Research report

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SCHOOL OF ARCHITECTURE, BUILDING & DESIGN

Foundation of Natural Build Environments (FNBE)

GROUP MEMBERS:

JOSHUA LEE YEE KAI 0315820

HONG SANGWON BRIAN 0314661

KEN WONG CHUN THIM 0315534

KELVIN YONG CHEN YIN 0316050

MUHAMMAD IKMAL BIN NOR HISHAM 0316037

SUBJECT:

ENGLISH 2 [ENGL0205]

PREREQUISITE: ENGLISH 1

LECTURER: CASSANDRA WIJESURIA

ASSIGNMENT:

A COMPARATIVE ANALYSIS OF 2 BUSINESSES OF SIMILAR INDUSTRY

IN DIFFERENT GEOGRAPHICAL LOCATIONS

SUBMISSION:

JUNE 4TH 2014

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CONTENTS

No. Title Page no.

1 Key Summary 3

2 History of bicycle industry 4

3 Description of Cyclon Cycle Ind Sdn Bhd 5

4 Description of KSH Bicycle TTDI Sdn Bhd 6

5Comparative Analysis of the Businesses’

Competitive Traits7

6 Recommendation 10

7 Bibliography 12

8 Appendices 13

9 Reference 30

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KEY SUMMARY

This research is about comparing two businesses in terms of their competitive traits. The

two businesses covered in this report are from the bicycle industry. A research has been done on

the history of the bicycle industry from its origins to the present. The businesses are interviewed

and a description is written for both of them. Then the two businesses are compared with each

other. The comparison is analyzed to see which business is more commercially successful. Some

recommendations are also written to improve the competitiveness of the businesses.

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HISTORY OF THE BICYCLE INDUSTRY

The earliest practical bicycle, Draisienne, originates from the early 18 th century invented

by a German civil servant named Baron Karl von Drais. From 1820 to 1865, the bicycle

undergone many transformations intended at improving the mechanism of the bicycle. In the

1870s, James Starley became well-known as England’s father of the bicycle industry when he

manufactured penny-farthing bicycles. It wasn’t until in 1885 that his nephew, John Kemp

Starley, built the Rover. The design of the Rover is incorporated in many bicycles today. Unlike

the penny-farthing bicycles, the Rover had two medium sized wheels instead of a combination of

large and small wheels.

In the US, Albert Pope was the father of the bicycle industry with the Columbia bicycle.

It all started in 1876 when he saw the Ordinary bicycle (also known as penny-farthing bicycle) in

the US and was so mesmerized by it that he converted his Pope Manufacturing Company from

making shoes and small mechanical parts into a company that import bicycles. His next step was

commissioning a mechanic named Atwell to create his vision of a bicycle which was the

Columbia in 1878.

It was only in the 1890s that bicycles became extremely popular in the US. It was so

widespread that “in 1890, American manufacturers produced nearly 30,000 bicycles, and by

1899 that figure had grown to 1,200,000” (Kraft, 2006, p. 24). In the present, bicycles can be

found throughout the whole world and is a common means of transportation. Bicycles are also

used as a sport or recreational purposes. The mass production of bicycles have shifted overseas

to China, India, the European Union, Taiwan and Japan. China produces over 60% of the world’s

bicycles (www.worldometers.info). Most of the bicycles sold in the US are manufactured in

China then imported there.

As for the bicycle industry in Malaysia, bicycles was introduced by the British when

Malaya was colonized. In 1938, activities related to bicycle racing were only starting to be held

in and around Kuala Lumpur. Bicycles were regarded as more of a sport and recreational activity

than a means of transportation. As such, more and more bicycle shops are importing bikes like

mountain bikes and racing bikes from various countries.

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http://www.worldometers.info/

BRIEF DESCRIPTION OF CYCLON CYCLE IND SDN BHD

Founded by Gary Yap, Cyclon Cycle Ind Sdn Bhd (CCI) is currently being managed by

Kamalruzaman, or more commonly called inside the shop as Kamal. Despite having only five

workers, this small-looking job is actually a very tough job. CCI is located at Lebuh Carnarvon,

which is nearby Chulan Street. This helps the shops in receiving visits from both local and

foreign visitors. While foreign visitors get to know this shop through their trip advisors, local

visitors are mostly long term customers. Famous people from KL also visit this shop to get their

bicycles serviced and checked whenever events or competitions are held in Penang. Despite

having only one branch, CCI has a small part of the shop to cater the mass market like kids,

schoolboys, workers, foreign workers, and local guards.

