Table of Contents

INTRODUCTION TO MANG INASAL............................................................3

A. COMPANY PROFILE................................................................................................... 3
B. MARKET PROFILE..................................................................................................... 4
C. VALUE CHAIN ANALYSIS............................................................................................ 6
Franchising and Store Operations.......................................................................6
Marketing............................................................................................................ 7
Logistics.............................................................................................................. 7
Sourcing.............................................................................................................. 8
Franchising and Expansion.................................................................................. 8
PROFILE OF TARGET COUNTRY, MALAYSIA................................................9
A. STEP ANALYSIS...................................................................................................... 9
Socio Cultural...................................................................................................... 9
Socio Cultural.................................................................................................... 13
Technological..................................................................................................... 16
Economic........................................................................................................... 19
Politics............................................................................................................... 21
B. ANALYSIS OF THE CONSUMER FOOD SERVICE INDUSTRY IN MALAYSIA...............................22
Malaysias Food Service Industry......................................................................22
Bargaining Power of Buyers.............................................................................. 23
Bargaining Power of Suppliers...........................................................................24
Threat of New Entrants..................................................................................... 26
Threat of Substitutes......................................................................................... 27
Rivalry among Competitors............................................................................... 27

C. CONSUMER PREFERENCES, MALAYSIA........................................................................31

Lifestyle/Shopping habits.................................................................................. 32
Brand/Price Sensitivity...................................................................................... 33
Health food, convenience food and halal food..................................................33
The Halal factor................................................................................................. 33
SYNTHESIS, WHY MANG INASAL IN MALAYSIA?.......................................35
STRATEGY FORMULATION......................................................................37
MANG INASALS VISION MISSION AND OBJECTIVES AND ITS CONGRUENCE TO THE MARKET
PENETRATION STRATEGY.............................................................................................. 37
MARKET ENTRY STRATEGY........................................................................................... 38
Store Operations............................................................................................... 38
Sourcing............................................................................................................ 39
Production......................................................................................................... 40
Marketing.......................................................................................................... 40
Foreign Exchange.............................................................................................. 41

Introduction to Mang Inasal

A. Company Profile
Edgar Sia II, then 20 years old, took the entrepreneurial path when he founded
Mang Inasal and began its operations in Iloilo City, Philippines on December 12,
2003. The restaurant initially offered chicken inasal to its clientele which was wellreceived by the Ilonggo people. As time went on, it offered more Filipino-inspired cuisine
to the mass market. As such, the driving force behind Mang Inasals exponential growth
lies in its uniquely Filipino food offerings, its value for money and its serving of unlimited
rice for customers. All these factors add up to create Mang Inasals distinct brand
identity, which has led to its becoming one of the countrys fastest growing fastfood
chains. Fast forward to seven years later, the company currently has 223 branches
around the country, with its management aiming to expand to 500 branches by the year
2012, with a hundred new stores opening annually.
The company offers Paborito Meals and Sulit Meals to its customers, as well as
Palamig Selections, Merienda Meals and other well-loved Filipino viands. The Paborito
Meals are categorically more expensive compared to the Sulit Meals, whose lowest
offering is at an affordable 49 pesos. However, their serving portions are bigger
compared to the Sulit Meals. Mang Inasal also offers traditional Filipino dishes such as
the Beef and Bangus Sinigang, Bangus and Pork Sisig, and Dinuguan, Halo-Halo,
among many others.
Mang Inasal promotes sustainable community living by providing employment
opportunities and by sourcing out local materials in its business operations (example,
banana leaves, chicken oil, bamboo sticks). In that matter, the company takes an active

stance in developing livelihood programsfor the betterment of the community it serves.

The company helps preserve the Filipino tradition kinamot, which in Ilonggo means to
eat with ones hands. As such, Mang Inasal restaurant chains around the country have
a designated washing area where customers can wash their hands prior to dining to
maintain sanitary eating standards.
During the recent economic crisis, Mang Inasal managed to sail through the
distress unharmed. Sia mentioned that the affordability of the companys offerings
proved to be a competitive advantage to the budget-conscious Filipino - thus,
strengthening its foothold in the fastfood consumer market, enabling the company to
grow in times of economic turmoil.

B. Market Profile
The target market served by Mang Inasal is the middle class Filipino family, with
monthly income ranging from 12,000php to 30,000php. Moreover, these families live in
homes where members of the extended family live in the house as well, thereby making
it a large household. Hence, the company offers meals that range from 49php for the
Sulit Meals, 99php for the Paborito Meals, with the highest priced viand priced at
155php (Beef and Bangus Sinigang). It is reasonably priced considering how its value
for money is high, taking into consideration the serving portions, the friendly customer
service and the warm, localized eating ambience provided by the company. How the
company achieves this cost advantage is accomplished by sourcing out one hundred
percent of its raw materials locally, unlike other fastfood chains who import some of its
production materials from abroad.

In addition, the fastfood chain banks on its traditional Filipino cuisine, fast
service, and the lively dining experience it presents to its customers to attract new and
retain recurring customers. As such, it is to Mang Inasal's competitive advantage that it
has found its niche through Filipino families who want to find a truly Filipino fastfood
dining experience without going beyond the family budget. Hence the company's
slogan, "Hahanap hanapin mo".
As well, the company's primary strategy lies in Mang Inasal's strategically
locating its stores in high foot traffic areas to attract more passers-by to enter the store,
eat, and enjoy the Mang Inasal dining experience(kinamot). In particular, most Mang
Inasal

branches

are

situated

beside

call

center

companies,

public

service

establishments, in malls, and other heavily-condensed locations.

