success factor of franchais business

FACTORS INFLUENCING THE SUCCESS OF BUMIPUTERA FRANCHISOR IN MALAYSIA: A CASE STUDY OF ANI SUP UTARA

ABRNOV,2010

CHAPTER I:

INTRODUCTION

1.1 INTRODUCTION

Franchising in Malaysia has come a long way

since the introduction of the Singer sewing

machine stores in 1948. These were later

followed by Bata shoe outlets, automobile

and gas station dealerships, and soft drink

production by local bottlers. Although the

first fast food franchise (A&W) was

established in 1967, it wasn’t until the

1990's that franchising really took-off in

Malaysia. In addition, franchising becomes

known to public only after government

launched franchise development program in

1992 and Malaysian Franchise Association

(MFA) was founded in 1994.

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After five years MFA had been established,

the number of Bumiputera franchise increase

whether as a franchisors or franchisees.

Table 1.1 in appendix shows the numbers of

Bumiputera involvement in franchise. From

the table we can conclude that the largest

number of Bumiputera involvement is in food

and beverage industry which constitute 18

out of 72 number of franchisor. Till June

2010, according to Ministry of Domestic

Trade, Co-Operative and Consumerism, the

number of franchisor in Malaysia is up to

449 while number of franchisee are 6083.

No doubt that franchising is such a good

business. Franchising is becoming a fast,

effective and productive way to expand a

business (Lafotaine, 1992; Lashley and

Morrison, 2000). According to Datuk

Saifudin Abduullah, Deputy Minister of

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Ministry of Domestic Trade, Co-Operative

and Consumerism, a study conducted by

Europe Franchise Federation stated that 90%

of franchise business in Europe did not

facing any problems although during

economic recession. This shows that

franchise business able to minimize risk

among the entrepreneurs. Recognizing the

potential economic contribution from this

industry, the Government has been proactive

in promoting franchising amongst local

entrepreneurs.

In addition, encouraging home-grown

franchises to expand abroad has long been a

Government effort. The franchise industry

in Malaysia started to gain acceptance due

to Malaysian government effort in providing

various funds and assistance in supporting

the industry. With reference to 9th

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Malaysian Plan (2006-2010), about RM20

million had been allocated to develop 50

Bumiputera franchisors and 1000 Bumiputera

franchisees. If this government’s aim

achieved, we shall see the U.S franchisors

as well as Chinese franchisors won’t

dominant the Malaysian franchise industry

any longer. In fact, the industry will

become more competitive.

However, the presence of Bumiputera

franchisors in this industry should be

associated with their potential successful

factors otherwise the government will only

see the number increment of new entry

Bumiputera franchisors but stagnant or

decline of the successful ones.

Therefore, the successful factors of

Bumiputera franchises those have already

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established for many years should be

studied by the prospect or potential

Bumiputera franchisors hence possibly can

be a benchmark for them to success as well.

The issue of the franchisor’s competitive

advantage is also important to be

determined. Competitive advantage is very

crucial in order to ensure the franchisor

being survival among other members of rival

in the industry. In fact it is not

impossible the franchisor can stay ahead

from other franchisors if it had the

sustainable competitive advantage provided

it has to have strategic resources.

Success is not achieved easily. The

franchisors have to encounter barriers or

challenges. If the franchisors had the

competitive advantages that are

sustainable, possibly they can face the

barriers or challenges very well.

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Otherwise, the potential to suffer failure

is always possible. Therefore, this study

is about what are success factors of

existing Bumiputera franchisors.

1.2 BACKGROUND OF THE STUDY

Little Cash (M) Sdn Bhd is the franchisor

of Ani Sup Utara franchise restaurants, the

most established soup-based restaurant

chain in Malaysia. It has been established

since 13th June 2005. The company is wholly

owned by Bumiputra, which is found by the

dedicated and ambitious entrepreneurs of Mr

Hasanuddin Ibrahaim and his wife, Mrs.

Rohani Abu, who have strategically

developed the company to its stage today.

The company is currently managing up to its

28 owned-restaurants and 31 franchisees’ in

just 5 years.

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The corporate office is located at Wisma

Ani Sup Utara, TTDI Jaya, Shah Alam,

Selangor and the central kitchen is located

at the Kompleks Kilang SME Bank, TTDI Jaya,

Shah Alam, Selangor. The main activity of

the company is to develop its 28 owned-

restaurants and 31 franchisees. The company

constantly provides training and

supervision to all its 28 owned restaurants

and 31 franchisees.

The company’s vision is to be the finest

and the most affordable Malaysian soup

based food delicacies provider to peoples

of the world. Meanwhile, its mission is to

provide duplication enable restaurant

system with hygiene and Halal conscious.

Ani Sup Utara tagline is “Ingat Sup, Ingat

Ani Sup Utara”. The main course served in

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Ani Sup Utara restaurant is based on the

”Northern Recipe” soup based menus, with

stringent hygienic control and fully

compliance to Halal standard. With the

mixture of their 14 secrets herbs and

spices, their soup is very delicious and

healthy to consume. The best part is their

soup based products are free from

cholesterol and fats proven and certified

by Consolidated Laboratory (M) Sdn Bhd.

1.3 PROBLEM STATEMENT

Although the government had been

encouraging and promoting the franchise

industry but it was still at its infancy

stage. Since it would take at least two

years to create a successful franchise, the

fastest way of establishing new franchises

was to purchase foreign franchises. In

addition, it would take time to develop

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them to a level where they could compete in

the global market.

Consequently, U.S. franchises with proven

business systems and track records were

encouraged to operate in Malaysia and it is

still dominating the Malaysian fast food

and restaurant industry. As of 2005, the

U.S. was accounted for over 70% of foreign

franchise sales in Malaysia, followed by

the U.K., Taiwan, Singapore, and Australia

(Malaysia Franchise Association, 2005).

Since there is no significant presence of

other foreign franchises in Malaysia, the

U.S. franchises are mainly competing among

themselves and with a few successful home-

grown franchises including Marrybrown Fried

Chicken, 1901, England Optical, Royal

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Selangor Nelson's and Bonia and Ani Sup

Utara.

Among all the successful franchises, only a

few are created by Bumiputera and still

success until today whereby their number is

still far behind the non Bumiputra’s

counterpart. According to Datuk Ismail

Sabri Yaakob, Minister of Domestic Trade,

Co Operative and Consumerism, Among 374

Bumiputera franchisor in Malaysia only 70

were success. In the mean time, there has

been little research into the success

factors of Bumiputera franchisor that are

still steady competing with the foreign and

non Bumiputra franchisors. Therefore, this

study is embarked to determine the

Bumiputera franchisor’s success factors in

Malaysia.

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1.4 RESEARCH OBJECTIVE

i. To indentify the success factors

influencing Bumiputera franchisor in

Malaysia

1.5 RESEARCH QUESTION

ii. What are factors influencing the success

of Bumiputera franchisors in Malaysia?

1.6 SIGNIFICANT OF STUDY

i. Prospect and existing Bumiputra

franchisors

As a guidelines for prospect and

existing Bumiputra franchisors to adapt

the success factors in their business in

order to being competitive in the

franchise industry. Therefore, the

competitive advantages of successful

Bumiputra franchisors that have been

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identified in this study will provide

them an idea in acquiring strategic

resources. In addition, they can have

some ideas with regard the potential

barriers or challenges to be encountered

of being franchisor.

ii. Government and agencies

By reviewing this study, the Goverment

and support agencies those relevant to

this study might able to highlight the

success factor in running the franchise

business during the training and

enterpreneurial cources. So that both

potential and existing franchisors and

franchisees will aware about this matter.

iii. Academic purpose

It is anticipated that this study will

benefit of anyone in academic field

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particularly lecturers and students in

higher learning institutions who would

like to study further the successful

factors of Bumiputra franchisors. In

other words, this study can be used to

embark the future research by the other

researchers.

