had established a good relationship with its suppliers and always maintain a good communication between them. When we are about to analyze the bargaining power of suppliers to KRR, we must take into account that KRR purchase item from various suppliers for different items. KRR order its marinated chicken from Dinding Poultry snd. Bhd, muffin mixture from English Hotbread snd bhd, Vegetables from Ven Trading, the Gravy mixture from PAP marketing and so on. The items that ordered for the operation purpose has a significant impact on the restaurant daily profits. The bargaining power of suppliers is differ from a supplier to another. The suppliers of raw chicken and vegetables and fruits are having more bargaining power because they are very established company with their own trademark in providing the required amount and size for the item that is ordered by the buyers.

3.4.4

Bargaining Power of Buyers

The people create demand for KRR are its guests. KRR is in restaurant services industry and it’s operating with its own concepts, taste of food and targeted guests. The buyers are more dominant in KRR. The KRR operation based on guests demands and there are many restaurants providing similar food and beverages to the

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guests. So, KRR had to obey for the demand for its guests. At KRR they practices ‘Just Say Yes’ philosophy, realizing the power of guests. The guests can easily find a substitute for KRR products since it’s related with food and Malaysia is well known for tasty food and beverages. The buyers can easily find another substitute for their meal. Therefore, KRR must create an unforgettable image on it’s guests and make KRR must accentuate itself as a distinctive taste as food as how Malaysian feels about KFC and MC Donald’s and Pizza Hut. In this food and beverage industry, the buyers are definitely has the bargaining power since the industry is running to serve them.

3.4.5

Intensity of Rivalry

KRR restaurant at KLCC convention Centre is placed at the food court. At the food court, there are all kind of foods and beverages. There are foods to the taste of locals and foreigners. There are western food stall, Thailand food stalls, Indian food stall, Korean food stall, New Zealand ice- cream stall, and so on. KRR is originated from United States of America and it remains its foreign identity. Therefore, it is battling with other stalls build up there. The only different that it provide to guests in term of services is its structure of it restaurant which is more spacey and it give a table service. In term of price KRR is known for a highest price for its products among its competitors at there.

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CHAPTER 4: -ADDITIONAL ANALYSIS AND SUMMARY-

4.1 ADDITIONAL ANALYSIS 4.1.1

Industry Analysis

In this part, I had done an industry analysis for franchise Industry in Malaysia. Industry analysis is a type of business research that focuses on the status of an industry or an industrial sector (a broad industry classification, like "manufacturing"). A complete industrial analysis usually includes a review of an industry's recent performance, its current status, and the outlook for the future.

Smith.E , Samuel.M (2004) There are many sources of industry analysis or eg. investment firms, business and trade periodicals, trade associations, and government agencies. To conduct a thorough industry analysis, include a variety of sources.

The industrial analysis that had carried out in this report is about the Franchise Industry in Malaysia. This analysis include information about the overall franchise market overview, the government support, financial supports, current market trends, potential competition between foreign and local competitors, sales prospect, market access and cultural and regional issues.

The purpose of this analysis is to give a deep understanding about the franchise industry in Malaysia as it is now recognized as one of the profitable and less risk

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involved industry. The main objective of this analysis is to give a proper understanding of the industry to the readers and to guide those who are interested in involving themselves in the industry later.

4.1.2

Market overview

A&W was the first fast food company that brought the idea of franchising into Malaysia in 1967. (Layhwa Teh, 2003). However, Franchising were better known and starts to expand gradually in Malaysia after the year 1992 when government began promoting the sector. The government's agenda is to increase the number of "bumiputra" (ethnic Malays and other indigenous groups) entrepreneurs in the country through franchising by offering them significant financial and training support. The government efforts had been effective, as bumiputras now represents at least 40% of franchise owners in Malaysia, up from less than 10% ten years ago. (source). Interestingly, more non-bumiputras are entering the industry for they are recognizing franchising as an effective strategy for regional expansion. Furthermore, with increasing competition regionally, local manufacturers are looking towards franchising as a way to diversify their operations.

4.1.2.1 Strong Government support Under the 9th Malaysian Plan (9MP), the country's economic development plan for 2006-2010, franchising has been identified as one of the growth areas for the structural change and upgrading of the distributive trade industry. The government allocated US$26.3 million (RM100 million) to the Ministry of Entrepreneur Development to promote, market, train, and finance the Franchise Development Program (FDP) with the objective of establishing 1,000 franchisees and 50 new franchisors (and hopefully, building 1,000 entrepreneurs) over the five-year period. ( Forbes, 1999 )

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Although FDP encourages the development of home-grown franchises, foreign franchises that contribute capital, technology transfer, expertise, entrepreneurial development, and human resource development are most welcome.

The

government recognizes that it has to learn from the developed countries since franchising is relatively new in Malaysia.