As mentioned previously, the company is one of the fastest growing fastfood
chains in the country and their speedy rise can further be amplified by choosing an
endorser who is an ideal personification of their brand. Mark Bautista, a twenty eight
year old Filipino artist, is Mang Inasals primary endorser. The most recent TV
advertisement starred by Bautista shows the man narrating his humble beginnings as to
how he has made it to become one of the country's most revered artists, adding that his
move to Manilamade him long for home, and how dining at Mang Inasal alleviates the
homesickness he feels. Furthermore, to quote Sia as to why Bautista was chosen as
the brands endorser, I think we (the company and Mark Bautista) have some
similarities. Mark also started in 2004, the same with Mang Inasal... And we feel that
Mark, like Mang Inasal, has a very big potential, coming into the next few years as they
slowly unfold.

C. Value Chain Analysis

The rapid expansion of Mang Inasal stores throughout the country proves to
be a competitive advantage to the brand. This may be attributed to Mang Inasal's
efficiencies in its value chain, which will be discussed below:

Franchising and Store Operations

Mang Inasal is a fastfood brand open for franchising opportunities. Currently,
the brand is open for franchising at a cost of 7 million pesos, with franchise terms
renewable every seven years. The company provides operational guidance for new
franchisees, including training for their time-tested operations system, staff support, and
other marketing initiatives. Before approving any franchise deal, the company looks at
the site where the store will be built and they would assess whether or not the location
is ideal and profitable. Mang Inasal hires project inspectors, who are mostly
architectures and civil engineers, to oversee the construction of a branch. They ensure
that the company is able to locate its stores in high traffic areas, such as malls or near
schools.
Most Mang Inasal stores are open from 10:00 am to 10:00 pm, and each branch
has at least 40 employees. These individuals either take or prepare the customer's
orders, maintain the cleanliness of the facilities, or perform other routinary work,
supervised by the store manager. Each of the company's employees receive rigorous
training before they are considered part of the permanent staff of a branch. As well,
Mang Inasal has management trainees whom they hone to become branch supervisors.

All this adds up to ensure that each customer experiences fast and quality service from
the store.

Marketing
Part of the company's marketing strategy involves advertising through print,
billboards, radio and television ads. They bank on promoting further the three defining
characteristics of the brand - affordable Filipino food, a lively atmosphere to dine in, and
the kinamot eating concept.
Most print advertisements of Mang Inasal emphasize the company's serving of
unlimited rice to dine-in customers. This is a particularly effective marketing
strategy considering how Filipinos are heavy consumers of rice. Cost-wise, the food at
Mang Inasal is affordable which furthers their marketing efforts of affordable quality
food.

Logistics
Mang Inasal sees to it that that there will not be delays in the delivery of the raw
materials that will be prepared then served to customers. In urban areas they have a
daily delivery of raw products by means of delivery vans. In rural areas, on the other
hand, they utilize two transportation methods - the daily delivery of raw materials
through delivery vans and through public transportation such as the pedicab. They
utilize the pedicab to deliver non-perishable products such as charcoal and bamboo
sticks, which they source locally in the area.

Sourcing
Whether in urban or rural regions, Mang Inasal is stimulating economic activity
where their branches are located. They purchase their raw materials - calamansi,
charcoal, banana leaves, sorbetes, vegetables, fish, bamboo sticks and other
ingredients through local producers of these materials. However, these suppliers have
to undergo strict quality check to be conducted by the Purchasing Department at the
company. In this way, Mang Inasal can ensure that the quality of food in each of its 223
branches are consistent and of high quality. This also provides lesser costs for
transportation seeing how each branch sources its materials in its own community,
thereby lessening production costs incurred.

Franchising and Expansion

As for future plans for growth, Mang Inasal, through the holdings investment firm
Injap Investments, Inc., is planning to join the Philippine Stock Exchange (PSE) this
2010. However, this is still determinable depending on whether current economic
conditions will improve or not. Sia plans to raise around two billion pesos to fund its
expansion of company-owned stores nationwide.

Profile of Target Country, Malaysia

A. STEP Analysis
Socio Cultural
Malaysia Demographics
Population: 25,715,819 (July 2009 est.)
Table 1: Malaysia's
Population as of

Figure 1: Malaysia's population as of July 2009

Year

Population

Rank

Percent Change

Date of Information

2003

23,092,940

46

2004

23,953,136

46

3.72 %

July 2005 est.

2005

23,953,136

46

0.00 %

July 2005 est.

2006

24,385,858

46

1.81 %

July 2006 est.

2007

24,821,286

46

1.79 %

July 2007 est.

2008

25,274,132

46

1.82 %

July 2008 est.

2009

25,715,819

46

1.75 %

July 2009 est.

2010

25,715,819

46

0.00 %

July 2009 est.

July 2003 est.