1.7 LIMITATION OF STUDY

i. Malaysian franchisor

This study determines the Bumiputera

franchisors solely. Therefore, it limits

in the Malaysia country. The success

factors of Bumiputra franchisors perhaps

dissimilar from non Bumiputra and

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foreign franchisors as well as

franchisees. Furthermore, this study

refers to a single Bumiputra franchisor

only that carries the status of Small,

Medium and Enterprise (SME) Company. Its

success factors perhaps dissimilar

comparing with the other Bumiputra

franchisors as well as franchisees.

ii. Supported articles

There are not much previous study that

discuss about cost and strategic

purchasing with regards to franchise

business. Therefore, the finding cannot

be supported with relevant evidence that

will make the finding stronger and

confidence.

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CHAPTER II:

RESEARCH METHODOLOGY

2.1 THE TYPE OF QUALITATIVE STUDIES

Basically, there are two kinds of research

that are qualitative and quantitative

research. We decided to embark qualitative

research in this study due to we believe

that it allows us to get closer to the

actor’s perspective through detailed

interviewing while quantitative research

strict us to have rely on more remote,

inferential empirical methods and materials

(Silverman, 2005). Since we would like to

embark qualitative study, the first and

foremost, we identified various type of

qualitative study. Ethnography, case study,

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phenomenology and grounded theory are

amongst the types of qualitative research

(Merriam, 2002).

They further explain that the ethnography

is the earliest distinct tradition of

qualitative enquiry that has a long history

in the field of anthropology. They reveal

the primary method of this approach is

participant observation in the tradition of

anthropology. Data collection techniques

also include both formal and informal

interviewing.

Meanwhile, a case study research describes

an entry that forms a single unit such as

an individual, organization or an

institution. However, it is a method that

can either take quantitative or qualitative

approach. Phenomenology refers to the study

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of phenomena whereas it represents a way of

describing something that exists as part of

the world in which people live in. it can

be events, situations, experiences and

concepts. The purpose of this kind of

research is therefore to access to

individuals’ life worlds, to understand

their personal meanings and describe their

experiences of phenomenon.

Grounded theory has become a popular

approach in many disciplines including

education, counseling and nursing. The main

feature is to construct a grounded theory

through the collection and analysis of data

about the phenomenon. Various data

collection techniques are used to develop

grounded theory particularly interviews,

observation through literature and relevant

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documentary analyses that include discourse

analysis.

2.2 RESEARCH STRATEGY – CASE STUDY

We determined among the types of

qualitative research, a case study is the

most appropriate method to embark the study

on factor influencing Bumiputera

franchisor’s success factors in Malaysia.

The rationale of choosing case study as a

research method is first, the case study

has been a common research strategy in

business (Ghauri & Gronhaug, 2002).

Similarly, to Hamel (1992), and Perry &

Kraemer (1986), the case study has been

increasingly used as a research tool.

Second, the examination of the data is most

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often conducted within the context of its

use (Yin, 1984), that is, within the

situation in which the activity takes

place. Third, a case study allows including

both quantitative and qualitative data,

which helps explain both the process and

outcome of a phenomenon through complete

observation, reconstruction and analysis of

the cases under investigation (Tellis,

1997).

It is difficult to determine what the

factors of success and failure in business

are as it is very subjective and a matter

of definition (Frazer, 2001). According to

Everett and Watson (1997), firm performance

is difficult to be determining by economic

analysis, therefore, we determined whether

the Bumiputera franchisors are successful

or not by examining whether their available

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resources are strategic or not. If they had

the resources that are strategic, that

means their today sustainable competitive

advantages and success are ‘created’ by

these strategic resources. In this study,

we believe that Ani Sup Utara has strategic

resource that is secret recipe of soup

paste and these sustainable competitive

advantages are important to help them

facing the barriers or challenges and stay

ahead from other members of rival in the

industry. Dollinger (2003) explained that

it is very important for the company to

have the strategic resources in order to

withstand competitive pressures while

Grunert and Hildebrandt (2004) supported

that the real causal of business success

and sustained competitive advantage is when

the firms had valuable and unique

resources, and meet specific criteria such

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as imperfect limitability/ substitutability

and imperfect mobility.

2.3 CASE STUDY DESIGN- SINGLE CASE

Yin (2003) explained basically there are

two case study designs which are single

case and multiple case designs. In this

study, we consider single case study rather

than multiple case studies because there

has been little previous research that

study about Bumiputera franchisor success

factors. Therefore, we anticipated that by

choosing single case design would allow us

to have more concentration in the research

interest and help us to come out with the

best discussion in the final stage of

study. The reason for selecting a single

case rather than multiple case designs is

that the single case represents the

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critical test of a significant theory (Yin,

2003).

In addition, Allison & Zelikow (1999)

explained that single case study can be the

basis for significant explanations and

generalization. According to Hamel et al.

(1993) and Yin (1994), parameter

establishment and objective setting of the

research are far more important in case

study method than a big sample size.

Furthermore, it still allows for the

generalization of findings to a bigger

population can be a reference to us and

other future researchers if we / they

wished to conduct a research that related

to this study.

In order to conduct single case study we

applied structured and unstructured

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interview in selection data process. Both

types of interview are considered as the

preliminary data collection in this study.

In addition we referred to documents

including the newspaper cutting and

academic articles those relevant to his

study. Further details of these two data

collection activities are discussed in the

data collection.

2.4 SELECTION OF CASES FOR THE STUDY

In this study, we had predetermined the

criteria of the Bumiputera franchisor to be

selected as the predominant case. First and

foremost, definitely it is Bumiputera

ownership. Secondly, it has already

obtained the franchise license. Thirdly, it

has registered with Malaysian Franchise

Association (MFA). The last but not least

the type of business offering is classified

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as either product-dominant or service

dominant.

Little Cash (M) Sdn Bhd which is Bumiputera

franchisor of Ani Sup Utara has all these

four criteria to be selected as the case

study. We selected Little Cash (M) Sdn Bhd

due to the fact that it is one of the

established Bumiputra franchisor which has

been competitively in the franchise field

for more than five years. It has been

recognized locally and internationally. It

has 31 franchisees all over the Malaysia

and master franchisee in Australia

recently.

Furthermore, it has resources that are

strategic that believed contribute to its

today’s sustainable competitive advantage

and success. If the company had strategic

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resources that are valuable, rare, hard to

copy and non substitutable, they will have

its competitive advantage over the long

term.

2.5 COLLECTING DATA

Yin (2003) explained data for case studies

can come from many sources of evidence

including documentation, archival records,

interviews, direct observation, and

participant-observation and physical

artifacts.

2.5.1 Interview

In this study, we collected data

preliminary by interviewing keys personnel

of Little Cash (M) Sdn Bhd, the Bumiputera

franchisor of Ani Sup Utara. We decided to

do an interview in collecting the data in

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order to gather the best possible needed

information with regard the company’s

success factors and competitive advantage.

By conducting interviewing, we could probe

further in finding hidden information that

might not available in the other secondary

sources of data. We interviewed the

company’s keys personnel in structured and

unstructured mode.

We interviewed the company’s key personnel

personally at Ani Sup Utara Kitchen Centre

at No.7 Blok F, Jln Saujana Indah 10,

Kompleks Kilang SME Bank, Tmn Perindustrian

Saujana Indah, 40150 Shah Alam, Selangor.

All together there are three person that we

interviewed. Mr. Sharidzan Shamsuri was

attending us in the structured and

unstructured interview on 30th September

2010. The interview session was happened

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for one and half hours. Meanwhile, we

interviewed another one two key personnel

through telephone on 11th November 2010. We

had telephone conversation with Mr. Syauqie

Kharip (Corporate Communication Manager)

from 10.10am to 11.40am meanwhile with Mr

Naquib Baharuddin (CEO) from 3.15pm to

3.35pm.

