economics report fnbe

SCHOOL OF ARCHITECTURE, BUILDING AND DESIGN

THE DESIGN SCHOOL

FOUNDATION IN NATURAL BUILD ENVIRONMENT

PRINCIPLES OF ECONOMICS (FNBE0135)

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

NAME: LIM CHERN YIE 0315688

CHUA WEI JIE 0316323

LEE KIM THIAM 0310710

MUHAMMAD HASIF BIN ALIAS 0316413

HAZIM BIN ABDUL AZIZ 0315773

REPORT TITLE: RESEARCH PROJECT FOR BUSINESS OF CHAR KWAY TEOW IN PENANG AND KLANG VALLEY

LECTURER: MR. CHANG JAU HO

SUBMISSION DATE: 13TH JUNE 2014


Table of Contents

Content PageSummary 3Introduction of Ah Leng Char Kway Teow 4-5Introduction of Aunty Gemuk Char Kway Teow 6-7Comparative Analysis 8-9Strategy 10Nature of the Market 11-12Summary Table 13-14Analysis 15Recommendations 16-17Appendix 18-25Reference Lists 26


Summary

Throughout this whole report, you will be going through numerous contents like the descriptions,

comparative analysis, recommendations, and so on. The first one is the descriptions on the businesses’

we interviewed, where you find their personal business information. After that, you’ll be going through

the comparative analysis of the two businesses’ mentioned above where you find comparisons like the

number of competitors in their area, brief biographies etc. You’ll go through the recommendations

section where you’ll find recommendations to improve their businesses’ success based on our

viewpoint. The last two would be the bibliography, appendices, and of course, Legit references.


Introduction of Ah Leng Char Kway Teow

The first business that we interview is the Ah Leng Char Kway Teow. It is one of the most

famous Char Kway Teow stalls to be found in Penang. It is located along Jalan Dato Keramat,

Georgetown. Ah Leng Char Kway Teow operates at a café named Kafe Khoon Hiang. There are

apparently 2 stalls at the café, which are Ah Leng’s, and an economy rice stall. Other than that,

they are operating at just from 8.30am until 2.30pm. For customers who usually have lunch in

the evening, they can go to the main branch, which is located near Jalan Chor Sin Kheng, Air

Itam as they’re operating hours are from 6pm to 10pm.

As has been mentioned earlier, there is a main branch located near Air Itam, which is

currently taken over by the original founder, Teoh Koon Leong. The business has started since

the late 70s, which was approximately in 1978. Today, it has handed down to the second

generation being managed by the founder’s own son, Teoh Yung Hee. Teoh Yung Hee is the

owner of the sub branch where we visited. Teoh Yung Hee started to take over at year of 2009

when he was 51 years old. Additionally, the business currently has a total of two branches and

is hiring 3 hardworking employees to help out in the decrease of some burdens of the business.

Then, Teoh Koon Leong was upholding his only product, which is Char Kway Teow for almost 40


years now, as it is only the main product they are selling and does not think to develop any

other products.

Prior to this, by the time the second branch was expanded, he was offering at Lorong Kulit

Penang, found adjacent to the Maybank Fragrant Coffee Shop, yet now he has moved to Jalan

Datuk Keramat due to the unwelcomed reviews. The place was also perceived as an unlucky

place of earning money by relating to the Chinese traditional philosophical arrangement of

fitting the human presence with the nature's domain, well known as Feng Shui.

Next, when we asked the owner, Teoh Yung Hee about the motivation from his father by

starting this kind of business at that time. Then he kindly explained to us that his father started

learning the way to cook a fried Char Kway Teow based on his own personal interest and

hobby. After some time, they’re family begins to face various kinds of financial crisis. Thus, Teoh

Koon Leong decided to start the business by the only knowledge and capabilities of earning

money that he applied. He first borrowed some money from his siblings and friends knew well

because at that part of time, he can’t even afford to start the business. After he managed to

save enough money, he started the business without any hesitation, as he was the only

breadwinner around his family. Although he did not get the flying color of results at the

beginning, he tends to really work hard by not giving up easily. At last, he managed to earn as

much income as he can then he paid all his debts to the ones he borrowed money from during

his hardship. He also brought his family to the harmony and peace status. Since then the

business is carrying on until now and being handed down to the second generation.