July 2009

Age structure
0-14
years:
31.4%
(male

Figure 2: Malaysia's population

4,153,621/female 3,914,962)
15-64 years: 63.6% (male 8,210,373/female 8,143,043)
65 years and over: 5% (male 569,245/female 724,575) (2009 est.)
Median age
Total: 24.9 years
Male: 24.3 years
Female: 25.6 years (2009 est.)
Population growth rate: 1.723% (2009 est.)
Birth rate: 22.24 births/1,000 population (2009 est.)
Death rate:5.02 deaths/1,000 population (July 2009 est.)
Urbanization
Urban population: 70% of total population (2008)
Rate of urbanization: 3% annual rate of change (2005-10 est.)
Sex ratio
At birth: 1.07 male(s)/female
Under 15 years: 1.06 male(s)/female
15-64 years: 1.01 male(s)/female
65 years and over: 0.79 male(s)/female
Total population: 1.01 male(s)/female (2009 est.)
Infant mortality rate
Total: 15.87 deaths/1,000 live births
Male: 18.32 deaths/1,000 live births
Female: 13.24 deaths/1,000 live births (2009 est.)
Life expectancy at birth
Total population: 73.29 years
Male: 70.56 years
Female: 76.21 years (2009 est.)
Total fertility rate
2.95 children born/woman (2009 est.)
Major infectious diseases

Degree of risk: High

Food or waterborne diseases: Bacterial Diarrhea
Vector borne diseases: Dengue fever and Malaria
Note: Highly pathogenic H5N1 avian influenza has been identified in this country;
it poses a negligible risk with extremely rare cases possible among US citizens
who have close contact with birds (2009)
Nationality
Noun: Malaysian(s)
adjective: Malaysian
Ethnic groups
Malay 50.4%,
Chinese 23.7%,
Indigenous 11%,
Indian 7.1%,
Others 7.8% (2004 est.)

Figure 3: Malaysia's Ethnic Groups

Religions
Muslim 60.4%,
Buddhist 19.2%,
Christian 9.1%,
Hindu 6.3%,
Confucianism,
Taoism,
Other traditional Chinese religions 2.6%,
Other or unknown 1.5%,
None 0.8% (2000 census)

Figure 4: Malaysia's religion

Languages
Bahasa Malaysia (official), English, Chinese (Cantonese, Mandarin, Hokkien,
Hakka, Hainan, Foochow), Tamil, Telugu, Malayalam, Panjabi, Thai
Note: In East Malaysia, there are several indigenous languages; most widely
spoken are Iban and Kadaza
Literacy (age 15 and over can read and write)
Total population: 88.7%
Male: 92%
Female: 85.4% (2000 census)
School life expectancy (primary to tertiary education)
Total: 13 years
Male: 12 years
Female: 13 years (2005)
Education expenditures
6.2% of GDP (2004)
Source: http://www.indexmundi.com/malaysia/demographics_profile.html

Socio Cultural
Because of the diversity of culture in Malaysia, its national identity is still in
question. The country being a multi-ethnic society comprises mainly of Malays,
Chinese, Indians, Eurasian, and other indigenous groups. Although its characteristics

are still not as unique as Japan, Korea, and other Asian or European countries, the fact
that it has a colorful array of culture creates a distinctive mark on Malaysia.
As stated in Article 160 of the Malaysian Constitution, the Malay population is
defined as someone born to a Malaysian citizen, who professes to be a Muslim,
habitually speaks the Malay language, adheres to Malay customs, and is domiciled in
Malaysia or Singapore. This definition is somehow ambiguous that it connotes an
inclusion of the population from a wide array of ethnic background; however, it differs
from the anthropological understanding of what encompasses ethnic Malay. As the
definition of a true and legitimate Malay only state that he/she must profess to be
Muslim, it has led to the creation of ethno-religious identity, where it has been
suggested that Malay cannot convert out of Islam. This conversion to Islam from
Hinduism and Theravada Buddhism began in the 1400s, largely influenced by the
decision of the royal court of Melaka. As of 2007, Malays made up an estimated 64.5%
of the population of Malaysia. It is predicted that this proportion will rise due to birth
rates higher than other ethnic groups.
Malays, based on the definition provided in Article 160 of the Malaysian
Constitution, are largely Muslims, which was perhaps the basis for the declaration of
Islam as the official religion of the country. As 100% of ethnic Malays profess this
religion, their lifestyle is largely affected by its traditions and customs. One of the main
aspects that is affected by their Muslim tradition is their diet. Muslims are prohibited to
drink alcohol. They are also not permitted to consume any product or dish with blood
and pork as main ingredients. If an animal must be slaughtered, it must be done so by
only a Muslim. If there is doubt to anything being regarded as halal (lawful) or haram

(unlawful), Muslims are generally advised to refrain from consumption until another
Muslim gives clarification or permissiveness.
Forming about 25% of the population, Malaysian Chinese are the second most
influential culture in Malaysia. Chinese are generally known to be highly entrepreneurial
and are very recognized for their diligence and keen business sense. The three subgroups who speak a different dialect of the Chinese language are the Hokkien who live
predominantly on the northern island of Penang; the Cantonese who live predominantly
in the capital city Kuala Lumpur; and the Mandarin-speaking group who live
predominantly in the southern state of Johor. Most of the Chinese in Malaysia are
Buddhists, which comprises around 19% of the countrys population.
Malaysian Indians make up 10% of the population which makes it the smallest of
the three main ethnic groups.Coming to Malaysia during the British colonial rule, most of
its descendants are Tamils-speaking South Indian immigrants. These people mostly
came to the country to break away from the caste system in India. Predominantly
Hindus, they painted Malaysia with their culture, such as ornate temples, spicy cuisine
and exquisite sarees. Being part of the Hindu culture, Malaysian Indians may choose to
follow their dietary law, which prohibits them from eating beef, water buffalo, and yak.
Some also avoid pork, crabs, reptiles, amphibians, snails, insects and worms. Some
Hindus may also believe that animals that have died of natural causes are considered
highly polluting and eating them makes a person untouchable. Animals that have died of
natural causes are considered highly polluting. Eating them makes a person
untouchable.