All of the three interviewees, Mr

Sharidzan, Mr Syauqie and Mr Naquib are

determined amongst the most suitable person

in the company to be the interviewees or

respondents in this study. Yin (2003)

explained key informants are often critical

to the success of a case study. The post of

Mr Sharidzan, Mr Naguib and Mr Syauqie in

Ani Sup Utara and their education

background entitled them to be the key

informants in this study. With exemption to

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Mr Naguib, they’ve been working with Ani

Sup Utara since its business was

franchised.

Mr Sharidzan and Mr Syauqie are responsible

towards the franchisees development and

recruitment of prospect franchisees

respectively. Meanwhile, Mr Naguib is the

‘prime mover’ of Ani Sup Utara whereby he

just appointed as a CEO this year,

replacing Mr Hasanudin. (However, Mr

Hasanudin is still involving in the

operation and management to coach new CEO).

Regarding to their education background, Mr

Sharidzan has a master degree in business

administration from Universiti Utara

Malaysia (UUM), Sintok, Kedah. Meanwhile,

Mr Syauqie and Mr Naguib similarly have

their first degree in management from

Universiti Kebangsaan Malaysia (UKM) and

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Universiti Utara Malaysia (UUM)

respectively.

2.5.2 Structured interview

Structured interview is when the

researchers have a set of question that has

already prepared prior to interview

session. Sekaran (2003) explained that

structured interviews are those conducted

when it is known at the outset what

information is needed. He added the

interviewer most of the times has a list of

predetermined questions to be asked of the

respondents.

The questioning technique that we adapted

during interview session was using open-

ended question. We conducted structured

interview to come out with both ‘warm up’

and significant questions in the more

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serious inquiries. During this structured

interview, we managed to gain the needed

information from Mr. Sharidzan. He answered

our all inquiries very well. Sekaran (2003)

explained that structured interview

benefits the researchers to establish

rapport and motivate respondents, clarify

the questions, clear doubts and add new

questions as well as rich data can be

obtained.

2.5.3 Unstructured interview

Unstructured interview is when the

researchers have a set of correlated

questions that have been generated from the

structured interview question. We conducted

unstructured interview simultaneously with

the structured interview According to

Sekaran (2003) normally, unstructured

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interview is pursued further during the

structure interview for eliciting more in

depth-information. The rationale we

interviewed Mr. Sharidzan in unstructured

mode to probe into the information that

related to the given answers in the

structured interview. The inquiries were

come out spontaneously whereby we thought

they were significant to the given answers

in the initial structured mode.

i. Telephone interview

The reason researcher conduct telephone

interview due to time constraint as

interviewee not available for face to face

interview. The way it is conducted just

similar with face to face interview when we

start with structured questions in order to

get to know information with regards to

interviewee details such as education

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background and working experience. The

unstructured question followed in order to

probe further detail based on the previous

answers answered by interviewee.

2.5.4 Documents – Academic Article

Yin (2003) explained that a major strength

of case study data collection is the

opportunity to use many different sources

of evident and identified newspaper

cutting, academic articles, letters and

reports are amongst the type of documents.

Besides of conducting interview, we

collected needed information from other

significant sources to gather as much as

evidence we could including from relevant

documents therefore we referred to the

academic articles.

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As mentioned earlier, the reason of

referring documents of academic article was

to gather as much as sources of significant

data to have more evidences. We would like

to have more confidence about the goodness

of the gathered information by examining

whether they are correlated to one another

or not. If they had a great degree of

similarity, we would have stronger

conviction in the goodness of data. Sekaran

(2003) explained that because almost all

data collection methods have some biases

associated with them, collecting data

through multi methods and from multiple

sources lends rigor to research.

2.6 DATA ANALYSIS

According to Yin (2003), data analysis consists of

examining categorizing, tabulating, testing, or

otherwise recombining both quantitative and

qualitative evidence to addressed the initial

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proposition of a study. There are about three

strategies in data analysis namely relying on

theoretical proposition, thinking about rival

explanations, and developing a case description.

2.6.1 Analytic Strategies

In analyzing the gathered data first and foremost

we relied on the theoretical proposition as an

analytic strategy in helping us to treat the gathered

data fairly. By relying on the theoretical

propositions, it has helped us to focus our

attention on certain data and ignore the other data

that irrelevant. In other words, this kind of

analytic strategy has helped us in organizing the

entire case study of Ani Sup Utara. Furthermore,

data analysis requires us to come out with the tool

or technique in analyzing or interpreting the

gathered data so it is important for us to put an

analytic strategy in a first place prior to practice

the selected analytic tool. Yin (2003) explained that

the best preparation for conducting case study

analysis is to have a general analytic strategy. She

further elaborated that the researchers should have

a general analytic strategy in the first place, once

they have a strategy, the analytic tools may turn

out to be extremely useful (or irrelevant).

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2.6.2 Analytic Tools

Yin (2003) identified five techniques for

analyzing case studies which pattern

matching, explanation building, time-series

analysis, logic models and cross-synthesis.

The first four are applicable whether a

study involves a single or multiple case

designs. Meanwhile, the cross-synthesis

definitely is not relevant tool or

technique in this study due to the fact it

requires at least 2 cases to study while we

only have a case.

We perceive an analytic tool of organizational-level

logic models is the most appropriate one to

analyze the gathered data in this study. The

rationale we use this analytic tool is first it is

applicable to a single-case study. Second, it can

trace events taking place in an individual

organization (Yin, 2003). So, logic model could help

us in tracing the process of achieving success

taking place in Ani Sup Utara. Furthermore, it is

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in line with our unit of analysis which is single

franchisor of Ani Sup Utara. Third, we ve been’told by many researchers logic model has become

popular in doing case study research.

By using the organizational-level logic model we

managed to come out with the flowchart that

indicates the process of achieving success in Ani

Sup Utara. Miles and Huberman (1994) included

creating data displays such as a flowchart is one of

the helpful ways to analyze or interpret the

gathered data.

With reference to the figure1, the flowchart that

we e been developed manually by using an’analytic tool of organizational-level logic model, it

indicates the Ani Sup Utara s strategic resources’which are its capabled franchisees, experienced

and skillful employees as well as its managerial

system particulalrly purchasing function, effective

communication with suppliers and franchisees and

hands on training for the franchisees are

potentially help itself be capabled in enhancing its

business performance financially and non

financially hence make it more competitive in the

market and finally will result its success.

36

Immediateoutcome


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37

Strategic Resources

-Franchisees

-Employees

-Managerialsystem

EnhancesBusiness

Performance

- Financial and non financial

SustainableCompetitiveAdvantage

-Survives amongother local /foreignfranchisors

The CompanySuccess

Increasesthe

CompanyCapability

-Expands thebusiness

-Increases no. of great franchisees Immediate

outcome

Immediateoutcome

Final outcome

Figure 1: Organizational-level logic model for Ani Sup Utara

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CHAPTER III:

FINDINGS

The table below show the summarize result

from the interview with Ani Sup Utara key

personnels. The answers given by all

interviewees are tabulated as below to

indicate the similarities and differences

of their perspectives towards the success

factor that influencing Ani Sup Utara, the

Bumiputra franchisor in food industry.

Success FactorsInfluencing Ani SupUtara, Bumiputra

franchisor

Interviewee1

(MrSharidzan)

Interviewee 2

(MrSyauqie)

Interviewee 3

(MrNaquib)

Selection of

franchisees

/ / /

Training / /

Cost Advantage /

Experience and

management skill

/ /

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Strategic purchasing /

Effective

communication with

franchisees and

suppliers

/ / /

Table 1.2: Summary of the interview

From the table we can see that all the

interviewees agree that selection of

franchisee and effective communication with

franchisees and suppliers as the most

factors that influence to the success of

Ani Sup Utara. This is because selection

of the right franchisees into the franchise

business is essential. The selected

franchisees will have significant capital

invested in the franchise business, and

will want to see s return on that

investment prior to moving on. For these

reasons, once a franchisee has been

appointed, the franchisor can have an

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ongoing business relationship with the

franchisee and have the long term success

of franchise business.