As the second generation’s owner, Teoh Koon Leong had mentioned he would continue the

business until the time he retires and definitely spread on to his young ones as he stated this is

a family business and it must be carried on by their own family.


Introduction of Aunty Gemuk Char Kway Teow

The second stall we interviewed was a local Char Kway Teow stall located somewhere near

Klang Valley. The gene of the stall is Penang Fried Kway Teow, however, the people there

preferred to call it the “Aunty Gemuk’s Char Kway Teow”. The reason we describe it that way

was because the one who cooked the char kway teow, Ewe Sow Choo is a fat auntie. She wasn’t

mad but instead, she was happy that her dishes did not take all the credits. The stall received a

lot of great feedbacks from the Internet.

The stall shared its location with Restoran Jamal Mohamed, a mamak restaurant. Unlike any

mamak themes, the restaurant consists of many individual stalls such as Nasi Lemak Kukus and

Yong Tau Foo. It is located near SS 5A, Kelana Jaya. The restaurant is surrounded by a housing

area and exactly beside the Football Association Malaysia(FAM) building. Furthermore, the

place is very near to the busy highway, Damansara-Puchong Expressway(LDP). And if people

take a left junction to SS 5A from LDP, the restaurant can be easily located about 100m away.

Unlike the typical chinese char kway teow which have pork and lards in it, the Auntie

Gemuk’s char kway teow is halal. This way, the stall managed to attract every races and

religions in Malaysia to enjoy their delicious char kway teow. The pricings are RM5.00 for small


portion and RM5.50 for big portion per plate. Their char kway teow is a bit spicy than the

normal one. The number and size of their prawns are little and small respectively. Even so,

upon serving, the texture and presentation of the char kway teow on the plate looks very

amazing it looks.

The stall size was just the right size despite having small spaces, as it is only a shared space in

the restaurant. They do not have any other branch, which makes it quite nice to attain such

delicacy. With only 2 employees including the cooker, they are able to sustain about more than

150 customers per day. Not to mention that the stall only opened from 10am to 6pm everyday.

The stall maintained in such ways for quite a long time without any new development or needs

to expand their branch.

The business was established since 1982, which means that the business has already exist for

more than 32 years. The founder, Ewe Shiau Wei, was the father to current founder, Ewe Kong

Chooi. He started the business because of his personal interest in char kuay teow. Ewe Kong

Chooi later inherited the business after her father runs it for 10 years. The interesting part was,

she is not the cooker. She insisted to be the waiter instead and asked her sister, the fat auntie

to be the cooker.

Lastly, the Auntie Gemuk Char Kway Teow is very lucky because they dealt with fewer risks

and hardly need plans for any strategies, as there are very few competitors. The other char

kway teow stalls located miles away and are not as popular as the Auntie Gemuk’s. The only

competitors they have in the restaurant are stalls they share their business location with.

However, the owner did not desire to compete with the other stalls and already considered

them as part of the restaurant.


Comparative Analysis of Ah Leng Char Kway Teow and Aunty Gemuk Char Kway Teow Competitive Traits

As a Malaysian, we all know that Penang food was truly Pearl of the Orient, and that was the

reason numerous Malaysians barely strike an eyelash at the prospect of making the trek up to

Penang to get those mouth-watering meals. There are a lot of amazing nice local street foods at

Penang and Char Kway Teow is one of the most well-known foods there. This is the reason why

the owner of Ah Leng Char Kway Teow, Teoh Yung Hee stated that it is hard to compete with

others as there are much more famous and customer-based stall than them. Additionally, he

mentioned that there has currently total of around 47 stalls that are operating in Penang.