As a result of their emergence of a unified Malaysia, the social distinction

became more apparent between Malay and non-Malay, which are represented by two
classifications: the upper class of Malay and a large portion of the Chinese middle class
population. The former dominates the countrys politics and the latter, being a businessoriented cluster, creates a positive shift in the consumer society. This two major
population mostly live in the urban areas of the Malay Peninsula's west coast and their
influences shape the shared life of Malaysia's citizens. Sarawak and Sabah, the two
Malaysian states located in north Borneo, tend to be less influential part of the national
culture, and their vibrant local cultures are shrouded by the bigger, wealthier peninsular
society.

Technological
The government of Malaysia encourages technological advancements through
establishing a separate agency to handle research and development in the country.
Malaysia Technology Development Corporation (MTDC) was established by the
government in 1992 to lead the development of technology business in Malaysia.
According to the organizations website (http://www.mtdc.com.my), the initial role of this
branch was to concentrate on the promotion and commercialisation of local research
and invests in new ventures that can bring in new technologies from abroad.
Emerging from the investment activities, MTDC became the leading venture
capitalist in the country long before the concept became familiar and accepted in
Malaysia. Consequently, it encourages more businesses to invest in technological
innovations and breakthroughs. It is the only company in Malaysia to attain the status of

an integrated venture capital solutions provided. At present, MTDC is the only one-stop
agency where financing can be source from; all the way from laboratory ideas to full
commercialization of such ideas. This is evident in the number of grant that they have
approved (under 9th Malaysia Plan), which totaled to RM143.4 million to 95 deserving
local companies. They have also participated in taking up equity stakes totaling more
than RM350 million in more than 50 companies both locally and internationally. Their
consistent search for highly technological institutions led the agency to invest United
States, Europe and other countries in the region.
Moreover, communication and transportation in the country is well structured.
Since railroads, airports, and highways are strategically constructed in Malaysia,
logistics will not be a problem for business and trade. The following table summarizes
the infrastructures for communication and transportation available in Malaysia.

Figure 5: Malaysia's transportation system

Figure 6: Malaysia's communication system

Source: CIA World Factbook, Malaysia

http://www.cia.gov/library/publications/the-world-factbook/geos/my.html

Economic
Malaysia is generally a middle-income country. Its performance in the early and
mid-1990s was strong, however, due to the regional economic turmoil in 1997 and
1998, there was a downturn in their development. As a result of this crisis, the economy
went down by 7.4 percent. At the start of the new millennium, the country recovered
strongly through the aggressive efforts of the government in encouraging a robust
export sector, as well as an increase in the government spending. It stabilized growth of
their economy, with an average annual growth of 5.9, from 2001 to 2007 (6.3 percent).
The service sector, with its increase in private consumption and investment, have also
emerged as key drivers of economic growth. (ASEAN FTA, 2008)
Even if major economies were negatively affected by the global financial crisis,
Malaysia remained generally stable. Latest figures reveal that growth, trade and
investment have also remained steady, although the countrys stock exchange has
endured a bad year. Measures to cushion the impact of the current global economic
downturn were implemented by the government. This includes a deposit guarantee
scheme, capital market support and a stimulus package. Moreover, the government
promulgated an ongoing commitment to an open economy, as well as, the development
of the countrys attractiveness and competitiveness for foreign investors as part of its
policy response. (ASEAN FTA, 2008)
As aforementioned, the economic growth of Malaysia slowed down in 2008 but
regained its power in 2009. The Department of Statistics of the country reported a GDP

rate at the fourth quarter of 2009 to be 4.5 %, compared to the negative value at the
beginning of the year. Major sectors include agriculture (10.1%), industry (42.3%), and
services (47.6%), according to the estimate set by the Central Intelligent Agency.
Unemployment rate of the country also decreased from 3.7% at the end of 2009 to 3.6%
at the start of 2010, as well as, inflation rates, which diminished from 5.4% in 2008 to
-2.4% in August 2009. Since the government is encouraging more investments, interest
rates in lending was also reduced.
The main exports of the country include electronic equipment, petroleum and
liquefied natural gas, wood and wood products, palm oil, rubber, textiles, chemicals,
partnering with Singapore (14.7%), United States (12.5%), Japan (10.8%), China
(9.5%), Thailand (4.8%), Hong Kong (4.3%), based on 2008 study. Electronics,
machinery, petroleum products, plastics, vehicles, iron and steel products, and
chemicals are some of goods that they import from China, Japan, Singapore, and
United States, to name a few.

Politics
Malaysia, previously known as the British Malaya, gained its independence from
the British in 1957. It was a 171-year long colonial rule, where the colonizing country,
Britain, founded the British East India Company on the Malay Peninsula to engage in
trade with the countries in the East Indies (South and Southeast Asia). This colonial rule
influenced Malaysia's ruling political system, the federal constitutional monarchy,
wherein a head of state and a head of government preside over Malaysia. Its rules and
governing policies are based on the Constitution of Malaysia, which has been adapted

from the Westminster parliamentary style of government based in the United Kingdom.
This system requires a head of state, a head of government, an executive and
legislative branch, and a lower parliament house.
The most recent general elections was held last March 8, 2008, where the
Barisan Nasional (BN) party, an umbrella coalition constituting fourteen political parties,
won in the elections. Although the turnouts of the elections ruled out in favor of Barisan
Nasional, it was by far the lowest-rated electoral results for the party, where the
previous reigning control of the party fell steeply from 90% to 63%. Experts have
pointed out that the current means of sharing information has made the Malaysian
public more astute to make the right political choices. For the next general elections,
which will be held in 2013, speculations abound for a probable two-party political
system, which means that the head of state and the head of government are likely to
come from differing political parties.

