Evaluation of the Environment of A&W Malaysia

1. PURPOSE OF REPORT

This report will show a finding from proper evaluation of the surroundings of A&W Malaysia. It also presents a turnaround proper for A&W Malaysia which escalates the chance of success.

1. SCOPE WITH THE REPORT

In this article that'll be microenvironment analysis, interior analysis, macro environment evaluation, as well as any tactical to A&W Malaysia. It also given tactical option and make clear about the implementation of strategic, and finally the suggestion for A&W Malaysia to turnaround.

1. LIMITATION OF A&W MALAYSIA

In 2001, A&W Malaysia was bought over by KUB Malaysia SDN BHD. In 2008, boarded on a destructive enlargement drive to restoration and develop its aim. However, the business reported that will close 24 A&W store that's not earning money will be shut down or repositioned, which include 24-hour A&W drive-in restaurant in Petaling Jaya in this year.

1. OVERVIEW OF A&W MALAYSIA

A&W Restaurants is a string of fast-food restaurant well-known by its draft root beer and root beer floats. It was the first fast food franchise restaurant in Malaysia and Asia. A&W continues to be businesses until today. A&W is focused on deliver customers with delicious, safe meals and operation restaurants that meet the highest food basic safety standards. It also quickly became a favorite gathering place for students, especially from the near by secondary university such as La Salle and Assunta. The junk food industry is growing rapidly. It offers more doubled in a couple of years such as, Mcdonald, Pizza Hut, KFC, Burger King and Subway. Within this season, A&W lost its market and plan to close down 24 retailers in Malaysia because they wish to relocate its business and procedures to attain lasting development in future. A&W are starting a counteractive strategy and critiquing the performance of each store. A&W's market steadily been substituted by other junk food restaurant due to the insufficient advertising. The image of A&W brand image is easily substituted by other junk food restaurant that always doing a myriad of advertising, because A&W's branding is not power enough to remain in customer's head. Matching to group managing director Wan Mohd Nor Wan Ahmad, he declare that 24 wall socket in Malaysia will close down in this season, to relocate its business and businesses to attain lasting growth. He'll only retain outlets that contain heavy traffic predicated on the upsurge in sales, and looking at ways to increase customers' satisfaction. The A&W wall plug is predictable to reopen in 2018, added by the foundation. The loss were mainly recognized to the group's food procedures, aimed by its subsidiaries A&W Malaysia. A&W Malaysia challenged major setbacks in the 2011 fiscal 12 months where it recorded losses totaling RM44. 5 million, 50% which was brought on by impairment deficits. (Wan Mohd Nor Wan Ahmad, 2014) Members of the general public had indicated their frustration above the imminent closure of the iconic restaurant in December. (Local Business Daily, 2014) A Facebook page "Save iconic A&W was create barely hours after the statement surfaced. The page has compiled 260 desires within five time of being setup, checked because of the Rakyat Post. The iconic A&W Malaysia is going to be revamped and will only be shut for the next 3 years to expedite the structure of the KUB Tower job. (The Pakyat Post, 2014) A&W needs to be strategized or it'll never happen of revamping after 3 years, and go bankrupt.

1. STRATEGIC ENVIRONMENTAL ANALYSIS

In considering the micro and macro effects on a business, inside and external factors must be looked at. There is a variety of tools in likely to sider these impacts of businesses, like the PESTLE, SWOT, and Porter's 5-Causes Analysis.

1. Macro environmental Analysis

A macro environmental analysis has been conducted using PESTLE tool, which is politics, economic, social, technical, legal and environmental.

The conclusions of A&W Malaysia have been summarized in the stand shown below.

APPLY TABLE

(Desk 1)

The macro environmental evaluation review A&W Malaysia faces more dangers than opportunities. Probably the most serious the economic loss, the harder to get on development of A&W Malaysia recognise the business has relied on.

In political factors and legal view, Administration introduces the nice & Service Tax (GST), and all those request of licenses which involve law and rules, affect the prices for consumer. Legally, the issues of sanitation and hygiene brought on the challenge in maintenance.