Being a bicycle shop, it would not make any sense if they do not sell any bicycles or

relevant products like safety gears. The main products CCI sells are mountain bikes. This shop

also provide various services like giving advice on how to fit the riders on their bicycles. This

includes fitting station where they, the worker, will fit the riders on their bikes to the riding

position like sit height, knee adjustment and etc. They will also correct some of the riders’ minor

cycle habit as some riders have awkward cycling positions.

Started on 28th February 1996, approximately 18 years ago, CCI was founded by a

mountain biker named Gary Yap Chun Hong. Right after his high school, Yap was sent by his

father to United Bicycle Institute, located in Oregon, United States of America, to study more

about bicycle. With his passion and knowledge on bicycles, he came back to Penang and opened

his first bicycle shop after he graduated from that institute. CCI has moved location for a several

times until it settles at the current location, Lebuh Carnarvon, in 1999. In 2002, they started

selling accessories like clothes, peddles, bags and helmets because the bicycle market had

evolved from a mode of transportation into a sport.

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BRIEF DESCRIPTION OF KSH BICYCLE (TTDI) SDN. BHD

KSH Bicycle (TTDI) SDN. BHD is located at No. 34, Jalan Tun Mohd Fuad, Taman Tun

Dr. Ismail. According to Mr. Leong, the manager of the shop and also the interviewee, they have

a total of nine branches all over Malaysia in Penang, Johor, Melaka, Shah Alam and etc. The

main product that they sell at the branch at TTDI are high-end and good quality mountain bikes.

They also provide repairing services for bikes.

The KSH Bicycle (TTDI) SDN. BHD was founded in 1974. The shop owner’s

grandfather was the one who had started the business. The shop started as a small shop which

was selling all kinds of bikes at the time. But then in the 1990s, they started to sell modern bikes

until now. They cater to every age group from kids, students and adults at every branches across

Malaysia. Now they even have a service area in the shop which provide services to the customers

who would like to adjust their bikes or send in for a repair.

According to Mr. Leong, their business strategies are to train high quality staffs, have a

good supply of stock and selling their stock at a fair price. Marketing is also an important part of

the strategy as well. For an example, advertising in the newspaper, magazines and etc. They will

also sponsor bicycle events to advertise so that bike lovers will know about their shop through

the sponsorship of the event. They will also bring in new products every month to meet their

customers’ demand.

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COMPARATIVE ANALYSIS OF THE BUSINESSES’ COMPETITIVE TRAITS

Cyclon Cycle Industries

Sdn Bhd

KSH Bicycle (TTDI)

Sdn. Bhd

Services provided Selling bikes

Repairing bikes

Give advice on how to fit the riders on a bicycles

Have a fitting station where we will fit our rider on his bike to the riding position like sit height, knee adjustment and etc

Correct some of their minor cycle habit because some people have awkward cycle positions

Selling bikes

Repairing bikes

Products sold Mountain bikes

Road Bikes

Mountain bikes

Road Bikes

Customers Mainly high-end bicycle enthusiasts

Famous people

Foreigners

All age groups from kids to adults

Strategies in managing business

Teamwork

Be a friend but not too friendly

Need to know what is sellable and what is not

Have to know what is in season

Keep updating through the magazine and internet

Get the right components, get the right bicycles, get the right items and also get te right time.

Train good staff

Bring in good products

Have a reasonable price

Marketing: sponsoring events and advertising in magazines

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Number of branches One branch in Penang Nine branches across Malaysia

How many competitors?

Five to six in the area Two to three in the area

Strategy to compete with competitors

Sell a brand different from competitors

Have a mutual agreement with competitors to sell different brands

Provide more variety of products to the customers

Try to provide best service in this industry

Advertise and join events

How often new products are released

Every month Every month

Is pricing affected by competitors?

Puts a fair price which is not too low or high as a respect towards their competitors

There is a price war between everyone so the price is set lower.

Future plans Shifting attention from retailing to focusing on distribution.

Keep opening new outlets in Malaysia

Train more trainees

Bring in more stock

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Based on the analysis, KSH Bicycle is more commercially successful. Firstly, they have

larger demographic where their customers range from kids to adults whereas CCI Bicycle target

audience is high-end bicycle enthusiasts.