B. Analysis of the Consumer Food Service Industry in Malaysia

Malaysias Food Service Industry
Malaysia's food industry is as diverse as the multi-cultures of Malaysia, with a
wide range of processed food with Asian tastes (Malaysian Industrial Development
Authority (MIDA), 2010). Based on the report generated by the United States
Department of Agriculture (USDA) Foreign Agricultural Service (2007), Malaysias food
service sector targets a local population of about 28 million persons and a large
transient population of tourist and business visitors of almost 21 million persons

annually. This sector is diverse and ranges from low-end food stalls to high-end
restaurants.
The Malaysian cuisine is largely influenced by Asian and Middle Eastern cuisines
but has recently been influenced by western cuisines as well.
Exporters intending to enter the Malaysian food service sector will benefit from its
rapid economic growth as most imported food and beverage products attract low to zero
Custom Duties (USDA Foreign Agricultural Service, 2007). However, since majority of
Malaysias population is Muslim, exporters will have to be halal certified to cater to this
segment.
Bargaining Power of Buyers
Based on the report generated by the United States Department of Agriculture
(USDA) Foreign Agricultural Service (2007), Malaysias food service sector targets a
local population of about 28 million persons and a large transient population of tourist
and business visitors of almost 21 million persons annually. In terms of buyer group
concentration, buyer power is weak as there are many and diverse consumers who
have no particular influence on products and prices. However, since majority of
Malaysias population is Muslim, exporters entering the Malaysian food service sector
will have to be halal certified to cater to this segment.
In terms of buyers costs, buyers have a leverage over the food service sector.
According to Barringer and Ireland (2008), the greater the importance of an item is to a
buyer, the more sensitive the buyer will be to the price they pay. Since food is a primary
necessity, buyers will be more sensitive to the price they have to pay for it. Thus, buyers
will bargain hard to get the best price for that commodity.

Based on the degree of standardization of suppliers products, buyers have a low

bargaining power. Since products offered in the food service sector are diverse, ranging
from low-end food stalls to high-end restaurants, the buyers bargaining power is
minimized.
Since there are a lot of available substitutes to the products offered in the food
service sector (e.g. consumers can opt to eat at home) and the buyers have the ability
to backward integrate, the bargaining power of buyers is enhanced.
Bargaining Power of Suppliers
The Table below summarizes the major supply sources for each major product and the
strengths of the key supply sources and the advantages and disadvantages of local
companies that supply to the food service sector.

Table 2: Summary of Food Service Sector Suppliers as of 2007

Source: Department of Statistics, market observations and trade comments

Based on the supplier concentration, the bargaining power of suppliers is weak.

Since the suppliers of the food service sector are not concentrated, the food service
sector has various supplier options and can opt to purchase from a supplier that can
offer the best quality-price combination.
The input required by the food service sector is also standardized (e.g. meat,
rice, other consumer goods), thus the supplier power is weakened since the food
service sector have various options available to them.
The cost of switching from one supplier to another is also minimal, weakening the
bargaining power of suppliers in the food service sector.
However, the supplier power is enhanced since these suppliers have the ability to
forward integrate and enter the food service sector.

Threat of New Entrants

Since the food service market in Malaysia is rapidly growing, the industry is
susceptible to new entrants. Based on the report generated by the USDA Foreign
Agricultural Service (2007), Trade sources estimate that the total food service market is
valued between US$ 5.0 billion and US$ 5.5 billion as of 2007. However, new entrants
also face barriers to entry. Since products in the food service sector are diversified,
firms breaking into the industry will have to spend heavily on advertising. The capital
requirements for the food service sector are also high since firms would have to invest
in infrastructure.
The new entrants access to distribution channels would also hinder it from
entering the industry since the inability to find an area which is not yet concentrated

would make it difficult for the firm to compete. There are also government and legal
barriers that new entrants have to face. For example, Malaysia has an import restriction
on whole chicken. Another possible barrier faced by new entrants to the Malaysian food
service sector is the halal requirement. The Malaysian government and many
companies are marketing the halal standards as a new benchmark for quality, hygiene
and safety (USDA Foreign Agricultural Service, 2007).

Threat of Substitutes
Another important aspect to consider in analyzing the Malaysian food service
sector is the threat of substitutes. According to Barringer and Ireland (2008), the extent
to which substitutes suppress the profitability of an industry depends on the propensity
for buyers to substitute between alternatives. The major substitute faced by the food
service sector is the consumers alternative of dining at home. In Malaysia it is not
unusual for consumers to have breakfast, lunch and dinner out daily, as well as snacks
in between meals (USDA Foreign Agricultural Service, 2007). Since it is common for
Malaysians to dine outside, the threat faced by the food service sector is low.

Rivalry among Competitors

The Malaysian food service sector is diverse and ranges from low end food stalls
to high end restaurants. Figure 6 shows the structure of the Malaysian Food Service
Sector as of 2007.

Figure 7: Structure of Malaysian Food Service Sector in 2007

Restaurants in hotels and resorts

In Malaysia, the 3 star to 5 star hotels usually operate one or more restaurants
within their premises, targeted at the hotel guests although walk-in and regular
customers form a sizeable and important proportion of their customer base (USDA
Foreign Agricultural Service, 2007). Malaysias middle to high income groups as well as
corporate customers are the frequent customers of these restaurants.

Restaurants
Full service restaurants are made up of mid to high end restaurants that target
the middle to high income consumers (USDA Foreign Agricultural Service, 2007). Most

of these full service restaurants are Asian restaurants with Chinese Restaurants
dominating the Asian segment.
Apart from full service restaurants, fast food restaurant chains are also present in
the Malaysian food service sector. Fast food restaurant chains that operate in Malaysia
are fast food or quick service chains that operate with an international menu, e.g.
McDonalds, Pizza Hut, A&W, Burger King, KFC and Nandos, or an Asian menu, e.g.
Yoshinoya Japanese quick service restaurant, Kim Gary Hong Kong-style quick service
restaurant (USDA Foreign Agricultural Service, 2007).

