Introduction Our aims to conduct feasibility study on Restoran Minang is to study whether market development is the most suitable

strategy for Restoran Minang to expand its business in Kedah area. Market development entails taking existing products or services and selling them in new markets that is around Kedah state. The next step for Pak u is to devise a way to provide more of his current cafeteria services to an ad!acent market by offering his product or service to customers in another city or state. Maybe he should start it slowly first by expanding it in Kedah state. Pak u may also expand his product or services line by adding new features to increase his sales and profits.. " product and services expansion growth strategy often works well when technology starts to change and that#s why Pak u should consider on developing his Restoran Minang to the new market apart from only in the $orthern %niversity of Malaysia &%%M' campus. (e also propose the resources needed to implement effective strategies for Restoran Minang success in the new market.

Background of Restoran Minang )n *ecember +,,-. Pak u and Mak u &real name is /aud0iah binti Mustaffa' operating Minang restaurant in Kulim. Kedah. "fter the next three to four years. Minang restaurants are success in getting the government tenders at Maktab Perguruan econdary chool . 1akar "rang econdary ungai Petani. )brahim chool and Merbok . )n +,2, to +,,3 Minang

restaurant has con4uered the tenders for all the schools around ungai Petani . )n +,,3 . Minang restaurant has grab a tender in $orthern %niversity of Malaysia &%%M' administration of student affairs caf5 for seven years. )t operating until 36++ as a caf5 that sells a variety of foods such as mixed rice. hot dishes. si00ling . and others. Minang restaurant owned by Mr "bd Rashid bin )shak has grown rapidly toward the goal of becoming the preferred cafe and Pak u ambition is that Restoran Minang to be a restaurant that sells a variety of food in that is well7known %%M . )n addition to using the concept of selling a variety of food as a strategy. Restoran Minang also offers a very affordable prices for their foods and drinks . Pak u has successfully get the cafe tender in tudent Residential 8all such as 9"1 . ime *arby . TM . 1 $ . and even )slam :entre&now' . Minang restaurant business will be open every day at ;.<6 am to =.66 pm . Pak su

has +3 employees and some of them are %%M students who is taking hospitality programmes to assist in his caf5 business as the partime worker. The recipes of their dishes are learned from their experience by going to many places. Monthly payment for shop rental is RM +366 per month. Pak u get his raw materials at :hangloon and regular supplier from >itra. *aily capital estimated is around RM 3666 to RM <666 per day. This Minang restaurant business achieve monthly net profit of RM36 . 666. )n addition. Pak u inspiration to start this business is of his own interest. 8e said before this Mak u was not a good cook. 1ut. she always makes improvement and learn from the experiences when they travel a lot to sudy about all the recipes. (hile staying in ungai 1uloh . Pak u and Ma u seldom come out to :how Kit Road on the weekend to try out others recipes and will ask about ingredients that they use and try it at home. Pak u experiences while working with Maybanks help him a lot in managing his business and he would rather do all the work himself because he did not fully believe his employees. Pak u owned that integrity value that an entrepreneur should possessed. )t#s always a bit difficult to begin or start anything. " beginner has the most to learn and the most to go through. )t#s the same with Pak u opening of a new business at the early stage until now. especially when trying to make it known and building its reputation. This is one of the most crucial times of building Restoran Minang reputation. 8e must be able to figure out how to bring in the customers. satisfy their needs. win them over and convince them to come back. Providing great customer service is always considered the most important element for Restoran Minang. (e choose to do research on Restoran Minang is that because of this is the most well7 known caf5 for students in %%M campus. tudents and staffs always come here to have their lunch. Restoran Minang is very special as they have their own regular customer whose loyal with them and always choose Restoran Minang where ever they are located in the campus. 1esides that. Pak u as the owner also one of the most successful entrepreneur as the longest person who operating his business in %%M. Pak u is really friendly and outgoing with students and many students like him very much. Restoran Minang have a great history along with its establishment and the !ourney of its business among %%M students.