Although there has many stalls, Teoh Yung Hee is still can find out who are their competitors

that stand as their top three. Lorong Selamat Char Kway Teow was the first he mentioned. He

said Lorong Selamat has much more customer-based than them and the annual profits are

leading them. Then, the next competitor is Sister’s Char Kway Teow. It is located at Jalan

Macalister. It's named so on the grounds that the Char Kway Teow stall is worked by a couple of

sisters. The Lam's sisters had fried Kway Teow for around 50 years precisely at this venue. Some

tour guides even introduce to the tourists that it is the best Char Kway Teow in Penang. The

third competitor then is Siam Road Char Kway Teow. Obviously, it is located at Siam Road or we

called Jalan Siam. However, Teoh Yung Hee mentioned that Siam Road has a very heavy

weakness which they tend to let their customers wait for so long for only just a plate of Char

Kway Teow but other than that, the food is nice.

On the flip side, there is much easier to operate nicely for Aunty Gemuk Char Kway Teow as

there are not that much competitors around at Petaling Jaya. There are only 28 stalls total at

Petaling Jaya and they are separated through different area as we all knows that Petaling Jaya is

a huge big city. Although there are a few of Char Kway Teow stalls at Petaling Jaya, still they are

not as tasty as we find around Penang because it is not cooked by local but mostly foreigners.

The curious parts, when we asked the owner of Aunty Gemuk, we were surprised of what she

told us. We thought was any Char Kway Teow stalls around that area at first, but she told us


that her actual competitors are the stalls that are recently located inside the Restoran Jamal

Mohamed as those are the sub-stalls under the restaurant. The first and foremost of the

competitor definitely is the main branch of the restaurant which is the Mamak Stall. The stall is

selling many products such as Indian traditional foods like Roti Canai, Nasi Kandar, Maggi

Goreng and so on. Then, the next competitor is the stall that is selling Nasi Lemak Kukus. The

steamed coconut rice was fragrant and came in soft seperate grains. Determinations of things

are accessible as accompaniments to your fundamental nasi lemak - chicken rendang, sambal

kerang and sambal sotong. This is obviously most open-armed by our Malay compatriots. The

third competitor is the Curry Mee stall. This is because even the owner herself praised the level

of tastiness of the Curry Mee as she personally loves it very much. She described the food for us

like the curry taste was thick and fragrance of the lime gave additional tartness. However, even

though they are competing with each others. The owner still told us that they are actually good

in a kind of friendship and are fighting with a fair level.


Strategy

People often use different kind of strategies in their business against their competitors. When we

asked or interviewed both stalls regarding strategies that they so far had been using, they both claimed

that there was no strategy. We cannot let this question remain unanswered, thus we decided to

interview the people there instead and do some research and observation.

Let’s first look at the difficulties of competition, specifically about their stall locations. Unlike Auntie

Gemuk CKT, Ah Leng CKT dealt with more and harder competition due to its stall located at the

product’s origin place, Pulau Pinang. As for Auntie Gemuk’s they chose to start the business in a place

that their product is not commonly found in Klang Valley. In the end, one stall which have more

competitions should have work harder in advertising their product, however the shared the same

strategy which is PUBLICITY.

Just like any other food stalls, if you are able to cook something delicious and worth trying, your stall

will be as popular as an artist. People will start to spread the news to friend, family and write their

opinions in the social medias like Blogspot and FourSquare. With nowadays technology, one info can be

easily being spread to thousand of peoples in just a second. To add it up, with excellent service and

friendly workers, it should be an additional support to be written in their contents about the foods.

People tend to be captured by the worker’s beautiful services.