Food catering operators

The food-catering sub-sector is made up of Food catering businesses and Airline
catering businesses.
The Food catering business has two types of businesses, the large high end
aggressive, sophisticated and well organized caterers and the smaller less organized
mid-to-low level caterers.
There are currently two major airline catering businesses involved although
smaller localized caterers also exist to service Malaysian Airlines that fly to the smaller
airports throughout Malaysia: LSG Sky Chefs Brahim Sdn Bhd and KL Airport Services
Sdn Bhd (USDA Foreign Agricultural Service, 2007).

Other food service establishments

This sub-sector is made up of traditional eating places such as cafes, coffee
houses and snack bars, food courts, coffee shops, canteens, other food stalls, bars,

pubs and alike. This is a highly fragmented segment, numbering several hundred
thousand of establishments, with mainly small businesses and family owned
establishments, employing a small number of staff as well as unpaid family members
(USDA Foreign Agricultural Service, 2007).
Since there are numerous competitors in the Malaysian food service sector, this
intensifies the rivalry in the industry. According to Barringer and Ireland (2008), the more
competitors there are, the more likely it is that one or more will try to gain customers by
cutting its price.
However, based on the degree of difference between products, the rivalry among
competitors is not high since the products offered in the food service sector are varied.
Thus, competitors do not have the need to compete on prices since they are able to
demand for high prices given their specialized products.
The growth rate of the industry also affects the rivalry among competitors in a
given industry. According to Barringer and Ireland (2008), the competition among firms
in a slow-growth industry is stronger than among those in fast-growth industries. Since
the Malaysian food service sector is a rapidly growing industry, rivalry among
competitors is not that high.
Lastly, the firms level of fixed costs affects the rivalry among competitors in the
industry. Firms that have high fixed costs must sell a higher volume of their product to
reach the break-even point than firms with low fixed costs (Barringer and Ireland, 2008).
Since the food service sector is labor-intensive and relatively does not have high levels
of fixed costs, this decreases the rivalry among competitors.

C. Consumer Preferences, Malaysia

Malaysian consumers are described as price conscious but still demand a high
quality. There is also the presence for the demand for foreign products brought about by
the change in lifestyle and has moved from the basic needs to the leisure themes that
have been made available in the market. With the growing affluence and changing
lifestyle, consumers have become more demanding; not only of the quality of goods but
also the services they receive as well.
Malaysians spend a high percentage of their household income on food, groceries and
personal care items, ranking third out of the ten major economies in the Asia-Pacific
region. According to ACNielsen, Malaysians on average spent MYR505 per month on
food and groceries, with just under half of that on fresh food like meat fruits and
vegetables.

Figure 8: Composition of household expenditure 1998-1999

Lifestyle/Shopping habits
Malaysias consumer lifestyle has been evolving and changing due, in part, to
rising affluence and education levels. High-profile international retailers and the global
media have also played a hand in shaping consumer-buying behaviour. Malaysians are
becoming more affluent, sophisticated and cosmopolitan. The Malaysians have moved
on from the simple need for sustenance to key leisure themes like health, beauty,
lifestyle, and fitness.
They also have an open demand for foreign brands. It is easy to find products
marketed by Procter & Gamble, Unilever and Nestle on the retail scene. Preference is
not only limited to consumer goods, but also to durable goods, such as electrical and
electronics aside from motor vehicles.
Since the emergence of foreign-owned hypermarkets, Malaysians who live in
urban areas have become accustomed to shopping for groceries at hypermarkets and
supermarkets. Meanwhile rural people continue to purchase from traditional grocers,
convenience stores and mini-marts.
Malaysians also have a strong shopping fetish, especially during the weekends
and on public holidays. However, the consumers comes in three categories: those
whose purchasing power is high enough to go on periodic shopping sprees, people who
shop for necessities, and bargain hunters.
High and middle income households spend most of their money at hypermarkets,
followed by supermarkets and traditional grocery stores. The high-income groups has
household income of more than MYR3,500 per month.

Brand/Price Sensitivity
Malaysian consumers are becoming more knowledgeable and discerning, and
are not easily influenced by advertisements and promotions. They are price conscious,
but at the same time desire brand quality. With the growing affluence and changing
lifestyle, consumers are becoming more demanding; not only of the quality of goods but
also the services they receive. According to ACNielsen, strong brands influenced almost
90% of consumers purchase decisions. Strong brands were also found to retain at least
75% of their customers loyalty.
Health food, convenience food and halal food
Lifestyle changes have led to an increase in the demand for convenience food
and health food. The demand for health food minimally processed fresh food and
organic food is expected to increase. Malaysia is moving towards organic farming.
Besides organic products, health food includes low calorie, fibre and nutrient-enriched
products, fruit juices and herbal products. Value-added pal oil based specialty products
to cater to demand from health conscious and vegetarian consumers are also targeted
for further development in Malaysia. There is also an increasing trend towards
convenience food with Asian recipes in the chilled and frozen form including pre-cooked
products. Food with halal certification is also better accepted as the majority of the
population is Muslim.
The Halal factor
With a Muslim population of 60 percent, the demand for halal foods by Malaysian
consumers has increased over the years. Foreign meat (except pork) and poultry plants
intending to export to Malaysia must be accredited by the Malaysian Department of

Veterinary Services and the Department of Islamic Development for halal purposes. The
Malaysian halal standards are perceived as stricter than those of other Islamic
countries. Hence, opportunities to increase exports of meat (except pork) and poultry
hinges on the halal approval.