Owners background Pak u whose real name is "bdul Rashid bin )shak had worked for Maybank before he venture into food and 1everages business. Pak u family background comes from a family of farmers. 8e said that he went to the school by only cycling and given RM 6.+6 for a day as his pocket money. 8e also doing the part time !ob during long school break when he was still in his childhood as their family led the hard life during that time. Pak u educational background is he graduated as a form six student or better known as the 8igher chool :ertificate & 8 : ' during that time. 8e used to get the title as the best student in the Kubang Pasu during the Malaysian :ertificate of ?ducation &now is PM ' . (hile in /orm @ he took diploma in "ssociate of the )nstitute of 1ankers and started his career with Maybank in +,;;. 8e worked for +2 years with Maybank . "fter three years !oining Maybank . he was promoted to become a sub7accountant and was appointed to be the enior "ssistant Manager two years later in Kulim branches . "t that time the country experienced recession and many banks merge into one like 1ank 1umiputera become :)M1 1ank. Pak u moved to Kepong 1ranch. ubang "irport. Kulim and Aangkawi for the time being has not been developed yet. )nfrastructure in Aangkawi was not complete and there is only a small Maybank branch there. Many of his colleagues resigned because of the high expectation and hard to reach the target setted by their upper management. Pak u also follow all other their colleagues to resign. The situation in the state of Kedah at the time was very difficult to grow because of the lack of infrastructure. not like nowadays where there are many large factories and companies such as Kulim 8ightech were built. The peoples that want to invest in the bank at that time are so little while the bank was targeting a target for RM 3.= Million but they only can achieve only around RM + million only and the employee whose fails to hit the target should explain the reasons to the board of director. " successful entrepreneur isn#t only profit7oriented. Pak u has his own defined values and beliefs that he cares about and stands for that he told he won#t rise up the food and drinks prices only to make profit as he think of its long term effect on his business. and he uses these as guides when dealing with his employees. his customers and when making decisions. Pak u is known to give great value not only to his customers but his employees as well. The people who work for and with him for a long time can feel this and are apt to radiate this kind of attitude in their work and thus. produce excellent results while doing

their !ob. tudents who are the regular customers appreciate this characteristic and they are more likely to trust someone who values them and they often come to Restaurant Minang to have their lunch. 8aving the ability to listen well and having the willingness to learn makes Pak u an entrepreneur who eager to keep finding ways for improvement. /or instance. 8e and Mak u always go out to try others recipe such as chinese dishes. 8e listens to his customers about their ideas. feedback. needs and even complaints and uses this in a positive way for the growth and progress of the business until today. 8e even listens to the public. observes his competitions and uses what information he can get. whether it is the price or taste of their foods for learning and improvement. :heaper price and delicious dishes prepared by Restoran Minang gives staffs and students the impression that they will always be satisfied. )t strengthens the business reputation more as the customers satisfaction is the priority. ?xperience teaches the importance of building the right team and inspiring that team to never give up. BOften times. ventures are formed with a top7heavy team of executives overly skilled and inappropriately scaled to the si0e of a business &Thornton. 36+3'C. (hen times get tough. instead of having the hunger to stick with it. many will !ump from the ship. That#s the reason why Pak u decide not to venturing with other people in operating his Restoran Minang. 1efore they own the Restoran Minang. Mak u only use the rickshaw to sell foods in Kulim night market. Mak u now is the only cook who prepared for the dishes in the restaurant. 8er experience as a hawker in the night market really helps her and many students like Mak u cooking. Pak u and Mak u learn things from any !ob they ever had 7 the most efficient ways of doing things. how to speak to people. problems to avoid. "nd often they learn from former mistakes as much as from their successes.

Method of Analysis " feasibility study is used to analysis the viability of a strategy. The feasibility study will focus on helping answer some essential 4uestions. /or example. Bshould we proceed with the proposed strategyDC The whole study of this are directed toward help to answering this 4uestion.

/easibility studies can be used in many ways but primarily will focus on suggests business ventures. " business strategy should go through a feasibility study to identify the viability of their strategy before proceeding with the development of a business. /or Restaurant Minang. They need to conduct a feasibility study to evaluate and analysis the strategy which is based on extensive investigation and research to support the process of decision making. (e suggest that Restaurant Minang can throughout the /easibility tudy to assess and considered in a number of areas for the Market *evelopment Plan by establish new branch in Kedah area. for example technical. financial. scheduling and material feasibility.

