BA 236

MARKETING MANAGEMENT

ANALYSIS OF LOCAL BUSINESS USING PORTER’S

FIVE FORCES MODEL

Submitted to:

HERMINIA C. LAGDAMEN, MBA

Submitted by:

EDISON A. ANG

DYANNA A. AZUMBRADO

ARLENE M. SEJAS

ROYCE D. LABADIA

CLAIRE B. RIVERA

STEPHEN JAKE M. PENALES

TYRONE V. INOCENTE

I. COMPANY PROFILE

A. NADIES CHICKEN HOUSE

Is a family run business owned by the BASAN family of Tupi, South Cotabato. NADIES is taken from the owner’s name, Zenaida “Nadie” Gonzales Basan. Zenaida’s past time was to cook while taking care of her children and waiting for her husband to come home from work.

Nadies started as a small restaurant in front of their house in Tupi. There were only a few tables then, but the restaurant was clean and had a pleasant surrounding. Nadies offered delectable food at a reasonable price and efficiently served hot and fresh by the owner.

Over the years, Nadies Chicken House has established its name in the local food industry and has gained the loyalty and trust of the customers. To accommodate the growing number of customers in the region, they opened an outlet in General Santos City on June 28, 2002 and another outlet in Tacurong City last February 2009. They opened their branch here in Koronadal City on September 9, 2010. They also have branches located in KCC Mall General Santos and SM Mall of Gensan and SM Mall of Davao.

B. MANG INASAL

Is a barbeque fastfood restaurant chain in the Philippines established in Iloilo City in 2003. It is one of the fastest growing food companies in the country specializing in grilled chicken. The company was started by Edgar Sia II, a young enterprising architect who owned his first business at the age of twenty. He engaged in the food business at the age of 26, opening the first Mang Inasal branch on December 2003 at the Robinson’s Mall Carpark in Iloilo City.

The restaurant was an instant success despite stiff competition from other more established grilled food restaurants. The branches were first opened in the Visayan region, then to neighboring Mindanao to its south, before spreading to Metro Manila. The company started franchising in 2005. By 2008, Mang Inasal had 23 restaurants opened, with 10 being franchised.

In October 2010, 70% of Mang Inasal branches were acquired by Jollibee Foods Corporation, the largest food chain company in the country for 3 billion pesos. As of March 2014, the chain has grown to about 460 stores.

C. BJ’S LECHON MANOK

Is a restaurant established by John Garcia in 1996 here in Koronadal City. It started as a small eatery that serves grilled foods and ventured into supplying dressed chicken to barbeque vendors. The business prospered and the owner decided to expand it into a restaurant. The first branch was put up in Abad Santos Street, Koronadal City.

The business was primarily known for its best seller, the lechon manok. It enables them to build a reputation and a loyal customer base over the years. With the business continuing to grow, Mr. Garcia decided to tap markets in the neighboring cities and municipalities. He put up branches in Tacurong City, General Santos City, Isulan and Surallah.

At present, they have branches or outlets in almost all municipalities in South Cotabato including 3 branches in Koronadal City. Two are located in opposite ends along National Highway while the main branch is still located in Abad Santos Street. BJ’s Lechon Manok is a Halal-certified food establishment.

II. ANALYSIS

A. POTENTIAL ENTRANTS

The threat of new entrants is moderate. Although it is not too expensive to start up a restaurant business that specializes on grilled foods, it is difficult to compete with well established brands such as Nadies Chicken House, Mang Inasal and BJ’s Lechon Manok. These businesses have already built a reputation and a loyal customer base in the SOCSARGEN region over the years. It will require new entrants a significant amount of capital investment in promoting their products and many years of operations to establish a brand name. The only exception will be if the new entrants are recognized food companies offering similar line of products such as Penongs and Dencios. These companies can easily compete with the other known restaurants in the area. Another disadvantage for new companies to enter the market is the eating preference of the people in the area. Most people prefer to cook their food and eat at home. When they decide to buy, they would certainly choose restaurants that are known and has the reputation of providing delicious foods. This is the reason why only few food establishments prospered in Koronadal City over the years.

B. BARGAINING POWER OF SUPPLIERS

The bargaining power of suppliers is moderate. A poultry farm in Tupi, South Cotabato supplies chicken to Nadies Chicken House while the supplier for BJ’s Lechon Manok is from General Santos City. Mang Inasal get their supply of poultry products from Davao City. With the said companies enjoying a good business relationship with their suppliers, the bargaining power is fairly stable. The reliance that these food establishments have on suppliers is equal to the reliance suppliers have on them. On one hand, Nadies, BJ’s and Mang Inasal has a good supply chain of quality materials at fair prices.

On the other hand, the suppliers are surely content with supplying to established food companies. However, there are numerous substitute suppliers within the SOCSARGEN region that can replace the current supplier without a significant drop in quality, should there be a conflict in the buyer-supplier relationship.

C. BARGAINING POWER OF BUYERS

The bargaining power of buyers is low in the industry. Nadies Chicken House, BJ’s Lechon Manok and Mang Inasal are competitive with their product pricing as it stands. Their prices are often used as benchmark in the industry pricing. Price floors are experimented with through value meals offered, wherein some actually operate at break even or at a small profit margin for each sale of these value menus. Therefore, with low prices already established, the bargaining power of buyers will be low because fast food restaurants already offer selections at various price range that cater to all budgets.

D. THREAT OF SUBSTITUTE PRODUCTS

The threat of substitute products is high. There are restaurants in Koronadal City that offers a similar or a more extensive menu than the one offered by Nadies Chicken House, BJ’s Lechon Manok and Mang Inasal. Aside from the establishments that specialize on grilled foods, we have to take into account other restaurants’ products and classify them as substitute products. These restaurants include Patti’s, Cinco Ninas, Mang Gorio, Casa Gemma and Mesa. Substitute products may also include grilled foods sold by informal food outlets like Chickenpoint, Terraza Espanol and Baywalk, and the various lechon manok vendors in the city like Disyang, Kini Rogers and Wow. There are substantial substitute products that exist, whether similar in nature or completely different, yet still classifiable as restaurant food.

E. INTENSITY OF RIVALRY AMONG COMPETITORS IN AN INDUSTRY

The intensity of rivalry among competitors in the restaurant industry is high. They try to outdo each other not only in terms of the food they offer but also on the look and ambiance of their dining place. Each restaurant tries to come up with dishes that will distinguish their brand from the rest and capture a major portion of the market.

They also provide promotional schemes to obtain customer loyalty and always have fresh ideas and products to keep their clients interested. These restaurants also have to deal with the competition from fast food chains in the area. With so many food establishments around, it is logical that rivalry is high and intense in the industry.