In term of packaging and promotion, it’ll be unnecessarily because as people who prefer CKT to be

eaten on a plate and eat it with chopsticks. Both stalls can be concluded to be careless about their

packaging and promotion processes. They simply charge their buyers with RM5 or higher for a plate of

CKY. Their customers explained that it was a fair price because nowadays market fluctuation. As for

Auntie Gemuk’s, their customers have no problem with the price as their CKT is very mouth-watering.

As a conclusion, both stalls decided to not make a fight and use any kind of strategies with their

competitors and only use when their business suddenly go bankrupt.


Nature of the Market

In our opinion, the nature of their market is oligopoly. The word oligopoly is defined from

two different Greek words which are Oligoi with Polein, which means Few Seller. Therefore, it is

described as a situation in which a specific business is controlled by gathering of firms. Other

than that, an oligopoly is a business structure in which a couple of firms command. At the point

when a business sector is imparted between couples of firms, it is said to be much focused.

Although just a couple of firms overwhelm, it is conceivable that a lot of people little firms

might additionally work in the business.

The reason we say so because that the business of Char Kway Teow in Malaysia is one of the

conquering market in our country. Although it was originated from Chinese, it is a well-known

food for this country that is surrounded by multicultural races until today. Thus, there are many

Char Kway Teow stalls operating recently but all their ingredients and ways of frying it are

almost the same. Then, their range of pricing their food is almost the same as well as an inch of

miles away. However, since there are Char Kway Teows all around the country so that is the

reason of their earnings will be lower than those monopoly markets because there are many

similar businesses on the market. Additionally, if one stall is more creativity by creating new

outlook of the product then it will gain more customers because the other stalls are still

following the old ways then they could not attract more customers to stay with them.

Therefore, business that is under oligopoly must always figure it out about new strategies to

compete with others. Technique is greatly crucial to firms that are related. Since firms cannot

act freely, they must expect the logical reaction of an enemy to any given change in their price,

or their non-value pricing. As it were, they have to arrange, and work out an extent of

conceivable choices focused around how they think adversaries may respond. For example, the

business thinks whether to raise, low or keep constant of its prices of their products.

In other words, definitely is hard for those new businesses who wish to enter the market for

example like market of Char Kway Teow. This is because that is a term that called “barrier to


entry” that we have learnt from subject of Economics. A barrier is an obstacle that prevents

other new firms from entering the market. At first, there is a term called Economies of Scale

which means that a firm’s ability to produce its goods at gradually lower costs over the long

run. It occurs due to improvement in production technology and cheaper raw materials. As a

result, firms with Economies of Scale can produce goods at cheaper costs and, in turn, sell them

at a lower price but new firms cannot compete at the same low price because it requires some

time to happen. Then, firms can also prevent new competition by adopting strategic moves as

they will advertise more and lower their product’s price to discourage customers from going to

new stalls. At last, the very important part is that old market has already had their old-based

customers so it is very hard to pursue their customers by going to the new business stalls to

have a plate of Char Kway Teow. As summary, it is very hard for any new business to enter this

historic market unless they can figure it out some creative things so they can attract the

people’s attention then have a visitation to their stall.


Summary Table

Competitive Traits Ah Leng’s Char Kway Teow Aunty Gemuk’s Char Kway Teow

1. Number of Competitors

(in ranges e.g. 2 to 10, 10 to

50, 50 to 150, etc.)

In ranges 10 to 50 In ranges 50 to 150

2. Barrier to Entry (Weak or

Strong? Why?)

Strong barrier to entry, there

have much more stalls as we

know its famous local food. The

old stalls will advertise more in

order to slash new stall.

Strong barrier to entry, this is

because they have had their

original customers. Most of the

customers would prefer old

stalls as they already used to it

the old taste and will not take a

risk to new stall.

3. Differentiated or

Standardized Products (if

differentiated provide 2 to 3

examples)

Standardized Product Standardized Product

4. Pricing Power (Price Price Taker, because the price Price Taker, because the price


Maker or Taker? Why?) he set will not affect the market

price. They will lose customers

if their pricing is too high.

she set will not affect market

price. Just in case, they would

lose customers as they would

prefer some stalls that set in the

cheaper price.