In economic factor, the increasing of francized of other fast food restaurant such as Mcdonald, KFC, Subway and Pizza Hut impact the overall economy downturn in short period very quickly. The cost of raw material increases also have an effect on A&W experienced major setback. The inflation of rate rises which caused impairment deficits.

Social factor of A&W is there are out of young people budget. Due to the monetary factor, which contributes to increasing of prices, teenagers aren't affordable for the fast food. Besides, currently a lot of individuals learn to increase health condition and increase living condition, more and more people started to leave or cease eating junk food. Therefore, A&W Malaysia wrap up by reporting that A&W Malaysia will be reposition its business and procedure to achieve sustainable expansion by close down 24 retailers in Malaysia in end of this year.

For technological factor, A&W outdated computer system and insufficient technology and development system, afflicted the attractiveness to the client.

Environmental factor of A&W are ecological footprint because A&W reduced product packaging and use more recycled material wherever possible. A&W eliminated own paperboard fry cups in favors of your paper bag, formulated with at least 70% recycled content. This impact A&W brand was eco-friendly and ecological junk food restaurants.

1. Micro Environment Analysis

A macro environmental analysis has been conducted using the Porter's Five Makes. Five forces research assumes that we now have five important forces that determine competitive vitality in a company situation.

APPLY TABLE

(Stand 2)

The micro environmental examination review A&W Malaysia faces more dangers than opportunities.

The bargaining electric power of buyer are strong, the cost to consumer of turning from A&W to prospects competition. A&W are offer with powerful clients, which often in a position to transition to other rivals easily.

The supplier power of A&W Malaysia is weakened which have an effect on many competitive suppliers. Amount of supplier of A&W is high for each and every key input, mainly freezing food, which a lot of distributor on market. The company doesn't have the power and strength to regulate over A&W in costing.

The risk of new entry of A&W is straightforward to enter in and exit, it also few economies of scale set up and training easily available. This impact new competition can enter quickly and weaken the position of A&W in Malaysia, and lead the lessening of earnings.

A risk of substitute of A&W is strong which impact many affordable substitutes. There are too many similar junk food restaurants in industry which are more attractive operating and product. A&W hardly ever improve and develop in their business, therefore is better to let other swap to weaken A&W position.

Competitive rivalry is high contributes to buyer and distributor can change to competitor with similarly or more attractive product and service. A&W have many opponents with offering equally or attractive products and services, so A&W have little electricity in the situation, because company and buyers goes to competition of A&W if consumers do not get much from A&W.

1. Internal Environmental Analysis

A&W Malaysia has a state of great-tasting elements, farmed carefully. A&W is happy to acquire high standards as it pertains to A&W food and beverages, which can tastes it in everything they provide. A&W's product are patented that need to apply for franchise certificate which can be unique source. Unique logo design permit of A&W are hard to get shows that A&W are unique source. A&W's food is not completely utilized which signify supply more than demand. This business lead to waste material of food, it implies that A&W are threshold competency. A&W Malaysia are unique source of information and threshold competency, this explain that A&W stay marginally.

1. SWOT

Strength of A&W is the first fast food restaurant invented in america in 1919. A&W Malaysia has listed in The Malaysia Publication of Documents as the first franchise restaurant in Malaysia. A&W also became the first Drive-in restaurant in Petaling Jaya as Iconic A&W wall plug. A&W symbol, The Great Root Bear and their company orange color stated in people's brain.

Weakness of A&W, due to the problems or repositioned or close down outlet stores that cost its lost revenue because location is not considered or rented cost is very costly, so A&W is closing down 24 outlet stores in Malaysia. A&W has not advertised comprehensively in Malaysia. People might not find the latest advertising of A&W. nevertheless the competition have strong advertised in anywhere caused the people will almost neglect A&W existing and lost its reputation in the market. In order to serve the meals on time and make sure the meals quality is fresh by commit some improvement on the servicing and food quality. The price of A&W is just a little greater than other opponents. A&W getting a Sen Saver lunch time collection but after included all the fee of beverage and service taxes, it cost around RM10, that are out of budget for a normally learner or employee. People could turn to mamak stall somewhat than fast food restaurant. A&W didn't totally use of the technology of upgrading their aspect of shops location and shutting down shops information at website and interpersonal network, which mistake consumer.

