PapaRich is a moderm 'kopitiam' that acts quality espresso and asian delicacies at affordable 'Malaysian' prices. PappaRich kopitiam has multiplied from one kopitiam to 41 retailers around Malaysia, one in Hong Kong and one in Singapore. Thailand will be a good market for PappaRich to type in because Thailand's GDP by areas show up to 45% for service industry. This plainly shows us that PappaRich can spend money on Thailand to provide the community with Malaysian genuine, classic, and amazing kopitiam foods.
Using the SWOT analysis, in conditions of durability, the PappaRich will serve the city with Malaysian's kopitiam meals with affordable prices with a classic coffee shop ambience. In terms of opportunities, financially the GDP and inflation rate has been progressively increasing lately. Interest rate fell sharply due to the US financial crisis. The Thai Baht loved against MYR and a result of that, the revenue made in Thailand relatively to the Malaysian Ringgit would be higher. The weakness for PappaRich to go into Thailand which is the food that PappaRich is serving is probably not accepted by the local people. Besides that, the dangers to the company are the political instability anticipated to street protests.
PappaRich's success currently is because of its successful differentiation business level technique to set them aside from others from the same F&B industry. PappaRich focuses on the grade of their product and keeping it steady throughout all their shops. Furthermore, the atmosphere is what captivated the consumers and made them regular customers in PappaRich.
The best way for PappaRich to enter in the Thailand market is the franchising market entry strategy. To become successful F&B franchisors that can go land, PappaRich (the franchisee) can sell the franchisor's trade mark, product or services, or trade name and benefits from the franchisor's help and support in Thailand market. In return, the franchisee from Thailand need to gives an initial charge to PappaRich and then a ratio of the sales revenue.
In cultural examination, there are five areas to be concerned, the cultural research of Thailand and Malaysia is shown respectively; PDI 64;104, IDV 20;26. MAS 34;50, UAI 64;36, LTO 56. That is further elaborated in the internet pages to come.
2. 0 Introduction
Many years ago, to enjoy a vintage 'kopitiam' meal in Malaysia, such as half-boiled eggs, toasted bread with kaya and butter, and a cup of coffee, one will have to travel many miles back to their hometown. Kopitiam is a traditional breakfast and coffee shop found in South East Asia. Because the establishment of PappaRich in 2006, one need not go the length. PappaRich is a modern 'kopitiam' that serves quality caffeine and asian delicacies at affordable 'Malaysian' prices. In four years, the string of PappaRich kopitiams have multiplied in one kopitiam in Selayang Mall to 41 shops around Malaysia, one in Hong Kong and one in Singapore. It includes emerged as a formidable player in the local and food beverage chain. PappaRich's beliefs is to provide authentic, typical and amazing kopitiam meals, the original Malaysian style where the locals can mix and mingle in the ambience of a soothing atmosphere with a feeling of owed.
In Thailand, PappaRich intends to serve the Thai community the same idea it currently assists the Malaysian community. As there aren't many 'kopitiams' in Thailand that assists authentic Malaysian coffeeshop-styled cuisine, PappaRich intends to venture into Thailand by becoming one of the pioneers in providing the traditional Malaysian coffeeshop-styled cuisine.
As observed in the diagram on the left, the assistance industry contains a 45% stake of the total market talk about for GDP structure in Thailand. Types of the assistance industry are the tourism sector and the F&B sector. Due to the high stake of the services industry in Thailand's GDP ratio, investing in PappaRich in Thailand may be a sensible investment choice. Furthermore, potential customers from the tourism sector would be an added advantage to the company into raking in more potential income.
3. 0 Situation Analysis
3. 1 SWOT Analysis
3. 2 Strengths
As pointed out in the advantages, PappaRich's viewpoint is to to provide authentic, classic and ageless kopitiam meals, the original Malaysian style where in fact the locals can merge and mingle in the atmosphere of a soothing atmosphere with a sense of belonging. This idea is a significant power in branding the 'kopitiam' brand in Thailand as there aren't many affordable restaurants in Thailand that help traditional kopitiam dishes. This places PappaRich among the pioneers into adding the cuisine to the Thai locals. Furthermore, it will further bolster its reputation to be one of the most original and traditional kopitiam in Thailand. Another major strength of the business is its focus on clientele service. In the F&B industry, it is important to note that service is one of the main priorities in differentiating a good restaurant and an undesirable one. Thus, PappaRich places much emphasis on its clients service never to only lure first-time or one-time customers but reoccurring customers, over and over again.