5. Other Characteristics (e.g.

Any close product

substitutes, mutual

dependence, constant

advertising)

No other characteristics. Mutual dependence, as they are

operating with other stalls in a

same restaurant, When one

decides to set higher price, they

will may reduce some price in

order to get more customers.

6. Verdict (Monopoly?

Oligopoly? Perfect

Competition?)

Oligopoly Oligopoly

Analysis


On a summarization, we have analyzed out that the stall of Aunty Gemuk’s Char Kway Teow

will be the more commercially good compares to the Ah Leng’s Char Kway Teow. The first

reason is because Aunty Gemuk was located at the area of Klang Valley and here is the most

hustle and bustle city in Malaysia. Thus, there will be more customers are willing to visit them

and their average customers in a day will be supplementary. Secondly, there is a turning point

why we think that Aunty Gemuk will be better because we had noticed that there was a sticker

from company of TripAdvior that stacked on the stall. It is a travel site giving registry data and

surveys of travel-related substance. It additionally incorporates intuitive travel gatherings. Thus,

this is a very extra bonus for our conclusion of choosing between them. Last but not least,

customers will remember the body size of the fryer aunt as her body is big. We mention this is

not an offense to her as we respect and love her very much because she is very lovely and

friendly to us. We are saying this is just mentioning that this will be a kindly reminder for those

visitors by remembering the tantalizing Char Kway Teow that all of us had eaten.

However, both of them are very popular in their responsibly state instead. We had also had

hard to make our choice among them but at last after some evaluations, we had finally chosen

Aunty Gemuk.

Recommendations


Both Aunty Gemuk and Ah Leng Char Kway Teow stalls have very good attributes as businesses. Both

are able to attract customers easily but in this case, we would have to recommend Aunty Gemuk’s Char

Kway Teow stall.

The first reason why we would recommend this stall is mainly because of the Char Kway Teows being

Halal. This allows the Malay race to enjoy the Penang delight. Aunty Gemuk tops most of the Char Kway

Teow stalls because unlike most stalls, this stall is one of the very few that actually serves Halal Char

Kway Teow.

The next reason why I would recommend Aunty Gemuk Char Kway Teow stall over Ah Leng Char Kway

Teow stall is because of the stall’s serving size. For Aunty Gemuk, the size they serve is surprisingly

decent for a small plate. Although expensive for a five ringgit platter of small Char Kway Teow, add

another fifty cents and you will be served with a much bigger serving. The price you pay for the big plate

is very much worth it. Ah Leng Char Kway Teow only serves very little for a small plate for seven ringgit

and somewhat smaller for the bigger plate that costs eleven ringgit. Ah Leng Char Kway Teow stall might

have gotten their pricing for the serving sizes wrong, but on the minor plus side, they serve very big and

juicy prawns.

Both stalls showed very skilled cooking skills, but even so, Aunty Gemuk was able to serve her Char

Kway Teows much faster despite the number of orders she gets every minute. Ah Leng’s owner was able

to serve at a decent speed but he could never have reached Aunty Gemuk’s owner’s level of speed. Not

to mention that the owner of Aunty Gemuk stall even had her chance to take her cigarette breaks in

between, which would be evident enough that she was able to cope with her orders very easily.

Aunty Gemuk might have conquered almost all aspects of what every good business might have, but

for every good side, there will always be a bad side and that bad side would be Aunty Gemuk’s food

quality. Sure enough, the owner cooks up a good plate of Char Kway Teow with the only downside of

her servings being soaked in too much oil. Aunty Gemuk’s Char Kway Teows were oily almost all the

time, which is a health threat to those who are both healthy or not. Ah Leng’s Char Kway Teows were

able to refrain themselves from jumping into the pool of oil putting customers at a lesser risk of a heart

attack.