Opportunity of A&W is having affordable saver lunchtime treat meal to focus on in teenage which giving them to have significantly more affordable meal set with food quality, in once save their budget. A&W can intend to have more Festival Campaign such as Chinese language New Calendar year, Ramadhan evening meal and etc, to interest another target market. People can have their Ramadhan available evening meal in A&W. A&W can also come out with a fresh set meals with collectibles gift but only for limited time only. Due to strong competitors on the market, A&W have to improve in advertising or commercial by publicize their products or brand image astutely to avoid consumers just forget about their existing on the market due to strong opponents on the market. A&W also can increase publicity in market by corporate and business with some big event such as "Operating Day or going to to orphanage.

Threats of A&W is there are a lot of other fast food restaurant competitors are challenging with A&W is increasing quickly in the market. Having junk food increase a person's risk of health by putting on weight and fatness. Expensive fast food restaurants rented fee costly in increasing franchise in just about everywhere. Junk food restaurant string changes in strategy of leading in arriving years which lead financial crisis.

1. STRATEGIC OBJECTIVE

In last year, A&W Malaysia's income is predictable to attain RM42 million by Dec 2014. For 2014, A&W is expected to drive up the fast-food operator's income to RM60 million next 12 months. KUB declared a net loss of RM61. 86 million for financial year finished Dec 31, 2011 compared to a net earnings of RM11. 48 million this year 2010. (Bernama, 2012) regarding to Datuk Wan Mohd Nor, he said that A&W have to be capital inoculation but not reselling it. He also declare that working hours in shopping malls are limited and the hire is expensive, so the fast-food string was continuously enhancing and optimizing its resources in present outlet stores to better provide its customer. To achieve profit, accounting a corrective strategy and critiquing the performance of every outlet. Any store which not making income will be turn off or repositioned. Besides, protect A&W loyal customers and get new sections like children and lower middle income earners via value snacks. Increase on the marketing and advertising strategy to create consciousness for consumer to after A&W repositioned or open up new retailers in Malaysia. KUB which is owner of A&W targeted to list A&W on Bursa Malaysia in 2015.

1. STRATEGIC OPTION

1. Basic Strategic

To achieve earnings with earnings of RM60 million in 2015, A&W Malaysia have to be consolidation and turnaround. 40% of stake in A&W Malaysia Sdn Bhd are not selling made a decision by KUB Malaysia Bhd (owner of A&W) as the fast-food string is assertive of the profitable turnaround after restrategize its business operations. The new stores have to be focused in bustling in Klang valley where are predictable to thrust the fast-food operator's income. 24 outlets of non-profitable shops in Malaysia close down for business loan consolidation exercise. Using this method action, in once increase A&W durability by develop center competences and downsizing company weaknesses. A&W Malaysia needs to be enhance performance by property, argo, executive and structure, and food sectors in the 1 / 4 contributed to raised revenue. A&W CEO Samad Mohd Shariff informed to the media after briefing on its 50th anniversary event in Petaling Jaya about, reviewing at the process of opening better stores in good locations and this provides in the income. (Malaysian Reserve, 2013)

1. Strategic Direction

To achieve income with earnings RM60 million in 2015, by using Porter's Common Strategy method is recommended to use differentiation in A&W Malaysia. Due to the price and product & service of A&W, their cost is not the cheapest on the market, but the target market of A&W is extensive credited to A&W brand image value. A&W has many strong rivals such as McDonald and KFC which are strongly advertised, to be able to strengthen the ˜First Fast food Restaurant' in Malaysia slogan, A&W needs to make their product and services different and more appealing to their competition. To produce a success of a differentiation strategy, A&W need to have good research, development and innovation by having change of complexes and well educate staff. A&W need to strengthen the ability to provide high quality product and service since the cost are not low but offering better value for customer. A&W can implement it giving out limited toys or attractive surprise in several set food, and also offer campaign of buy more get more with attractive packaging and food, make sure the food are fresh and quality. A&W competence on the personal Root Beverage Float, they can make good use of the uniqueness of creativity of the merchandise and strongly advertise that no other competition cannot imitate. Because of the product's unique characteristics, if suppliers increase their prices the firm may be able to pass along the expenses to its customers who cannot find substitute products easily.