3. 3 Weaknesses
A major setback that hinders the kopitiam business in to the Thai market is the different taste buds between your Thai and Malaysians. Only the exciting ones may venture out of their safe place into eating Malaysian kopitiam delicacies. Furthermore, avenue food is popular and cheap in Thailand, thus the local people may well not be very willing to pay extra for Malaysian food. Besides that, PappaRich and the kopitiam notion is a rather new brand in your community, and thus may acquire additional time to be familiarised by the locals. Also, the management style used in Malaysia may well not be appropriate to the culture of the local people and therefore, new management style may need to be devised to suit the employees in Thailand.
3. 4 Opportunities and Threats
In modern times, Thailand has been politically unstable scheduled to street protests and riots. It's important to notice that such politics instability is a major disadvantage to the business enterprise. This is because, the employees of the business may engage themselves into the protests that halts production and services of the restaurant. Furthermore, a demonstration will hinder potential prospects from departing their homes to eat out as they may fear for his or her safety.
An improvement of technology has both pros and cons to the establishing of the new company. It could improve the cooking food expectations of the restaurant as better kitchen accessories are purchased to monitor the grade of the food. Furthermore, improvement of the machines may reduce cooking time that rises efficiency. In time, more customers can be served and income can be increased. However so, an improvement in technology can result in an increase in capital cost anticipated to expensive kitchen machines.
As seen in the graph above, the GDP rate of Thailand has been progressively increasing within the last couple of years. However, through the US financial crisis in '09 2009, there's been a slight street to redemption in GDP. It may be wise to hold back the venturing of the business enterprise into Thailand for two months to ensure the stability of the marketplace.
During this year's 2009 US financial meltdown, the inflation rate travelled negative, to as low as -4 displaying a shrink of the economy. However so, in 2010 2010, Thailand has started to pick up the speed and shows that there's been a boost throughout the market. As the consumer's expectation and self-confidence is strengthened, Papparich can begin investing into Thailand.
Unemployment rate has been continuously decreasing over time. As unemployment comes, more people locally will have income to spend on goods. As a result, it is a good idea to invest into Thailand. Maybe, when the business decides to invest in the country, there will be people to be employed as staffs.
A fall in interest levels in recent years is an gain as we can apply for loans at low interest levels to set up restaurants in the united states. This can encourage more franchising options.
Comparitively, the Baht increased 0. 115% resistant to the MYR. A couple of both pros and cons to this situation. Expert, the revenue produced in Thailand comparitively to the MYR would be higher and the con, more income will have to be pumped into Thailand to set up the restaurant, comparitively to the MYR
4. 0 Business Level Strategy
In order to gauge the feasibility of Thailand as a strategic location for growth, we must look into the business level strategy of PappaRich.
Every corporation has a competitive technique to plan how it'll compete in its business and this pertains to PappaRich as well. PappaRich is a food & beverages (F&B) industry that focuses on serving quality genuine traditional Malaysian delicacies at affordable prices which is their competitive edge and what sets them aside other regular kopitiam. In addition to that, the atmosphere of PappaRich in addition has been one of their greatest assets as the furnished surroundings are chilling and therefore many people would choose to go to PappaRich to enjoy one with their specialty; coffee made from locally roasted coffee bean while capturing up with friends and family. They're also located just about everywhere as they may have over 41 retailers in Malaysia currently and this brings great convenience with their customers as the nearest store is just across the neighbourhood. This is PappaRich's goal in their investment into the Thai market as well that folks would have a enjoyable experience each time they set feet in PappaRich.