Therefore, Ani Sup Utara is very carefully

in selecting the prospect franchisees.

Their success or failure reflects Ani Sup

Utara very much. Basically, in selecting

the prospect franchisees, Ani Sup Utara

considers the prospect franchisees’

financial capability, experience and

management skills, demographic

characteristic, and attitude towards

business. According to one of the

interviewees, Mr. Sharidzan, it doesn’t

matter if the prospect franchisees do not

have business experience or not, as long as

they have working experience because Ani

Sup Utara perceives those have working

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experiences, they are more matured and

potentially good in decision making.

In the mean time, two of the interviewees,

Mr Sharidzan and Mr Syauqie agreed that Ani

Sup Utara prefers to recruit young

franchisees. The rationale of selecting

young franchisees Ani Sup Utara requires

energetic franchisees since being a

restaurant owner is tiring. They are

required to pro-actively being involved in

management and operation whereas they can’t

rely on the staff only. Furthermore, Ani

Sup Utara would like to see they run

business over a long time frame and do not

easily give up due to tiring or hectic

schedule. Besides, all of three

interviewees agreed that Ani Sup Utara

considers the prospect franchisees’

personal and education background equally

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in the selection process. Mr. Sharidzan has

explained further the prospect franchisees

those have more working experience

particularly in food industry, no problem

if they have minimum SPM of education

background. Otherwise, the company

prioritizes degree holders to venture Ani

Sup Utara business. He also explained the

rationale of Ani Sup Utara determines the

working experience and education background

of prospect franchisees. Mr. Naquib

explained the prospect franchisees are also

expected of showing innovativeness, desire

for personal development, seek work-related

challenges, personal commitment to business

and business risk-taking. In other words,

they supposedly to have the real

entrepreneurs’ characteristics to be a

franchisee of Ani Sup Utara. They can’t

rely on the franchisor alone to success.

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ABRNOV,2010

All of three interviewees were similarly

agreed an effective communication with

suppliers and franchisees influences the

success of Ani Sup Utara. This is because,

once a relationship is initiated it must be

maintained, and any effort to maintain a

good relationship requires the critical

elements of effective two-way

communication. The franchisor must

responsible to keep in touch with the

franchisees and suppliers or their raw

material. The open- ended exchange within

franchisor and its franchisees and supplier

will provide the opportunity to improve

their business and achieve their

objectives. Mr Sharidzan provided an

example Mr Hasanuddin, the founder of Ani

Sup Utara, concerns the franchisees very

much. He always keeps in touch with the

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ABRNOV,2010

franchisees not for the purpose of to

follow up the royalty fees solely but also

to update their performance financially and

non financially. For instance, if anyone

among them produced low sales, he’ll be

personally giving a motivation to them as

well as investigating the cause of the

problem prior to ask the management to find

the outcome.

In the mean time. Mr Sharidzan was

explained further that, Ani Sup Utara

luckily has engaged with the suppliers

those share their business knowledge of

core business process with its key

personnel. For instance, the beef

suppliers even welcome Ani Sup Utara’s key

personnel to visit their premises and

personally visualize their operation such

as slaughtering of cow or chicken. In

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ABRNOV,2010

addition, Ani Sup Utara and its suppliers

always exchange information that helps

establishment of respective business

planning. If Ani Sup Utara established,

that means its demand on the raw materials

from suppliers will consistent for long

period. Other than that, Ani Sup Utara and

the suppliers frequently keep each other

informed about events or changes that may

affect the other partners. For instance,

the beef supplier will inform Ani Sup Utara

it has shortages of beef due to number of

cows fall sick and not able to be

slaughtered.

Meanwhile, Mr Naquib revealed that the

founder of Ani Sup Utara, Mr Hasanudin does

even tolerate with all franchisees with

regards to the monthly royalty fees.

Whenever the franchisees do not financially

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ABRNOV,2010

perform well thus difficult to pay the

monthly royalty fees (5% of the total

sales), they will personally communicate

with Mr Hasanudin and he’ll consider

positively. Afterwards, he even will visit

these particular franchisees at their

franchised restaurant to communicate face-

to-face with them. Mr Syauqie explained it

is impossible Ani Sup Utara never had

problems with franchisees or suppliers.

However, an effective communication with

them always helps in coming out with good

solution. Most of the times, the management

of Ani Sup Utara will conduct official

meeting with suppliers or franchisees

whenever there are issues aroused and need

to resolve together. That proves Ani Sup

Utara practices an effective communication

with its franchisees and suppliers since it

is very significant to its success.

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ABRNOV,2010

According to the interview, Mr. Syauqie and

Mr. Naquib agreed that training programs

for franchisees influence the success

factors of Ani Sup Utara. The training

program is essential for the franchisee to

understand Ani Sup Utara business concept

and system. Basically, the company provides

hands-on training to all franchisees. The

hands on training is conducted in ten days

are more towards operation management

particularly how to cook the fixed

ingredients and mixture measurement as

well. Mr Syauqie explained that by

attending the training prior to start the

operation, the franchisees can equip

themselves with both knowledge and skill to

operate and manage their franchised

restaurant of Ani Sup Utara. Otherwise,

they won’t even get clear picture how to

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ABRNOV,2010

operate and manage Ani Sup Utara franchised

restaurant.

Mr. Sharidzan explained that the

franchisees those do not attend training

won’t show good performance financially and

non financially. However, there are some of

the franchisees attended the training but

still failed to perform. He assumed this

group of franchisees might not serious in

the training session. In the mean time, he

admitted some of the franchisees are not

performing well. There were cases in Kota

Bharu and Putrajaya whereas the franchisees

failed to produce soup according to the

standard. The management had investigated

such problem and found out they purposely

refused to comply with the given guidelines

in preparing the soup. They didn’t use the

appropriate pail in fixing the water level.

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Consequently, the taste of soup turned into

curry flavor, in other words the liquidity

of the soup was less.

Mr. Syauqie and Mr. Sharidzan also indicate

that experience and the management skills

of employees influence the success of Ani

Sup Utara. A good and effective manager

will be the key personnel to the company to

ensure the business are in the right

direction towards the objectives and

achieve business success. In Ani Sup Utara

there are three key personnel including Mr

Sharidzan and Mr Syauqie who previously

have been working with McDonald, Malaysia.

They were in purchasing and marketing

department and they adapt whatever they

learnt and experienced in McDonald into Ani

Sup Utara particularly with regards to the

operation practice. Mr Syauqie revealed

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that Ani Sup Utara’s operation practices

are more less follow to the McDonald’s

operation practices which is quite good. He

further explained similarly like McDonald,

Ani Sup Utara relies on at least 90% of

system and the rest of 10% on human or

employees. He perceived without such a

great system in Ani Sup Utara, employees

won’t perform well as system ‘directs’ them

in doing the given tasks.

Only Mr Sharidzan was explained that the

cost advantage influences the success of

Ani Sup Utara. According to him, Ani Sup

Utara achieves a fundamental cost advantage

through lower overhead and freight charges.

Ani Sup Utara is lucky because it has been

engaging with the steady suppliers those

provide low freight charges as well as

better value of money. For instance, the

suppliers deliver the raw materials as per

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ordered such as meat, rice, eggs, etc in

timely manner.

Besides, according to Mr Sharidzan, in

sourcing the materials from suppliers, Ani

Sup Utara is given options of early

payment, discount period, credit period and

financial charges for late payment.

Frequently, Ani Sup Utara is much preferred

to engage with suppliers those offer lower

price and longer credit terms. The

rationale of doing that is to have more

cash in hands (to satisfy account payable)

and to offer the best possible price to

customers. Higher costs can lead to more

intense competition and yet the lower cost

is necessarily beneficial for the

competition. However, he explained the

quality matter is not neglected at all by

Ani Sup Utara.