1. Specific Strategic

To achieve profit with earnings RM60 million in 2015, in Ansoff Matrix strategy, A&W should be using market penetration solution to increase up their business. A&W is the first fast food restaurant in Malaysia; therefore there is certainly existing product to existing customers. A&W need to practice several ways to achieve the target. A&W should be changing the charges, product packaging, and adding small features & most importantly, highly increase advertising or add increased sales visitors to increase sales. A&W owners giving out discounting, vouchers to succeed business from competition through competitive pricing. Besides, A&W can also introduced extra fat free or low fat version of set lunch break to counter a style towards reduced use since people begin to increase health condition. A&W can plan to have more Festival Campaign to push evening meal set for marketplace like family to obtain their gathering wide open evening meal in A&W. By choosing market penetration, this plan is the cheapest risk to get growth of A&W Malaysia for success. (Igoh H. Ansoff, 1957)

1. STRATEGIC IMPLEMENTATION

The current style of the management of A&W Malaysia is middle of the street leader in Blake and Mouton's Authority Grid. Administrator of A&W did not push their staff to hit sales or stress them with clearing up the environment. Supervisor didn't offer additional training or opportunities to wait promoter training. Customer gets their order on time alright, but no additional services like welcoming customer from the entranceway to the seats. As a result, employees of A&W neither satisfied nor dissatisfied using their job, and their performance is average. Brandy is a middle-of-the-road-leader. The first choice of A&W has balanced matter for both development and people, settles for average performance from employees. This management is good, but A&W supervisor management can be better. Manager should perform like team administrator, which very concern about people and high process matter. With this style, A&W could boost the concern for both activity and people. At the same time, employees promote energetic involvement and teamwork creates open and comfortable environment, enough to keep staff encouraged. (Kat, 2014)

In Hersey and Blanchard model, A&W Malaysia director has management of taking part or supporting. Leader attitude is low job concentration with high relationship focus. The employee atmosphere is good however the tasks are not well commitment, able but unwilling or insecure in doing task. Staff of A&W can do the job, but is refusing to do and showing insufficient commitment. Administrator did not fear about reminding them how to proceed instead of concern with finding out reason the staff is rejecting and thence cause them to become cooperate. In this case, A&W administrator are advised to be delegating and watching, a low task and low romantic relationship style where in fact the innovator allows the group to take responsibility for job decisions. Staff as of this level has don't need for support or consistent praise, although as with anyone, infrequent acknowledgment is obviously welcome. Staff will need to have an attitude with high willingness and ability to change or determined. (Hersey, 1999)

1. STRATEGIC CONTROL

The well balanced scorecard complemented traditional financial steps with requirements that measured performance from three additional perspectives, such as received those of customers, learning and growth, internal business processes and financial. Some companies move beyond early on eye-sight for the scorecard to determine its value as the building blocks of a fresh proper management system. By using like that, the scorecard addresses a serious shortage in traditional management system. (Robert S, 2014)

There are four processes in managing strategy, which is translating the vision, communicating and linking, opinions and learning and business planning. A&W are recommended to apply this strategy by controlling the company perspective and strategy. This plan helps managers to create a compromise and let professionals connect their strategy along the organization and website link it to departmental and individual goals. The scorecard would give manager of A&W a means of confirming that levels of the business understand the long-term strategy and that both departmental and specific aims are united with it. This plan allows A&W to combine their business and financial programs. When managers use the enthusiastic goals set for well balanced scorecard procedures as the foundation for assigning resources and arranging primacies, they can take on and synchronize only those initiatives that move them toward their goals. With this strategy also gives companies the volume for strategy learning, company can screen short-term results from the three additional perspectives and appraise strategy in the light of recent performance. (David P. Norton 2014)

1. CONCLUSION

In realization, A&W Malaysia Sdn Bhd needs to be innovated. By referring to strategy that stated in the survey, it has chance of success and profitable.