With Michael Porter's five makes model, professionals can determine and control the guidelines of completion and make a sustainable competitive benefit. Firstly, PappaRich can be an F&B industry with barrier to access; PappaRich must adhere to the standard set by the Thai federal government in its coverage, the high level of capital necessary for investment may be hard to obtain as the result of the recent US financial crisis and also the brand id may be anonymous to most consumers as it is new on the market. Furthermore, economies of range may also be another barrier to admittance for PappaRich as existing companies in Thailand enjoys low cost of production due to this factor and there is absolutely no way PappaRich could contend with them in short term period. If PappaRich were to project into the Thai market, it could face substitute companies such Hailam Kopitiam, Place 1 caf' and Old Town Kopitiam and Madam Kwan which are also strong growing F&B companies with similar business idea that can also be trying to broaden internationally to Thailand as well. Not forgetting, the swap companies that already are in Thailand such as Coffee Bean and Starbucks. However, in terms of bargaining vitality, many consumers would choose PappaRich over Starbucks for coffee as the purchase price is more affordable in PappaRich. The dealer also plays an important role in identifying the feasibility of PappaRich as a good investment opportunity in Thailand as company determines the price tag on operating which will affect the total profit of the business enterprise. PappaRich can get their way to obtain raw material from suppliers such as Leader Rice Products General public Co. Ltd, Siam Future Farm and Exotic Food Co. Ltd. Last but not least, the current rivalries that already are in Thailand would also impact the success of PappaRich if it were to venture into Thailand as it is an extremely competitive industry and the competitions are intense.
In terms of the target market of PappaRich, it could target the middle income group of consumers as the prices are moderate. It would not completely use the cost control strategy which identifies the basis of having the cheapest cost on the market as there are a great many other companies that have comparable price ranges with PappaRich. Also, PappaRich is a modern classy type of restaurant with required standard of adornment which further increase their cost and this doesn't comply with the low cost head strategy. Actually, PappaRich's success currently arrives of its successful differentiation technique to set them apart from other companies from the same F&B industry. PappaRich give attention to the quality of their product and keeping it consistent throughout all their outlet stores. Furthermore, the atmosphere is what captivated the consumers and made them regular customers in PappaRich.
5. 0 Market Entry Strategy
Expanding a firm to new market can raise the sale, brand awareness and achieve business stableness. To joining new market, we need to study the size of the country, number of opportunities and sheer geographical size. Besides that a proper market entry strategy requires general market trends so to give us a eyesight about the presence opportunity, understand the competitive landscaping and find out who are our potential prospects. Foreign market entry can be carried out via four mechanisms that are exporting, licensing, joint venture, and franchising.
Exporting is the most traditional strategy to use into international market by immediate deal of the domestic-products to the united states. This can be done through an export intermediary such as commissioned providers and trading companies. Exporting do not require the goods or product must be produce in the target country therefore there is absolutely no necessary to invest in international facilities. PappaRich is a F&B business through providing Malaysian Traditional Joy at their retailers cafe. This device is not well suited for PappaRich extend to Thailand because they are providing service but not produce goods.
Licensing is an essential permit to go into a new market. A license is a legal deal to run a small business. The licensee is going to pay a fee of exchange for the right to use the property of licensor such as trademarks, patents, and production techniques. For PappaRich, the licensing support comes in the form of outlet installation, shops designs, menu and recipe of PappaRich, chef and waiters training by experienced Pappa licensing coaches.
Joint enterprise is a legal entity created when two gatherings equally spend money on terms of money, commitment on the same project. Basically jv happen when one person want to increase his business to land while he does not have any enough of capital to take action and need to find a partner from the mark country to run the project along. The joint venture may be a less strenuous first-step for PappaRich to extend to Thailand before go to franchising. PappaRich can reduce the access risk by using Thailand partner's property through jv. Besides, the insufficient knowledge of legal environment can be solve. Through joint venture, PappaRich can begin the business enterprise at little or no costs.
Franchising is another form of licensing. Franchise occurs when the franchisor grants a licence to the franchisee to use their business idea. To become a successful F&B franchisors that can go country, Papparich (the franchisee) can sell the franchisor's trade mark, product or services, or trade name and advantages from the franchisor's help and support in Thailand market. In exchange, the franchisee from Thailand need to pays off an initial fee to PappaRich and then a ratio of the sales earnings.
In a bottom line, we discovered that franchising is the best way for PappaRich to go into Thailand market as Papparich is F&B industry gives servicing to community.