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ABRNOV,2010

Similarly, only one interviewee which was

Mr Sharidzan explained the strategic

purchasing influence the success of Ani Sup

Utara as well. Ani Sup Utara continuously

motivates its employees those working in

the purchasing department to work an

ethically. Ani Sup Utara always hopes its

employees particularly those involve in

purchasing functions to keep loyal to the

company, justice to the suppliers and faith

in their profession. Among Ani Sup Utara

principles and standards of ethical supply

management conduct, one of them is the

purchasing executives should avoid the

intent and appearance of unethical or

compromising practice in dealing with

suppliers. For instance, they are not

allowed to disclose a detail of one

supplier’s quotation to another supplier.

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ABRNOV,2010

They are also warned to do not involve in

the bribery, receiving something from

suppliers and select them to become

company’s supplier. Otherwise, the

purchasing functions in Ani Sup Utara won’t

turn into strategic. In addition, it will

affect the franchisees as well since they

source some raw materials (meat, chicken,

etc) and all semi-cooked materials (salted

eggs, sambal belacan, etc) from the Central

Kitchen of Ani Sup Utara.

Ani Sup Utara closely monitors its

purchasing department. The employees those

working in the purchasing department are

encouraged to play an integrative role in

the purchasing function. That means, all

personnel are encouraged to closely work

together in the team to ensure the

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ABRNOV,2010

department’s objective can be achieved

hence will helps Ani Sup Utara accomplish

its goals.

Besides, Ani Sup Utara requires its

purchasing department to always ready with

such a great planning to overcome any

challenges that might arise such as

tremendous price increment of goods or

services particularly when oil crisis takes

place. However, Mr Sharidzan revealed Ani

Sup Utara’s purchasing department

informally writes long range plan of the

purchasing function. Even though it

formally writes purchasing plan, it has to

be restructured to let them relate with the

current situation, for instance, the

purchasing plan has to be relevant with the

current economic condition.

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CHAPTER IV:

DISCUSSION & CONCLUSION

4.1 DISCUSSION

With reference to the gathered data that

collected in the interview with Ani Sup

Utara keys personnel, there are about six

factors that contribute to Ani Sup Utara

success. Among the six factors, selection

of franchisee and effective communication

between franchisees and suppliers had been

mention between all three interviewee. This

shows that these two factors had big

influence in the success of the company.

With regards to the factor of selection of

franchisee, Achrol (1996) stated that

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ABRNOV,2010

cooperation is essential between franchisor

franchisee relationship as its help the

franchise system to grow and prosper. This

been supported by Whittemore (1994) that

documented both franchisor and franchisee

will success if they had sense of working

together and helping each other. Overall,

future success of franchisor’s system can

be determined with systematic screening

process in order to ensure careful

selection of potential prospects to conduct

the business of the franchisor (Poe 1991;

Olm et al 1988)

The interviewees also mention about the

effective communication between franchisees

and suppliers are one of the contributors

to Ani Sup Utara success. Franchisor need

to communicate to franchisees as the have

mutually interest in running the business

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ABRNOV,2010

that is maximizing of wealth. Conflict

between franchisor and franchisee can cause

franchisee terminate the contract and out

of the market (Davis, 2004). The use of

technology able to make communication more

effective and geographical distance is no

longer barriers for effective

communication. Besides, it also contributes

to business competitive advantage. Saleh

and Kleiner (2005) indicate that

franchisors can boost up their sales

efficiencies, quality and communication,

and profitability by integrating internet

and intranet.

Effective communication in franchise

business is not just between franchisor and

franchisee only but it also involve with

suppliers. Suppliers play important role in

ensuring continuous supply of raw materials

57


ABRNOV,2010

and sometimes they also provide information

that may useful to franchisor such as new

product that may give value added to the

business or suggesting the best materials

that have high demand in the market.

Communication can facilitate knowledge

development and foster greater

understanding of complex competitive issues

to supply chain success. This been support

by Carr and Pearson (1999) that concluded

in order to jointly find solutions to

materials problems or design issues, buyers

and suppliers must commit a greater amount

of information and be willing to share

sensitive information.

Training is the other factors that been

mention by Mr. Syauqie and Mr.Naquib as

factors that influencing success of Ani Sup

Utara. Training to franchisee is crucial in

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order to ensure franchisee’s act in line

with franchisor requirement. This is

because any misleading action of franchisee

will affect the company as a whole. Terry

(1993) also support on this matter by

claiming that franchisee’s outlet success

much depending on assistance provided by

the franchisors. In addition, franchises

that provides comprehensive training and

detailed operation manual together with

ongoing support such as marketing are more

likely to maintain consistent system

standard (Mendelsohn,1993). By having

training, franchisor and franchisee will

experience less conflict and less

disruptive compare to those that

dissatisfied with level of franchisor’s

support (Frazer,2001).

Mr.Sharidzan and Mr.Syauqie also touched

about experience and management skill that

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contribute to the success of Ani Sup Utara.

To be successful franchise system must have

the right people on board. This is because

they are the one that planning for growth

of company. This been supported by

Dollinger (2003) that claimed

entrepreneur’s knowledge, skill and

experience together with their employees

and manager is one of the strategic

resources that able to contribute to

company sustainable competitive advantage.

Competitive advantage able to differentiate

the company’s for existing rival in the

market and winning the heart of the

customers. Heizer and Render (2009) support

this by indicating differentiation, low

cost and respond of the company will

contribute to the competitive advantage.

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Among the three interviewees, only

Mr.Sharidzan claimed that strategic

purchasing and cost advantage are the

factors that influencing the success

factors of Ani Sup Utara. However there are

some limitation occur as no supporting

articles from the previous study in the

area of franchising that stated strategic

purchasing and cost advantage are the

factors that contributes to the success of

franchise business. Therefore with regards

to these two factors, the finding seems not

to be strong.

4.2 CONCLUSION

In completing Ani Sup Utara case study, we have

gone through the appropriate process as suggested

by Holmes et al (2005) of embarking the case study

research as follow:

Research problem

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Research Objective &Research Question

Data collection

Data analysis

Findings

Discussion &

Conclusion

This study was started when we curious about

what are the success factors that influencing

Bumiputra franchisor. Initially, our research

interest was general but subsequently it narrow

down as we started read more about it.

Additionally, we thought to find out what are their

strategic resources that believed have contributed

to their sustainable competitive advantage and

today s success. Holmes et al (2005) defined’research problem is something that the researchers

are curious about. During the process of

62

Figure 2: Case study research process (Holmes et al, 2005)


ABRNOV,2010

producing problem statement, we thought not only

the main research interest but also correlated

issues which later became the research questions

in this study.

Subsequently, we initiated the collection data

process. We collected data mainly from interviews

which were done face to face and via telephone.

Secondly, we sourced the needed information from

the relevant documents which were academic

articles. Holmes et al (2005) explained that data

can be collected from interviews, observations and

documents.

In the mean time, data analysis process is done

simultaneously with the data collection. Once we

had gathered all the data, we organized them since

we were overwhelmed by their volume. In other

words, we began the process of data analysis by

evaluating the collected data to determine whether

they are useful and central to our areas of concern

or not. We have confidence an analytic tool of

organizational-level logic model is the most

appropriate one to analyze the gathered data. The

reason is that first, it is applicable to a single-case

study. Second, ble it can trace the process of

achieving success taking place in Ani Sup Utara.

Third, this analytic tool has become preferable in

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doing case study evaluations. Afterwards, we

interpreted the gathered data based on our own

perspective. The result of this interpretation later

became the findings in this study.

Finally, once we had completed all the appropriate

procedures of embarking qualitative research, we

came up with the full report. Basically, we do have

background of study, problem statement, research

methodology, data analysis and findings in this

case study research. Merriam et al (2002) said that

there is no standard format for reporting

qualitative research but must includes a discussion

of problem statement, the method of investigation,

the findings in relation to their importance or

relevance to theory and practice and its

implications. The style can be in the narrative

incorporating raw data such as quotes from

interview, episodes from observations, or

documentary evidence.