In conclusion, we would definitely recommend Aunty Gemuk’s Char Kway Teows. The stall is able to

meet the customers’ expectations every time without fail. Ah Leng’s stall could have taken our

recommendations, but the overpriced serving is definitely not an option that most customers would


consider. If Aunty Gemuk’s stall would have to change anything, they could definitely try to reduce their

level of oil usage just to cook a plate of Char Kway Teow.

Appendix

Interview Questions


Ah Leng’s Char Kway Teow

1) When was the business founded? 1978

2) Who are the key founders? Teoh Koon Leong

3) What prompted the founders to start this business? Helped to decrease burden of family.

4) What are your main products? Char Kway Teow

5) Who are your customers? Mostly the residents who are living nearby Jalan Dato Keramat

6) What is the business’ annual revenue figure? Around RM255,500

7) How many branch offices/stores do you have (if applicable)? 2 branches

8) Can you provide us a brief history of your business and its most recent developments? Started at Air Itam and then was expanded to here

9) Do you have many competitors? Who are they? Who are your top 3 competitors? There are many competitors because Char Koay Teow is a well-known food at Penang. If have to choose, I will choose Lorong Selamat, Sister’s and Siam Road.

10) How big is your market share as well as your top competitors?


I have no idea about this.

11) Is the business constantly facing strong competition from other competitors? What strategies have they used to compete with you? No strategies, just to maintain our food standard

12) How much capital is required to start this business? What, if any, specialized field of knowledge do you need to run this business? Not required. Basic knowledge of frying Char Kway Teow

13) Generally, do you feel it is easy or hard to enter this market? Why? Not that hard actually

14) How do you compete with your competitors i.e. what strategies do you employ to divert customers away from your competitors? No strategies.

15) How often do you release a new product (this assumes the business sells differentiated products)? No other products.

16) Are your pricing decisions strongly affected by your competitors? Definitely, we noticed that less customers after we have increased our product’s price.

Aunty Gemuk’s Char Kway Teow

1) When was the business founded? 1982


2) Who are the key founders? Ewe Kong Chooi

3) What prompted the founders to start this business? Personal Interested

4) What are your main products? Char Kway Teow

5) Who are your customers? People who is living nearby SS5 and Petaling Jaya.

6) What is the business’ annual revenue figure? Around RM246,375

7) How many branch offices/stores do you have (if applicable)? No branch

8) Can you provide us a brief history of your business and its most recent developments? Same as usual, no changes.

9) Do you have many competitors? Who are they? Who are your top 3 competitors? Around 30 competitors in Klang Valley. The top 3 competitors will be the one who share the restaurant which are the Mamak Stall, Nasi Lemak Kukus and Curry Mee.

10) How big is your market share as well as your top competitors? I have to ask my dad about this.

11) Is the business constantly facing strong competition from other competitors? What strategies have they used to compete with you? No strategies, just be what we be.


12) How much capital is required to start this business? What, if any, specialized field of knowledge do you need to run this business? I am not that clear about it, my dad do not provide this information to me.

13) Generally, do you feel it is easy or hard to enter this market? Why? At first, it definitely will be hard but it will become easier as our foundation had been built.

14) How do you compete with your competitors i.e. what strategies do you employ to divert customers away from your competitors? We do not use that obvious strategies. We just to make sure our food is nice and maintaining the standard.

15) How often do you release a new product (this assumes the business sells differentiated products)? No new products.

16) Are your pricing decisions strongly affected by your competitors? We do not experience that before because I think this price is the standard price.



Figure 1.0 Teoh Yung Hee Figure 1.1 Ewe Sow Choo

Figure 1.2 Ah Leng Char Kway Teow Stall

+


Figure 1.7 Aunty Gemuk’s CKTFigure 1.6 Ah Leng’s CKT


Figure 1.7 Aunty Gemuk’s CKTFigure 1.6 Ah Leng’s CKT

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