The Malaysian government has allocated funds to various federal agencies, including Perbadanan Nasional Berhad (PNS) and Permodalan Usahawan Nasional Berhad (PUNB), to develop and enhance local franchises, acquire master franchises, master licenses and encourage sub-franchises among the bumiputras.

4.1.2.2 Financial Support Many financial assistance programs and facilities created under the Ministry of Entrepreneur Development to promote franchising among bumiputra middle class entrepreneurs. Although preference is given to bumiputras, others are also allowed to apply.

The Programs that includes are such as Credit Guarantee Corporation where it guarantees up to 80%-100% of commercial loans obtained by franchise companies. Beside that The Franchise Development Assistance Scheme provide financial assistance up to a maximum of US$26,316 (RM100,000) or 90% of the total development cost, whichever is lower. Further more Permodalan Usahawan Nasional Berhad (PUNB) give out loans in return for equity holding. (Layhwa Teh, 2003). Further more, foreign franchisors can benefit from the above programs if the local partner or franchisee is incorporated in Malaysia.

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4.1.2.3 Market Trends There are over 2,500 franchising outlets in Malaysia in sectors ranging from food and beverage to automotive related sector (car sales, service centres, tire services), clothes and fashion, computer & internet services, beauty and health, hotels and tourism agencies, cleaning services, pharmacy, souvenirs, jewellery, printing, photoshops, etc. (refer to appendix 3) As of September 2005, 448 franchises have applied for registration with Registrar of Franchise (ROF). Of these, 339 have been approved. Approximately 40% of the approved applications are for foreign franchises, which the U.S. dominates.

Asmah Zaidani. (2000) mentions that Franchising, which contributes over 12% of the country's GDP, has been growing at a rate of 10% over the past few years. It represents approximately 4% of the retail outlets in Malaysia and accounts for 5% of total retail sales. Comparatively, the local industry has a high potential for growth since the franchising industry in the U.S. contributes more than 40% to its total retail sales. Although the market was impacted by the Asian financial crisis in 1997, it is recovering. It is expected to continue to grow due to the strong support of the government.

Fast foods dominate the franchising sector with estimated annual sales exceeding $342 million (RM1.3 billion). Asmah Zaidani. (2000). With rising disposable income, growing appetite for fast food (especially among Western-influenced young adults), the market outlook is good. As these young adults raise families of their own, they are likely to take their kids to fast food eateries, thus building a new generation of fast food lovers.

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Furthermore, the local industry is currently going through an interesting development phase where it is not only growing in terms of volume but also in terms of product variety.

Industry players are now more adventurous to explore non-food based

franchise business. An example is PNS' purchase of the Dwyer group franchise. Halim Hilman Abdullah. (2005).

4.1.3 Competition 4.1.3.1 Foreign Franchises The U.S. accounts for over 70% of foreign franchise sales in Malaysia, followed by the U.K., Taiwan, Singapore, and Australia. U.S. franchises dominate the fast food and restaurant industry and include the following: Kentucky Fried Chicken (KFC), McDonalds, A & W, Burger King, Starbucks, Seattle's Best Coffee, Dunkin Donuts, Pizza Hut, Domino Pizza, Shakeys Pizza, Kenny Rogers Roasters, Long John Silvers, Dairy Queen, TGIF, Chilis, Hard Rock Cafe, Planet Hollywood, Baskin Robbins, Haagen Dazs, Swensons, Famous Amos, Auntie Annes, Outback Steak House.

Due to the high capital investment required for a foreign franchise, owners of foreign franchises tend to be Malaysian conglomerates and wealthy investors. As more and more manufacturing heads towards China and other neighbouring low-cost labour markets, Malaysian manufacturers are beginning to look towards services and franchising as a way to diversify their operations, often in very different sectors. Halim Hilman Abdullah. (2005).

Large local conglomerates such as KFC Holdings Bhd, Berjaya Group, KUB Holdings, TT Resources Bhd and HPL Holdings Ltd (based in Singapore) are active players in Malaysia’s franchising market, each holding a number of foreign and local

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franchises. Most of these conglomerates use franchising as a strategy for regional expansion and, therefore, also hold master franchisee/licensee rights to a number of other countries in the region.

KFC, which entered the Malaysian market in 1973, is the most successful franchise and dominates the market with 300 outlets and 55% market share. KFC Holdings Bhd, a publicly-listed company in the Kuala Lumpur Stock Exchange (KLSE), also holds the franchise for Pizza Hut and Seattle's Best Coffee. In total, KFC Holdings Bhd controls over 60% of the fast food market in Malaysia.

Berjaya Group, a major conglomerate listed on KLSE, ventured into franchising in 1984 with the establishment of 7-Eleven convenience stores in Malaysia. They have since acquired the rights to Kenny Rogers Roasters, Roadhouse Grill, and Starbucks Coffee,

making

them

one

of

the major

players

in the industry.

http://

(www.berjaya.com.my)

4.1.3.2

Local Franchises

Since there is no significant presence of other foreign franchises in Malaysia, the U.S. franchises are mainly competing among themselves and with a few successful local franchises.