With regards to the findings, we conclude that if

the Bumiputra franchisors had the resources that

are strategic, they ll be capable in enhancing their’business performance financially and non

financially hence being more competitive in the

market and finally will result success.

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ABRNOV,2010

Overall the factors that influencing the success of

Ani Sup Utara are its capable franchisees,

experienced and skillful employees as well as its

managerial system particularly its purchasing

function, effective communication with suppliers

and franchisees and hands on training provided to

prospect franchisees.

However, we do admit that there is limitation in

term of the extent of the case result in making

generalization due to the fact this study focuses on

one Bumiputra franchisor only which is Ani Sup

Utara and it comes from food industry. So, we do

admit that to generalize, more case studies are

required in the future. Furthermore, Ani Sup

Utara perspectives towards successful factors might

differ from other Bumiputra franchisors, non-

Bumiputra franchisors and even foreign

franchisors.

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proceeding II. In Ann Dugant, ed. Honlulu:Society of franchising.

Allison, G.T., & Zelikow, P. (1999).Essense of Decision: Explaining theCuban missile crisis (2nd ed.). NewYork: Addison Wesley Longman

Carr, A. S., & Pearson, J. N. (1999). Strategicallymanaged buyer-supplier relationships andperformance outcomes. Journal of OperationsManagement, 17(5), 497-519.

Davis, P. J. (2004). Effectivecommunication strategies in afranchise organization. CorporateCommunication: An International Journal ,Volume 9 Number 4 pp. 276-282.

Dollinger, M. J. (2003). Entrepreneurshipstrategies and resources. New Jersey:Prentice Hall.

Everett J, Watson J. Small business failure andeternal risk factors, In: Hatte J.editor. SmallEnterprise Association of Australia and NewZealand Conference Proceedings.Australia:Coffs Harbour, 1997. pp 635-66.

Frazer, L. (2001). Causes of disruption tofranchise operations. Journal of BusinessResearch , 227-234.

Ghauri P, Gr nhaug K (2002) Research methods inøbusiness studies: a practical guide. FinancialTimes and Prentice Hall,Harlow, UK

Grunert, Klaus G. & Hildebrandt, Lutz, (2004)."Success factors, competitive advantage andcompetence development," Journal ofBusiness Research, Elsevier, vol. 57(5), pages459-461, May.

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Hamel, J (Ed.) (1992, Spring). The case studymethod in sociology [Whole Issue] CA: SagePublications.

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Holmes, G. R. (2005). Doing your earlyyears research project: a step by stepguide. London: Sage.

Ibrahim, N. (2000). Industri francais danpembangunan Malaysia, Singapura dan Indonesia:Analisis Strategi. Kuala Lumpur, Malaysia:Penerbit Universiti Malaya.

International Franchise Association. (2000).Franchising World, p.23.

Lafontaine, F. (1992). Agency theory andfranchising: Some empirical results. RANDJournal of Economics. 23, pp 263-283.

Lashley, C and Morrison, A (2000). Franchisinghospitality services. Butterworth-Heinemann,Oxford.

Mendelsohn M. (1993). The guide to franchising. 5th

edition London: Cassell.

Merriam, S. B. (2002) Qualitative Research in Practice:Examples for Discussion and Analysis. New York:Wiley, John & Sons.

Miles, M.B., & Huberman A.M. (1994). Qualitativedata analysis (2nd ed.). Thousand Oaks, CA:Sage Publication.

Olm, K.W., Eddy, G.G., Adaniya, A.R. (1988).Selecting franchisee prospects. Society of

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franchising, proceedings II. San Francisco:Society of franchising.

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Poe, R. (1991). Self- reliance: Sacrifice andpersistence lead to franchise success. Success38 (10): 63-69.

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Terry A. (1993). The distribution of good andservices through business format franchising(part 1.). Curr Commer Law (March); 1 (1):18-23.

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APPENDIXES

Table 1.1

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1. INTERVIEW

FACE TO FACE INTERVIEW WITH MR SHARIDZAN

SHAMSURI

Mr Sharidzan Shamsuri is the General

Manager in Little Cash (M) Sdn Bhd, the

Bumiputra home grown franchisor of Ani Sup

Utara. We recently had the opportunity to

interview him with regard to the company’s

success factors, competitive advantage and

barriers or challenges it had encountered.

We do admit that he is the best person in

the company to be present at the interview

session and provide us with the needed

information. He’s been working with company

for five years since it was venturing the

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Ani Sup Utara business. In other words, in

this study, he is not only the respondent

however the key informant as well. He

provided us with all the needed information

sufficiently.

In this study, we didn’t request the

company to prepare someone in the company

who has certain criteria to attend us in

the interview session. The company itself

required its General Manager, Mr Sharidzan

to attend us in the interview session. The

interview session was taking place in

structured and unstructured mode on 30th

September, 2010. We had predetermined open

ended questions for Mr. Sharidzan to answer

during the interview session. The lists of

predetermined open ended questions that we

asked to him and the answers or information

that he provided to us are as follows:

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Interview session

UiTM: First and foremost, we truly appreciate your

willingness to attend us in this interview, thank you very

much. Can we start this interview with your background

detail? Basically, what are your responsibilities in the

company?

Mr.Sharidzan: You’re most welcome. I’ve

been working with Ani Sup Utara for five

years as a General Manager. I am

responsible for the franchisees development

besides of financial and human resources.

Definitely I am the ones who investigate

and solve any problem with regard to

franchisees.

UiTM: We do believe that you’re one of the important

person in the company. Could you please tell us what is

your background education?

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Mr. Sharidzan: I have master degree in

business administration from Universiti

Utara Malaysia (UUM), Sintok, Kedah.

UiTM: Now, please tell us the history of Ani Sup Utara.

Mr. Sharidzan: Ani Sup Utara belongs to

Little Cash (M) Sdn Bhd, the Bumiputra home

grown franchisor. Definitely, it is wholly

owned by Bumiputra, the married couple of

Mr. Hasanuddin and his Wife Mrs. Rohani.

They ventured into this business in 13th

June 2005 with single restaurant.

Subsequently, they managed to expand their

business and today, Ani Sup Utara has

already had 31 franchisees all over the

Malaysia and one master franchisee in

Australia.

Both Mr Hasanuddin and Mrs. Rohani came out

with the idea to commercialize the renowned

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northern soup by promoting it as a

Malaysian delight in their very first

restaurants. The soup contains 14 herbs and

spices; all are carefully prepared to

promote good health and overall well-being.

Many customers gave their thumbs up to the

soup and it was the starting when Ani Sup

Utara was being expanded its chains. The

company started franchise Ani Sup Utara as

its strategy to expand its business.

UiTM: What are the mission and vision of

the company?

Mr. Sharidzan: As the renowned soup-

based food provider, the company aims to be

the finest and the most affordable

Malaysian soup based food provider locally

and internationally. This objective is in

line with its tagline of “Ingat Sup, Ingat

Ani Sup Utara”.

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UiTM: How many franchisees the company does have

currently?

Mr. Sharidzan: 31 local franchisees and 1

master franchisee in Australia

UiTM: How much are the license and royalty fees imposed

to franchisees?

Mr. Sharidzan: The license fee is RM250,

000 whereby the prospect franchisees are

required to provide minimum 10% of this

amount and the rest can be applied from

Permodalan Usahawan Nasional Berhad (PUNB)

with the assistance from the company

particularly in preparing the business

plan. Meanwhile, the royalty fee is only 5%

of the monthly sales.

UiTM: Did your company provide any training

to franchisee?

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Mr. Sharidzan: Basically, the company

provides hands-on training to all

franchisee. The hands on training is

conducted in ten days are more towards

operation management particularly in

cooking ingredients and mixture

measurement.