6. 0 Cultural analysis
Diagram 1
Country PDI IDV MAS UAI LTO
Malaysia 104 26 50 36 -
Thailand 64 20 34 64 56
Table 1
6. 1 Electric power Distance Index (PDI)
Hofstede's PDI steps the scope to that your less powerful people of organizations allow and expect that electricity is distributed unequally (Geert Hofstede'Cultural sizes).
On the range, Malaysia has a credit score of 104 and Thailand 64. Thailand doesn't have a large gap between the rich and the indegent, but have a strong opinion in equality for each citizen. Thailand gets the opportunity to grow in society compared to Malaysia. Malaysian employees see their professionals as being far more superior to them and perceive them as unapproachable. This frame of mind gives the managers a feeling of superiority and empowerment. In Thailand however, people view themselves more as equals hence there exists far more communication between the employees and managers.
6. 2 Individualism
Individualism is the one part versus its contrary, collectivism, that is the level to which folks are integrated into teams (Geert Hofstede'Cultural proportions).
Thailand's and Malaysia's IDV reaches 20 and 26 respectively. A minimal credit score, as Thailand and Malaysia has, indicates the population is more of an collectivist than an individualist. This manifest in a detailed long-term dedication to the member 'group', is a family, expanded family, or expanded relationships. Commitment in a collectivist culture is paramount, and over-rides most other societal rules and regulations. The world fosters strong relationships where everyone calls for responsibility for fellow participants of their group. Therefore in Individualism, it can be said that Thailand and Malaysia stands almost the same. Employees in both countries are incredibly team orientated; therefore the managers need not make any changes.
6. 3 Masculinity
Masculinity versus its complete opposite, femininity identifies the distribution of roles between the genders which is another important issue for just about any population to which a range of solutions are found.
Thailand gets the lowest masculinity ranking among the Asian countries outlined at 34, while Malaysia is outlined at 50, set alongside the Asian average of 53 and the entire world average of 50. This lower level is indicative of an society with less assertiveness and competitiveness, when compared with one where these principles are believed more important and significant. This situation also reinforces more traditional male and feminine roles within the population. Therefore it can be said that Malaysia does much better than Thailand in conditions of assertiveness and competitiveness. Thailand should improve in this area in order to keep to compete. Malaysians have a tendency to be a lttle bit more to being assertive and intense while Thai employees will be more laid back plus more accepting of feminine traits. Therefore managers from Thailand have to be stricter for their workers to become more efficient.
6. 4 Uncertainty avoidance index
UAI deals with a society's tolerance for uncertainty and ambiguity; it in the end refers to man's search for truth. It indicates to what magnitude a culture programs its users to feel either uneasy or comfortable in unstructured situations (Peruvian Frame of mind On UAI)
The UAI reveals the society's low level of tolerance for uncertainty. In an effort to decrease or reduce this level of uncertainty, polices are adopted and implemented. The best goal of this population is to regulate everything in order to remove or all the unexpected. As a result of this high UAI characteristic, the society will not readily acknowledge change and it is very risk adverse. The Thailand ranking of 64 is just a bit higher than the Asian average of 58 while Malaysia is just a little substandard of 36. It could be said that Malaysia does quite well while Thailand should learn to agree to change and put into action policies to regulate everything. The Malaysian professionals in Thailand must change the way they manage their employees and actually placed into place more guidelines and rules to get the best out with their Thai employees.
6. 5 Long-Term Orientation
Long-Term Orientation is the fifth sizing of Hofstede which was added following the original four to attempt to identify the difference in pondering between your East and Western, defined as the amount to which one programs for and considers the near future, as well as principles traditions of days gone by. ( Making Sense of Cross Cultural Communication) Here are some characteristics of both opposing sides of this dimension:
Long term orientation:
-persistence
-ordering interactions by status and observing this order
-thrift
-having a feeling of shame
Short term orientation:
-personal steadiness and stability
-protecting your 'face'
-respect or tradition
-reciprocation of greetings, favors, and gifts
Thailand solution a middle rating being outlined at 56 while Malaysia does not have any measures of LTO therefore no assessment can be made between both countries.