Malaysias consumers are characterized by a pool of people who continue to

modernize their eating habits, leading to increasing consumption of imported food and
beverages. Malaysia imported US$ 5.1 billion of food and beverage products in 2007.
Food imports have been growing on an average rate of over 20 percent per annum over
the past few years. Trade sources comment that imports of food products will likely
continue to grow at similar rates over the next five years.

In Malaysia it is not unusual for consumers to have breakfast, lunch and dinner
out daily, as well as snacks in between meals. This is more commonly practiced by
young married couples or young single adults who are gainfully employed. It is,
however, common for families to have dinner out at least once a week, at the street
stalls, food court, coffee shops, low-end restaurants and alike. Dining at a mid to high
end restaurant is reserved for special occasions such as birthdays, weddings,
anniversaries, festive celebrations, corporate functions and alike.

As far as eating out is concerned, Malaysia is one of the few countries in the
world where a family can afford to eat out almost every day of the week. Depending on
budget, the choice can range from posh hotels and chic sidewalk cafes to fast-food

joints and hawker stalls. The variety of international and local cuisines available in
almost all major commercial centres has influenced consumers desires, tastes and
preferences.

Synthesis, Why Mang Inasal in Malaysia?

The researchers of this study propose that the Mang Inasal restaurant concept be
exported to Malaysia chiefly for these reasons:
1.

Malaysians and Filipinos have similarities when it comes to the predominant

characteristics of cuisines in their respective markets. For example, both
Filipinos and Malaysians have the same staple food included in their meals
rice. However, Malaysian cuisine is much more diverse such that it also
primarily serves Indian and Muslim dishes alongside other cuisines. The
Filipinos, on the other hand, generally look upon traditional Filipino or
American foods more favorably. Since Malaysia has very diverse tastes,
they are most likely to treat the Mang Inasal eating concept more favorably,

2.

seeing how open-mindedness to new things they are.

In Asia, Malaysia has the greatest number of Overseas Filipino Workers.
This number exceeds the 250,000-population mark. That said, bringing the
Mang Inasal restaurant concept will entice the Filipino consumer to dine in
the restaurant, a living testament to the companys slogan, Hahanap

3.

hanapin mo.
Malaysians and Filipinos have similarities when it comes to the predominant
characteristics of cuisines in their respective markets. Both Filipinos and

Malaysians have the same staple food included in their meals rice.
However, Malaysian cuisine is much more diverse such that it also serves
Indian and Muslim dishes alongside the traditional Malaysian palette and
other cuisines. Since Malaysia has very diverse tastes, they are most likely
4.

to treat the kinamot eating concept more favorably.

It is about time that Mang Inasal also expand internationally that is, to
establish branches abroad to expand its market profile. Categorically, Mang
Inasal will serve the same target markets both in the country and in
Malaysia. By diversifying the market of the company, it will generate more
revenues that it can utilize to facilitate the establishment of new stores here

5.

and abroad.
Economically, Malaysia is sound fiscal condition. It is currently recovering
from the global financial crisis (like the Philippines) but since Malaysians
spend a lot of their income on dining out, they are not likely to scrimp on
spending on food, taking into consideration their openness to new ideas
thus, if Mang Inasal carries out its market entry strategy effectively (to be
discussed further below), it will also be able to capture a piece of the
Malaysian market.

Strategy Formulation
Mang Inasals Vision Mission and Objectives and its Congruence to the Market
Penetration Strategy

Mang Inasal endeavors to adhere to elements that bear a distinctively Pinoy stamp
of grilling with charcoal, rice wrapped in banana leaves, a marinade concocted out of
local spices and herbs, bamboo sticks for skewers, and the ambiance that encourages
kinamot (the Ilonggo term of eating with bare hands) whenever chicken inasal is served.
All these evoke a rush of nostalgia from tradition, culture, and most of all, home.
Mang Inasal has steadily grown since it offered franchising. Mang Inasal has
branches in Bacolod, Iloilo, Roxas, Metro Manila, Cebu, Davao, Kalibo, Tarlac, Boracay,
Antique, Mindoro, Batangas, Pampanga, General Santos, Tuguegarao, Iligan, Bulacan,
Cavite, Baguio, Laguna, Panabo, Cagayan De Oro, Lucena Surigao, Palawan, Agusan
Del Sur, Malabon, Zamboanga Pagadian, Koronadal, Rizal, Pangasinan, Dipolog, La
Union, Ozamiz, Kabankalan As of today, Mang Inasal has 223 branches nationwide and
counting. Man Inasals objective is to have 500 stores before 2012.
Equipped with great-tasting Filipino favorites and pocket-friendly prices, Mang Inasal
knows that in the end it will win the heart of the masses.
In Mang Inasal, Pinagsikapan naming laging masarap, laging mabilis, at laging
abot-kaya so that the Pinoy can truly say, KUMBINSING!
Given that Mang Inasals main objective is to expand its market in order to win the
heart of the masses, the market penetration strategy is in line with this objective since it
will open a new area for Mang Inasal, not only in the Philippines but in a different
country as well. Mang Inasal also has a short term objective of reaching 500 stores by
2012. Expanding to the Malaysian market will allow the company to reach this objective
more successfully. By offering its great tasting products at pocket-friendly prices to the