Next, KSH Bicycle focuses on marketing their business to more people by sponsoring

events and advertising in magazines. On the flip side, CCI Bicycle does not have a marketing

strategy. Based on the points in the table, it can be said that KSH Bicycle pays more attention to

their customers than their products by having a reasonable price and good products. CCI Bicycle

focuses more on their product on not their customers. A business should always put their

customers as their priority to succeed.

The largest difference between KSH Bicycle and CCI Bicycle is their number of

branches. KSH Bicycle has nine branches compared to CCI Bicycle who has only one. This

proves that KSH Bicycle has more potential to earn more profit with its branches spread

throughout Malaysia.

Besides that, KSH Bicycle only faces two to three competitors in their area which is

better than CCI Bicycle who has around five to six competitors in the area. They can sell their

products easily with less competitors. Their strategy in competing with their competitors is also

better as they provide a variety of products for their customers.

Lastly, KSH Bicycle is better in planning for their future as they focus on reinforcing

their staffs with knowledge on bicycles and opening more outlets around Malaysia which

provides more opportunities for profit.

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RECOMMENDATION

Base on the analysis, opening more of its branches in any location and focusing more

onto customers rather than the products might help CCI cycles to improve more on their bicycle

industry business. On the other hand, team working within the organization and keep updating

what is in season might also help KSH cycles to improve more on their bicycle industry business

too.

Firstly, opening more branches not just one but many will help the business to grow

faster and maintain the business constantly. If there is more than one branch in the business, it

will definitely be beneficial for them to earn more profit or salary by having more customers

coming and buying its products. For example, if let say that CCI cycles had only one shop in

Penang but now they have opened a new branch in other place not in Penang. This means that

since there are two shops (branches), the number of customers will also increase to double. And

therefore double customers will double the profits earn.

Secondly, focusing more onto customers rather than the products might also help CCI

cycles to improve on their business. This is because for the entire business worldwide, the

customer is definitely the number one priority for the business to maintain its business. For

example, the regular customer came to look for something very urgent but the staff or the other

shop members do not care much of its customer but rather busy repairing their products. This

will make the customers feel very upset and get angry with the shop therefore the customer

might just leave the shop without buying anything. This will make the business less profitable as

the number of customers are getting lower and lower.

For the KSH cycles, to get some improvements on their business they need to know the

importance of teamwork. Teamwork in most of the business is very important. The staffs and the

manager should work together as a team in order to maintain their business longer. For instance,

if the manager and staffs work separately and independently, the progress in managing the

business will get slower however when working together as a team, it will be much easier and

faster to maintain it.

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Lastly, keep updating what is in season is also one of the methods to make KSH cycles to

improve on their business. Most of the customers will definitely want latest products like latest

new smartphones, new trendy clothes and etc. Therefore keep updating its products to make

customers come and buy it. Having the latest mountain or road bikes for KSH cycles will help

and benefit a lot to the business to grow faster, bigger and to maintain its customers.

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BIBLIOGRAPHY

Kraft, T. E. (2006, November). Bicycle Manufacturing Past and Present. Kraft, T. E. (2006).

Tech Directions, 66, 24-26.

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APPENDICES

Interview Questions:

1) When was your business founded?

2) Who are the key founders?

3) What prompted the founders to start this bicycle business?

4) What kind of bicycles do you sell?

5) What are the services you provide besides just selling bicycles?

6) Who are your customers and how many customers do they visit per month in average?

(e.g. Age group, income-level, education-level, etc.)

7) What are your strategies in managing your business?

8) What is the business’ annual revenue figure?

9) How many branch offices/stores do you have (if applicable)?

10) Can you provide us a brief history of your business and its most recent developments?

11) Do you have many competitors? Who are they? Who are your top 3 competitors?

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

13) How do you compete with your competitors? What strategies were/are employed (e.g.

pricing, advertising, product variety, etc.) and how successful is it?

14) Is the business constantly facing strong competition from other competitors? What strategies

have they used to compete with you?

15) What is the nature of your markets (e.g. perfectly competitive, oligopoly, monopolistic

competitive) and your justifications.

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16) How much capital is required to start this business? What, if any, specialized field of

knowledge do you need to run this business?

17) Generally, do you feel it is easy or hard to enter this market? Why?

18) How often do you release a new product (note: this assumes the business sells differentiated

products)?

19) Are your pricing decisions strongly affected by your competitors? Why or why not?

20) What were the challenges and obstacles you had to face to succeed in your business?

21) What are the obstacles faced by new businesses who wish to enter their markets today? Are

they easy or difficult to overcome? Why?

22) What are your future plans?