7. 0 Recommendation
Based on both SWOT analysis and Porter's competitive push framework, it's the right decision to help expand the investment of PappaRich Group Sdn. Bhd to Thailand as it has the attributes and potential to penetrate into Thailand's market. PappaRich is today's 'kopitiam' that serves quality caffeine and asian delicacies that is currently doing very well in Malaysia. Yet, in Thailand, PappaRich intends to serve the Thai community the same beliefs it currently assists the Malaysian community. As there are not many 'kopitiams' in Thailand that will serve genuine Malaysian coffeeshop-styled cuisine, PappaRich intends to endeavor into Thailand by becoming one of the pioneers in portion the real Malaysian coffeeshop-styled cuisine as well as Thailand's own genuine delicacies.
Setting up a food industry in Thailand is certainly a wise investment as services industry retains a 45% stake of the total market share for GDP structure in Thailand. Besides that Thailand has a lot move forward in the improvement of technology, this may improve the cooking specifications of the restaurant, and better equipment in your kitchen which will enhance efficiency and improve in the quality of the food and beverages.
In addition, following the 2009 US financial crisis, Thailand has begun to pick up the tempo and shows that there's been a boost in the economy. As the consumer's expectation and confidence is strengthened, Papparich can begin making an investment into Thailand. Predicated on the cultural examination by Hofstede's construction, by assessing PDI, IDV, MAS, UAI, and LTO, the employees and managers in Thailand will be more team orientated, more laid back and even more accepting of womanly traits, and dominant. The sort of managers in Thailand will be appropriate to take care of PappaRich, although they are not perfect, they are really trainings open to improve their benchmarks to achieve better efficiency and increase production.
PappaRich is slowly and gradually being recognised internationally as they have build-up a good reputation internationally in countries like Singapore and Hong Kong. Discussing the market entrance strategy, requires general market trends so to give us a perspective about the presence opportunity, understand the competitive landscape and find out who our potential customers are. International market entry can be carried out via four mechanisms that are exporting, licensing, jv, and franchising. The strategies of exporting, licensing, jv, and franchising need to be done efficiently in order to enter a new market.
Lastly, predicated on Michael Porter's five forces model in the business level strategy, professionals can determine and control the rules of completion and produce a sustainable competitive gain. PappaRich can be an F&B industry with hurdle to entrance and it needs higher level of capital to start out up the business. Besides that the brand personal information of PappaRich might not be popular in Thailand, it faces alternative companies that already are in Thailand such as BEANS and Starbucks. However, in terms of bargaining electric power, many consumers would choose PappaRich over Starbucks for coffee as the purchase price is more affordable in PappaRich. The distributor also takes on an important role in determining the feasibility of PappaRich as a good investment opportunity in Thailand as provider determines the price tag on operating which will affect the total profit of the business so maintaining a good marriage with the dealer will definitely give and benefits to the company. The investment to Thailand is an excellent choice as PappaRich give attention to the grade of their product and keeping it consistent throughout all their outlets. Furthermore, the atmosphere in addition has captivated the consumers and made them regular customers in PappaRich.
8. 0 Conclusion
After much evaluation from the swot examination, business level, market accessibility strategy and the ethnical evaluation, it is figured Thailand is an excellent selection of investment location for PappaRich to endeavor into internationally. It can even be one of the pioneers of Malaysian food food in Thailand as there are very few coffee shops that serve traditional Malaysian delights in Thailand as of today. Thailand's increasing GDP is also another fascination to investment in Thailand as it shows the balance of the economy and the bigger expected go back on profit because of the gratitude in Thai Baht against Malaysian Ringgit if PappaRich were to venture into Thailand. Other advantages in investing into Thailand include attracting the locals in Thailand to experience new and various culture and delicacies. Furthermore, this gives Malaysian in Thailand a preference of their hometown at your fingertips.
Although there a wide range of advantages in buying Thailand, there should be some setback on the investment too and they are like the political instability of the united states which may prevent the procedure of the business if the employees were to be on riot. Moreover, the politics situation in Thailand could also cause the consumers to be fearful of departing the house to dine out as it is unsafe. Last but not least, from the doubt avoidance index, it has shown that Thailand is list 64 while average in all other countries are at 58, which means that Thailand is very risk adverse and don't like any changes in their countries so they might have very tight policies and laws regarding international investment being parked in their country.