UiTM: No doubt, Ani Sup Utara seems successful today. It

competitively survives with the other established local and

foreign franchisors in food franchise industry. So, we do

believe, the company does have resources that are

strategic to make it competitive among the other members

of rival. Can you please explain to us what are the

company’s resources that believed are strategic in

sustaining itself in the food franchise industry?

Mr. Sharidzan: First and foremost, the

franchisees are the most strategic

resources of the company. Therefore, we

believe that the franchisees selection is

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the crucial plan since it is significant to

the company success; therefore we are very

particular in selecting the prospect

franchisees to venture Ani Sup Utara

business. They are the most important

‘element’ in expanding Ani Sup Utara

business. Their success or failure reflects

the company very much.

Basically, in selecting the prospect

franchisees, the company considers their

financial capability, experience and

management skills, demographic

characteristic, and attitude towards

business.

It doesn’t matter they have business

experience or not, as long as they have

working experience because we perceive

those have working experiences, they are

more matured and experienced hence will

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advantage their franchise business

particularly in making decision.

Besides, we do prefer younger franchisees

to deal with. We prioritize prospect

franchisees those are energetic to become

the franchisee of Ani Sup Utara. Being

self-employed is tiring in addition

operating restaurant. They are required to

pro-actively being involved in management

and operation whereas they can’t rely on

the staff only. Furthermore, we would like

to see they run Ani Sup Utara business over

a long time frame.

In the mean time, the company considers the

prospect franchisees’ personal and

education background equally in selection

process. Those have more working experience

particularly in food industry, no problem

if they have minimum SPM of education

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background. Otherwise, the company

prioritizes degree holders to venture Ani

Sup Utara business.

The prospect of franchisees are also

expected of showing innovativeness, desire

for personal development, seek work-related

challenges, personal commitment to business

and business risk-taking.

UiTM: Are the existing franchisees doing well in operating

Ani Sup Utara business?

Mr. Sharidzan: Only a few are not doing

well in operating Ani Sup Utara business.

There were cases in Kota Bharu and

Putrajaya whereas the franchisees failed to

produce soup according to the standard. The

company had investigated such problem and

found out they purposely refused to comply

with the given guidelines in preparing the

soup. They didn’t use the appropriate pail

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in fixing the water level. Consequently,

the taste of soup turned into curry flavor.

UiTM: What other company’s strategic resources that

believed significant to its competitive advantage and

resources?

Mr. Sharidzan: Experience and management

skill of employees are also believed the

company’s strategic resources which

significant to its competitive advantage

and success. It does have three key

personnel including me who previously have

been working with McDonald, Malaysia. We

were in purchasing and marketing

department. We applied whatever we learnt

and experienced in McDonald into Ani Sup

Utara.

Besides, the company always believes that

the cost advantage is significant to its

success. Basically, it achieves a

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fundamental cost advantage through lower

overhead and freight charges. The company

is lucky because it has been engaging with

the steady suppliers those provide low

freight charges as well as better value of

money. For instance, the suppliers deliver

the raw materials as per ordered such as

meat, rice, eggs, etc in timely manner.

UiTM: Do suppliers provide the company with credit

facility?

Mr. Sharidzan: In sourcing the materials

from suppliers, the company is given

options of early payment, discount period,

credit period and financial charges for

late payment. Frequently, the company is

much preferred to engage with suppliers

those offer lower price and longer credit

terms. The rationale of doing that is to

have more cash in hands (to satisfy account

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payable) and to offer the best possible

price to customers. Higher costs can lead

to more intense competition and yet the

lower cost is necessarily beneficial for

the competition. However, the quality

matter is not neglected at all.

Strategic purchasing is also significant to

the company success. The company

continuously motivates its employees those

working in the purchasing department to

work an ethically.

UiTM: What does the company expect from those

employees in the purchasing department?

Mr. Sharidzan: They are anticipated to

loyal to the company, justice to the

suppliers and faith in their profession.

UiTM: Can you please provide us with an example of

activity that is discouraged in purchasing activity?

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Mr. Sharidzan: Among the company’s

principles and standards of ethical supply

management conduct, one of them is the

purchasing executives should avoid the

intent and appearance of unethical or

compromising practice in dealing with

suppliers. For instance, they are not

allowed to disclose a detail of one

supplier’s quotation to another supplier.

They are also warned to do not involve in

the bribery, receiving something from

suppliers and select them to become

company’s supplier. Then, the company’s

purchasing activity becomes strategic.

UiTM: How much the company focuses to the purchasing

activity since it is perceived significant to the company’s

success?

Mr. Sharidzan: As the other departments,

purchasing department is also closely

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monitored by the company. How much or

little the purchasing activity contributes

to the company’s success reflects the

purchasing department’s performance.

Therefore, the employees those working in

the purchasing department are encouraged to

play an integrative role in the purchasing

function. That means, all personnel are

anticipated to closely work together in the

team to ensure the department’s objective

achieved hence helps the company in

accomplishing its goals.

UiTM: Can you please explain further whatever related

purchasing functions in the company?

Mr. Sharidzan: During oil crisis, the

purchasing function becomes more

challenging thus requires those from

purchasing department to always ready with

such a great planning to overcome any

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challenges that might arise such as

tremendous price increment of goods or

services.

Other than that, the company informally

writes long range plan of the purchasing

function. Even though the company formally

writes purchasing plan, it has to be

restructured to let them relate with the

current situation, for instance, the

purchasing plan has to be relevant with the

current economic condition.

UiTM: Any other factors significant to the company’s

competitive advantage and success?

Mr. Sharidzan: Effective communication

between the company and its suppliers or

franchisees is also significant to the

company’s success. Mr Hasanuddin concerns

concern the franchisees very much. He

always keeps in touch with the franchisees

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not for the purpose of royalty fees solely

but also with regards to their sales

performance. If anyone among them produced

low sales, he’ll be giving a motivation to

them as well as investigating the cause of

the problem prior to find the outcome..

In the mean time, the company luckily has

engaged with the suppliers those share

their business knowledge of core business

process with itself. For instance, the beef

suppliers even welcome the company’s key

personnel to visit their premises and

personally visualize their operation

including slaughter activity. In addition,

the company and the suppliers always

exchange information that helps

establishment of business planning. If the

company managed to establish Ani Sup Utara

business that means its demand on the raw

materials from suppliers will keep

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increasing for long period. Other than

that, the company and the suppliers

frequently keep each other informed about

events or changes that may affect the other

partners. For instance, the beef supplier

informed the company that they would be

shortage of beef due to number of cows fall

sick and not able to be slaughtered.

I think the 5 factors I explained are the

most important factors that affect the

company’ performance and success

Basically, the company provides hands-on

training to all franchisee. The hands on

training is conducted in ten days are more

towards operation management particularly

in cooking ingredients and mixture

measurement.

UiTM: Among all the five factors that you have explained ,

which one do you think is / are the most significant to the

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company’s competitive advantage and success? And

please explain why?

Mr. Sharidzan: Cost advantage and strategic

purchasing. Cost advantage allows the

company to offer the best possible price of

its soup-based products to the customers.

It is important in the strategy of winning

and retaining the customers and sustaining

the business for long period. Cost

advantage also allows the company to have

extra cash in hands which can satisfy the

account payable and enhance the advertising

activity.

Meanwhile, the company perceives if the

purchasing employees complies with the

standard of ethical, it will continuously

deal with the best suppliers those not only

can offer the best possible price but also

added value of money. If there is unethical

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activities in purchasing department the

company will suffer failure at the end of

the day. In other words, the company does

want to deal with the suppliers those

really eligible otherwise it won’t remain

competitive in the market.

UiTM: Towards success, no doubt that there are barriers or

challenges to be faced. Can you please explain the

barriers or challenges that the company had before?

Mr. Sharidzan: There are some franchisees

don’t comply with the given guidelines in

operating Ani Sup Utara. For instance, as

mentioned earlier, there were cases in

Putrajaya and Kota Bharu whereas the

franchisees failed to produce soup

according to the standard. The company had

investigated such problem and found out

they purposely refused to comply with the

given guidelines in preparing the soup

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whereby they didn’t use the appropriate

pail in fixing the water level.