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CCI CYCLE IND SDN BHD

Kamalruzaman, The people there called him Kamal. He is the manager of the shop. He takes

care of everything inside and outside the show room. There are 5 worker working inside the

shop. Looks small but is a very tough job.

1) When was your business (Cyclon Cycle Ind Sdn Bhd) business founded?

CCI founded on 28 Feb 1996, 18 years ago, which is at a shop across the street from the current

shop now. The shop was half size of the current shop and is mainly just to sell bikes. We weren’t

selling any bicycle parts at that time.

2) Who are the key founder(s)?

Gary Yap Chun Hong


He started as a mountain biker. Right after his high school, his father sent him to Oregon, United

Stated of America – United Bicycle Institute to study more about bicycle. After he graduated, he

came back and opened his first bicycle shop. Later in 1996, he open the current shop which we

are in now.


Mountain bikes


Other than selling bikes, we also give advice on how to fit the riders on a bicycles. We have a

fitting station where we will fit our rider on his bike to the riding position like sit height, knee

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adjustment and etc. Then we will ask them to go cycle on the trainer for a little while so that we

can correct some of their minor cycle habit because some people have awkward cycle positions.


Our customers are mainly from Penang. Most of them are long term customers. There are also

famous people who come here from KL whenever there is any event or competition to get their

bikes serviced and checked. Sometimes, we also do have foreigners because the shop is nearby

Chulan Street which has many backpackers there. From trip advisors, they found out about this

place


If you are looking from the business point of view, to start a business is easy but to manage a

business is hard and to stay in the business is harder. For managing the staff, it is basically about

teamwork. As a manager or as a leader, you should be liked by everyone. But once in a while,

you should put a stand on your authorities. You can be a friend but not too friendly. If you are

too strict, they wouldn’t want to listen or do, they will feel lazy. They will feel reluctant to

cooperate with you. So if you be nice to them, they will be happy to do their jobs. For managing

the business, you need to know what is sellable and what is not. You have to know what is in

season, you have to keep updating yourself through the magazine and internet. Meet some

people, look at what they are using and ask around. Get the right components, get the right

bicycles, get the right items and also get the right time.


(Undisclosed)

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There is only one CCI store but we do have a small part of the shop which is across the street.

We sell kids bike there. We started to cater from kids, schoolboys, workers, foreign workers or

even local guards which can spend a couple of thousands on a bike. We have that shop right over

there just to cater that mass market.


CCI was started on the 28th Feb 1996 by Gary Yap Chun Hong. He started selling mountain

bikes. Only the half of the shop was under his management. Then he started the shop across the

street which is half the size of this shop. Then in 1999, we moved over here. In the year 2002, we

started to have accessories department. We sell clothes, peddles, bags and helmets because the

market had evolved. People use bikes not just as a transportation but more as a sport. It has

become a fashion or you can say, a trend. In 2010, we have a small shop to cater small bikes.

Before that we also sell mountain bikes and small bikes in the same outlet. Then it moved across

the street to serve this mass market which sell small bikes or we call it cheap bikes. This outlet is

more focused on the good quality racing bikes. We are also importing a brand from US which is

called Trek bikes.


Bicycles in Penang is very common. 10 years ago, there were only five bicycle shops in the

island and also the mainland. But now, there are almost six shops in radius of 15 minutes of

walking. One of the competitors is just across the street which sell different brand of bikes. The

next is 5 minutes away from here.


(Undisclosed)

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13) How do you compete with your competitors? What strategies were/are employed (e.g.

pricing, advertising, product variety, etc.) and how successful is it?

Bicycles are just like mobile phones. They all have brand. Everybody shares the market.

Different bicycles shop carries a different brand. For us, we are doing Trek bikes and also other

small brands. There is a mutual respect. So for the bicycles shop across the street, they won’t

bring in the brand which we are selling here and so do us.

14) Is the business constantly facing strong competition from other competitors? What

strategies have they used to compete with you?

Yes we do. When they started bringing in new products. We couldn’t bring it in because they

had already owned the distributorship. That product is better in price.

15) What is the nature of your markets (e.g. perfectly competitive, oligopoly, monopolistic,

competitive) and your justifications.

It is more on to a franchise. It is a clean competitive so it is pretty fair.

16) How much capital is required to start this business? What, if any, specialized field of

knowledge do you need to run this business?

It will be spend a lot more on tools. You will spend a lot of capital on product especially the

bikes, tools, accessories. Just this all it will need around 500 thousand ringgit. If you have a

proper kind of bicycle shop.