Home-grown food outlets such as San Francisco Coffee, San

Francisco Steakhouse, Chinoz and Mississippi Slims have been successful in marketing themselves as western food outlets which is in direct competition with the U.S. food franchises.

The largest local franchise is Edaran Otomobil Nasional (EON) which was established in 1986 to distribute Malaysia's national car, "Proton". EON has over 250

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franchised outlets with annual sales of $1 billion, making it the country's largest franchise.

Although the Malaysian government is encouraging the development of home-grown franchises through various programs, it will take time to develop them to a level where they can compete in the global market.

A number of home-grown franchise

schemes have started penetrating foreign markets. These include Marrybrown Fried Chicken (fast food), England Optical (optical shop), Royal Selangor (crafts/gifts), Nelson's (fast food) and Bonia (shoes & bags). Marrybrown Fried Chicken which was founded in 1981 has over 100 outlets in Malaysia, Singapore, Brunei, China, India and the United Arab Emirates.

Since home-grown franchising is still in its infancy stage, the government recognizes the benefits of learning from foreign franchises with proven business models and track records.

Therefore, it encourages leading foreign franchisors to set up

operations in Malaysia.

4.1.4

Sales Prospects

There are many opportunities for U.S. franchisors in the Malaysian market, especially for those willing to structure their franchising fees reasonably and emphasize training. Franchising has excellent growth potential here due to a few strong reasons. Which are the government's strong promotion and support for the franchising industry and popularity of U.S. franchises;

Best prospects identified for the franchising sector in Malaysia include casual fastfood outlets and restaurants , education and training products/programs for English, life sciences, leadership, child development, and other adult training programs,

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services, such as pharmacy, healthcare, nursing, senior care, printing, cleaning, plumbing, car servicing & maintenance, Information technology, such as computer services and Gift and souvenir shops.

4.1.5

Market Access

4.1.5.1

Registration With Registrar Of Franchise

According to Franchise Act 1998, all franchisors that are selling their franchises in Malaysia are required to register with the Registrar of Franchise (ROF) which is under the Ministry of Entrepreneur Development.

Exemptions are granted to

franchises that have been in operation in Malaysia prior to 1998. Therefore, U.S. franchisors that are selling their franchises in Malaysia will have to register with ROF first. The franchisors have to submit letter of Intent, their company profile, a sample of franchise agreement and copy of latest audited accounts

Officially, it takes one month to get an approval from ROF but normally it takes at least three months. It is usually easier for foreign franchises to get approval for registration with ROF compared to local franchises. However, there are incidences in which applications from foreign franchises had been rejected.

When an

application has been rejected, the franchisors can appeal.

4.1.6

Cultural and Religious Issues

Franchises operating in Malaysia must adhere to Malaysian commercial and contract laws, procedures, and local norms. For instance, pork must not be served at fast food outlets and chicken, lamb, and beef must be slaughtered according to Islamic rites. Although an existing handful of non-fast food franchised restaurants serve pork, new non-fast food franchised restaurants with pork on the menu may face difficulties in obtaining approval.

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4.2

BERJAYA ROASTER (M) SND BHD

SUMMARY OF MY RESPONSIBILITIES

I successfully finished my practicum period as a food and beverage assistant, frontline person, back of the house staffs and cashier at KRR KLCC convention centre. My responsibilities as FBA are welcoming the guests, giving the menu card to the guests, taking guests orders, serving the food correctly to the guests by following the cover note, cleaning the tables, sweeping and mopping the floor and fulfilling the guests’ needs.

Beside that as the frontline person, i prepared the food and drinks according to the menu sheet, keeping the frontline place clean, top up the products when it get less. Always make sure all the products are fresh and safe to consume. Further more, as the BOH staffs i helped the team to make products such as muffin. Beside that, I also washed the plates and the cups.

Finally, as cashier my responsibility is to punch in the order into the cashiering machine, giving out the bill, receive the payment from the guests and returning the correct change. When the shift comes to an end i need count the float money and the sales money to make sure that money is correct.

On top of all these responsibilities, i need to take a good care of the guests and give legendary service to them.

4.3 NEW EXPERIENCES At Kenny Rogers Roasters restaurant, everyday taught me useful and enjoyable experiences. At KRR, it’s all about services. Since, i am used to the service sectors but i really enjoyed my each day of work. I got chance to meet new people and gain

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New knowledge from them.

Besides that, i had been through exciting moments by representing KRR KLCC for the semi final and final of Roaster Challenge 2006. In this Roaster challenge 2006, i got the chance to meet most of the KRR staffs from all over Malaysia and the management people. I spend time with them to share their experience at KRR.

I was so thrilled when we were chosen to enter the final competition and we got even more excited when we were announced as the Bronze Winners. I and my team members received the medal and Rm200 cash money. It was the happiest moment at KRR.

Please refer to appendix 4 for my photos that snapped during Roaster Challenge Day 2006.

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