Consequently, the taste of soup turned into

curry flavor. In spite of the failure

sometimes caused by a few franchisees

however the rest of franchisees affected as

well. In other words, it has created bad

images to the Ani Sup Utara as a whole.

UiTM: Thank you so much for your time and willingness to

share your thoughts and information with us.

Mr. Sharidzan: You’re most welcome.

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TELEPHONE INTERVIEW WITH MR.SYAUQIE

This is an edited transcript of a telephone

interview with Mr Syauqie, Marketing and

Purchasing manager for Ani Sup Utara. This

interview has been recorded in Novenber

10,2010.

Mr. Syauqie is a manager of Corporate

Communication department in Ani Sup Utara

head office in Shah Alam. As a public

relations professional, he is responsible

to handles public communications to present

and maintain a positive public image of Ani

Sup Utara.

Interview session

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UiTM: Mr Syauqie, i would like to know, what are the

success factors that influence the Ani Sup Utara as the

franchisor?

Mr. Syauqie: One of the factors that

influence our company success is the

franchisee criteria. This is because

choosing the right franchisee will be the

most important to ensure that he /she may

good enough in running a business.

UiTM: Can you explain the example, what are the criteria

that fullfill Ani Sup Utara requirement to be our

franchisee?

Mr. Syauqie: Yes. Ani Sup Utara prefers to

recruit young franchisees. We are believe

that the young entrepreneurs with the right

attitude, enough determination, and a

little bit of help from their friend, they

can plug their passion into a franchise

business.

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UiTM: But how the young franchais or entrepreneurs could

be success if there have no business experience?

Mr. Syauqie: Its true that business

experience can help the company to be

success. But if you have it in you to be

successful, and you’re passionate, you’re

going to do just that, whether you have

experience or not.

UiTM: Are the education background also be the part of

the requirement in selecting a franchisee?

Mr. Syauqie: Yes. Our franchisee must at

least have SPM.

UiTM: Other then selecting the franchisee, what other

factors that influence your company success?

Mr.Syauqie: I would said that training for

franchisee is important. We are closely

examine the training system that will

provide to the franchisee in order to

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ensure that the franchisee understand how

to manage the business. Another factors

that influence our company success is the

good and effective management. Mr.

Sharidzan and i, have an experience working

with McDoonald. We try to adapt what we

learnt before into Ani Sup Utara business

management and administration.

UiTM: Regarding on the training programs provided to

franchisees, can you explain how well does the programs

will effect the franchisee understanding?

Mr. Syauqie: The scope of training program

is to ensure that the franchisee understand

and learn about the product and services of

Ani Sup Utara. We will provide detailed

training on how Ani Sup Utara franchise

system works. The franchisees can equip

themselves with knowledge and skill to

operate and manage their franchised

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restaurant of Ani Sup Utara.The reporting

system, the inventory tracking and all

required information will be provided to

the franchisee.

UiTM: You have said that good and effective management

also contribute to the success of Ani Sup Utara. Can you

explain the example of the management expertise?

Mr. Syauqie: As a key personnel in Ani Sup

Utara we must be able to smell trouble

ahead of time and the capacity of blocking

it before it happens. A good manager is he/

she able to predict the warning signals

well in advanced. As a manager we have to

be able to organize the company effectively

that will include our creativity,

flexibility and proactively.

UiTM: Before working with Ani Sup Utara you

have an experienced working with McDonald.

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Do you adapt any business practices with

McDonald into Ani Sup Utara/

Mr. Syauqie: Ani Sup Utara’s operation

practices are more less follow to the

McDonald’s operation practices which is

quite good. Similarly like McDonald, Ani

Sup Utara relies on at least 90% of system

and the rest of 10% on human or employees.

In my opinion, without such a great system

in Ani Sup Utara, employees won’t perform

well as system ‘directs’ them in doing the

given tasks.

UiTM: Is it the relationship between franchisor (Ani Sup

Utara) and supplier are contributed to the success of your

franchise business?

Mr. Syauqie: Yes that true. We have a

strong relationship with supplier. Most of

the times, the management of Ani Sup Utara

will conduct official meeting with

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suppliers or franchisees whenever there are

issues aroused and need to resolve

together. Our supplier always helps us

regarding on the low price of material that

they offer. We also offer a long term

contract for supplier. Supplier also as our

key informer regards on the price of the

materials. Such as price increment and

capacity of the material to supply.

UiTM: how about your relationship with franchisee?

Mr. Syauqie: We also really concern on out

franchisee and their business performance.

Whenever there are any problems that they

faced, we would try our best to solve it.

We also always keep on sharing new ideas

and information for the franchisee so that

they can achieve for the better performance

and bring up the good reputation and image

of Ani Sup Utara.

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UiTM: I guest that’s it for our conversation interview

Mr.Syauqie. I do really appreciate your time and concern

regarding with this short interview. Thank you Mr. Syauqie.

Mr. Syauqie: Ok. You are most welcome.

TELEPHONE INTERVIEW WITH MR.NAQUIB

This is an edited transcript of a telephone

interview with Mr Naquib, manager of

Corporate Communication department in Ani

Sup Utara. This interview has been recorded

in November 10,2010.

Mr. Naquib is the ‘prime mover’ of Ani Sup

Utara whereby he just appointed as a CEO

this year, replacing Mr Hasanudin.

(However, Mr Hasanudin is still involving

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in the operation and management to coach

new CEO).

Interview session

UiTM: Mr. Naquib, i would like to know, what are the

successes factors that influence the Ani Sup Utara as the

franchisor?

Mr. Naquib: In my opinion, i would said

that effective communication and

relationship with franchisee and supplier

will contribute to the success. I also

believe that the selection of franchisee

influence our franchise business running

good and success.

UiTM: Why that you said effective communication influence

the succes of your company?

Mr.Naquib: This is because, Ani Sup Utara

have good relationship with franchisees and

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its supliers. A good relationship is come

from an effective communication through our

common interest and encourages more open

exchange of information. Our founder, Mr.

Hasanuddin, always keeps in touch with

franchisee needs and encourages their

franchisee to approach Mr hasanuddin with

questions, concerns or idea for improving

the business. He does even tolerate with

all franchisees with regards to the monthly

royalty fees. Whenever the franchisees do

not financially perform well thus difficult

to pay the monthly royalty fees (5% of the

total sales), they will personally

communicate with Mr Hasanudin and he’ll

consider positively.

UiTM: How about your relationship with supplier?

Mr. Naquib: Our relationships with

supplier are very close. We would like to

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exchange information especially regarding

on the price of the raw material.

UiTM: How well your company effectively communicate

with franchisee and supplier?

Mr. Naquib: The key of our long term

relationship is trust, openness and

honesty. To be effective, we are frequently

communicated and have and open exchange

information. We trait our supplier and

other franchisee as our friends that have

mutual interest of business growth and

success.

UiTM: In selecting the franchisee, what are the best criteria

required?

Mr. Naquib: Besides of franchisee who has

an attitudes towards business, we also

expected that the franchisee can show their

creativeness and innovativeness, desire for

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personal development, seek work-related

challenges, and business risk-taking.

UiTM: Other than the two factors that have mention just

now, what other factor can influence your company

success?

Mr. Naquib: I would say training for the

franchisee is important towards the

franchise business success. Basically Ani

Sup Utara provides hands-on training to all

franchisees. The training program is

conducted in ten days. During the programs

franchisee will explain on how is Ani Sup

Utara work system, the operation process

and include the way of cooking the soup.

UiTM: Is it any factors that you feel its contribute to the

success of Ani Sup Utara?

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Mr. Naquib: I think the three factors that

i said just now are most contributing to

the success of our business.

UiTM: Ok then. I really appreciate for your time consuming

and concern. Thank you Mr. Naquib.

Mr. Naquib: You are most welcome.

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