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Yes, it is hard. It is a non-consumable product which follows the trend and also season which

some people wouldn’t buy in that season. It is hard to ask customer to come back and buy more

bikes. It is not like food which they will constantly come and looks for you.

18) How often do you release a new product (note: this assumes the business sells

differentiated products)?

Every month. We will try to find something new and also update.


We will put it at a fair price. Not too high but not too low so that everyone have a piece of

something


How to grow? For any kind of business if you don’t grow, you’re pretty much stagnant and you won’t be able to secure your future. It is not just for bicycle but for any kind of business.

21) What are the obstacles faced by new businesses who wish to enter their markets today?

Are they easy or difficult to overcome? Why?

(Undisclosed)


Soon this place will be a showroom for one of the major big brands. We also will be shifting our

attention from retailing to focusing on distribution.

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KSH BICYCLE TTDI SDN BHD

Mr. Leong, manager of KSH Bicycle TTDI Sdn Bhd.

1) When was your business (KSH Bicycle TTDI Sdn Bhd) business founded?

1974.

2) Who are the key founders?

Mr. Alan Tan.


(Undisclosed)


Mountain bikes.


Repairing and adjusting services.


(e.g. Age group, income-level, education-level, etc.)

We receive customers from every age groups from kids to adults.


Train good staff, bring in good products and have a reasonable price. As for marketing, sponsoring events and advertising in magazines.

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(Undisclosed)


Total of nine shops over Malaysia in Penang, Johor, Melaka, Shah Alam and etc.


The business is founded in 1974. It was only in 1990s that we brought in good brands which feature high-end models.


Lots of competitor. Specialized and Giant Bicycle


Our market share is 20%.

13) How do you compete with your competitors? What strategies were/are employed (e.g. pricing, advertising, product variety, etc.) and how successful is it?

We provide more variety of products to the customers, try to provide best service in this industry, advertise and join events.

14) Is the business constantly facing strong competition from other competitors? What strategies have they used to compete with you?

Strong. There are many competitors since many people started riding bicycles.

15) What is the nature of your markets (e.g. perfectly competitive, oligopoly, monopolistic competitive) and your justifications.

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It is a perfectly competitive market.

16) How much capital is required to start this business? What, if any, specialized field of knowledge do you need to run this business?

You need around a million to start a decent bicycle shop if you want to import high end brands.


It depends on what kind of bicycle shop you want to start. If you want to start a bike shop just for selling bikes, it is easy. But if you want to start a high-end bike shop, you need to have trained staff, bring in good products, have knowledge about the products in the market and provide good customer service.

18) How often do you release a new product (note: this assumes the business sells differentiated products)?

We carry a lot of brands in the shop so we bring in new products every month.


Currently in this market there are a lot of competitors. There is a price war between everyone so the profit is low. But we try to sell more.


We can’t say it is successful, we are just doing hard now, we still have long way to be successful.

21) What are the obstacles faced by new businesses who wish to enter their markets today? Are they easy or difficult to overcome? Why?

You have to prepare the capital. Secondly, you need a passion. You need to know all about your product. You also need to train your workers. The technology of bicycles are changing everyday so we have to keep updating ourselves through magazines and internet.

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We will keep opening new outlets in Malaysia and train more trainees. We will also try to bring in more stock.

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PHOTOS

CCI CYCLE IND SDN BHD

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KSH BICYCLE TTDI SDN BHD

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REFERENCES

Bicycles. (2001, October/November). History magazine.

Retrieved June 4, 2014, from http://www.history-magazine.com/bicycles.html

Bicycles produced in the world - Worldometers. (n.d.).

Retrieved June 4, 2014, from http://www.worldometers.info/bicycles/

Kraft, T. E. (2006). Bicycle Manufacturing Past and Present. Tech Directions, 66(4), 24-26.

SHORT HISTORY OF BICYCLE RACING IN MALAYSIA. (n.d.).

Retrieved June 4, 2014, from http://www.mncf.org.my/index.php?

option=com_content&view=article&id=80:short-history-of-bicycle-racing-in-

malaysia&catid=3:newsflash&Itemid=97

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http://www.mncf.org.my/index.php?option=com_content&view=article&id=80:short-history-of-bicycle-racing-in-malaysia&catid=3:newsflash&Itemid=97



http://www.worldometers.info/bicycles/

http://www.history-magazine.com/bicycles.html

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