Malaysian market, Mang Inasal will be able to reach more consumers who will be
convinced of their products and services.
Market Entry Strategy
Store Operations
The Mang Inasal branch would start out in Kuala Lumpur. Since Kuala Lumpur is
the capital of the country, most of the domestic and foreign businesses are located
there. Also a lot of Filipinos are designated in this location, thus at the beginning of
Mang Inasals operations it can target Filipino immigrants, expatriates, and OFWs. This
will enable Mang Inasal to compensate its daily operation costs since there will be a
steady revenue coming from Filipino immigrants. It may be possible that by attracting
Filipino immigrants, Malaysians and tourists may have the curiosity to try the place out ,
thus instant marketing happens. Also by targeting Filipino immigrants, it will help the
store lessen their difficulty of adjusting to a foreign market, since Mang Inasal wouldnt
need to initially add products that will target foreign consumers, instead they would
focus on getting Filipinos to eat at their store. Under this adjustment period Mang Inasal
can developed through its Research and Decvelopment (RnD) products or menus that
caters to the wants and needs of Malaysians. After the RnD team develops products
that cater to locals, it is then that Mang Inasal can add additional products to their menu
that will cater to Malaysians.
The store will be open from 10:00 am to 10:00 pm, same as their Philippine
stores. The store will be located in highly populated area in Kuala Lumpur, (e.g.
shopping mall, park) this will ensure that the store is easily located and accessible to

anyone. Since Mang Inasal Malaysia is still a fast food chain, the store will employ 40
employees, who will ensure the each customer experiences fast and quality service
from the store. Most of the employed service crew are Malaysians, since it is easier and
cheaper for the company to hire local employees, than to send Filipinos to Malaysia. By
employing Malaysians, the company can understand the needs and wants of their
Malaysians consumers, since they can easily asks their employees about the
preferences of Malaysians, also by employing Malaysians Mang Inasal helps lessen the
unemployment of the country. However, the store manager and top managerial
positions of Mang Inasal Malysia must be Filipinos, this is to ensure that all production
and operations of Mang Inasal are maintained.
Sourcing
Mang Inasal Malaysia will purchase their raw materials for their products in
both Malaysia and the Philippines. Since Malaysia and the Philippines have almost the
same resources, it is easy for Mang Inasal to acquire the ingredients needed for their
product. Some of the products that they can purchase in Malaysia are rice, chicken,
charcoal, vegetables, and other spices. One of the ingredients that they can ship is
calamansi, which is a home grown fruit in the Philippines. By using calamansi, Mang
Inasal can show off its unique Filipino taste. The purchasing from suppliers must still
undergostrict quality control, to guarantee that the quality of the food is not overlooked.

Production
Mang Inasal Malaysia would have a daily of production of their products to
ensure the freshness and quality of the food that they would serve. The barbeque
products will be marinated and pre-cooked prior to the stores daily operations, and are
fully cooked or heated up at the time of the order to ensure that the orders of the
customers are served as fast as it could. The production manager should be a Filipino,
to ensure that the proper ingredients and proper procedures of cooking are maintained.
Marketing
As what was mentioned above, Malaysians are very price conscious, Mang
Inasal can offer them high quality food at a low price. By having a very reasonable price,
Mang Inasal can penetrate not only Filipino immigrants but locals as well.
They could promote the store in two simultaneous ways. First they should
promote the store to Filipino immigrants, the slogan hahanap hanapin mo will
encourage Filipinos to dine at their store especially if these Filipinos are longing for a
Filipino taste. Second they could promote the store as a foreign brand to Malaysians
and other nationalities as something that should be tried. It is said that at present,
foreign products are in demand by Malaysians. Mang Inasal and its products have a
purely Filipino taste that is something different to Malaysians.
Mang Inasal may invest on several advertisements such as print and radio. At
first Mang Inasal may the option of not doing television advertisements. Mang Inasal is
still in their transition and adjustment stage of their store in Malaysia. It would be very
costly for them to invest in such promotion. But after they penetrate the market and

become financially stable in Malaysia, it would be advisable for them to advertise

through television, and maybe get celebrity endorsement to endorse their product. It will
increase the awareness of their store to the Malaysian market.
Foreign Exchange
Since both countries (Philippines and Malaysia) have weak currencies, an
intermediary currency can be used. The US dollar can be used as a way of paying initial
investment and operations costs of the company. Mang Inasal can open an bank
account in Malaysia. This will be where all transactions will be made, whether money
transfers, or depositing revenues from its branch in Malaysia. The group thinks that it is
better for Mang Inasal to retain most of its stores earnings in their Malaysian bank
account. This will enable them to establish more branches in the country, since they
dont need to buy US dollars again to establish another branch. Also retaining their
revenues in Malaysia would help them in paying their suppliers in Malaysia, they can
easily withdraw money from their bank accounts in order for them to pay their suppliers.
The store will only accept ringgits, Malaysian currency, from consumers in paying
for their meals.

References:
Barringer, B.R. & Ireland, R.D. (2008). Entrepreneurship: Successfully launching new
ventures (2nd ed.). New Jersey: Prentice Hall.
United States Department of Agriculture Foreign Agricultural Service. (2007). Malaysia
HRI food service sector. GAIN Report, MY9001, 1-33.
Malaysian Industrial Development Authority. (2010). Food industry.Retrieved on April 3,
2010, from http://www.mida.gov.my/en_v2/.
http://www.asean.fta.govt.nz/malaysia-economic-situation/
http://en.wikipedia.org/wiki/Politics_of_Malaysia
http://en.wikipedia.org/wiki/Westminster_system
http://en.wikipedia.org/wiki/Malaysia
http://www.asean.fta.govt.nz/malaysia-political-situation/