Technical feasibility Technical feasibility would re4uire to identify and evaluate that whether this strategy will perform effectively. reliable and the capability of resources to open a new branch in Kedah area. To open a new branch. Pak u need to recruit a lot of the 4ualified workers to help in manages the new branch operation. if !ust depend of the current workers is not enough. 1esides that Pak u also need to train the current worker to become more skillful and promote some of the current workers to become manager in the new branch. o that they can handle well the operation of the new branch and help the new workers to perform their task.

Financial feasibility /inancial feasibility is to assess whether the Restaurant Minang able to raise any finances that may be re4uired and will it be able to keep up with repayments if loan funding is re4uired. The current financial position of Pak u is strong. This can see by the current average monthly net profit of RM36. 666. this amount is 4uite huge compare with the other competitors. "lthough Pak u do not have enough cash to buy the new shop and all the new e4uipment for the new branch. but with the current strong financial position of

Restaurant Minang. be sure that it is not a problem for Pak u to get a loan funding form any of the banks. o Pak u should not have the financial feasibility problem in open the new branch.

Material Feasibility Material feasibility is assessing about whether the organi0ation have access to the material re4uired to deliver the strategy. /or the new branch of Restaurant Minang. we suggest Pak u to open it at >itra. This is because for the past few years. Pak u also purchases part of the raw material which is vegetables. chicken meat. beef. fish and so on from the supplier who come from >itra. This is because the expectation of Pak u toward the 4uality of raw material of food is very high and the supplier from !itra able to fulfill the need of Pak u. o. if the new branch establish in the >itra area. then be sure that the supplies of high 4uality of raw material to the new branch need will not be a problem and the bargaining power toward the supplier can be increase since the 4uantity of the Pak u purchase increase. so even Pak u able to negotiate a better price with the supplier.

Schedule feasibility ?valuating schedule feasibility of Restaurant Minang in implementation this strategy is concerns with the duration. This new branch is estimated to be launch within 3 months. 1ased on the grantt chart below on the 3nd >an. Pak u should start to find a suitable shop lot to open his new branch. "fter that at +6th >an . Pak u can start to apply for loan funding and sign the agreement after the loan being approved. (hilst waiting the approval of the loan. Pak u can train the current workers to become more skillful and promote some of the current workers to become manager in the new branch. o that they can handle well the operation of the new branch and help the new workers to perform their task. 1esides that. Pak u may start to advertise !ob vacancy to attract potential workers. "t the same time Pak u can renovation the new shop lot and purchase all the re4uire e4uipment for the new branch. Aastly on the 3;th /eb. Pak u can decorate and make arrangement for all the e4uipment and at the <rd Mar. Pak u start the operation of the new branch.

Alternative views There have another alternative ways to expand the business of Restoran Minang. /ranchising " franchising is a business relationship between two entities which are a franchisor and one or more franchisee that based on an agreement to let the franchisee get the licensed privilege of franchise from the franchisor. The franchisor can allow the franchisee the right to use the concept. trademark. brand names. production and business operation model for doing business. 1ased on this alternative. Restoran Minang can build the franchising system to become the franchisor for expand the business. 1y using this way. Pak u can expand his business to many places with low cost and the brand names will become well known. )f Pak u expands his business by himself without franchise system. the cost operation will high. This is because the need of consideration for finding the appropriate locations. rental. purchase fixed asset. wages and others. )n contrary. if Pak u as a franchisor sells his franchise system to future franchisee. the cost will bear by the franchisee. 8owever. the budget can use for the ob!ective of the business as maximum the profit and do the research and development for new products. 1ut. the disadvantage of franchising is the commitment of franchisee. They might be lack of experience and motivation to become a franchisee. *ue to this. they need sacrifice more time to succeed so that the brand name won#t be getting destroyed. Mergers and "c4uisitions &ME"' Mergers and ac4uisitions are the legal consolidation of companies. " merger is a combination of two different companies to form a new company. 8owever. ac4uisition is a company purchases another company and no new company is formed. 1y using ME". this can maximi0e the Restoran Minang#s growth by enhancing its production. marketing operations and even expands the business. 1esides that. ME" can give the strong power that enables enhance performance and cost efficiency of Restoran Minang. (hen these ME" companies get together and supporting each other well. the business can gain a high profit and maximum revenue. )n addition. it is also easy to maintain the competitive edge. This is because there are many

strategies that can understand from each other and also obtain the combining resources and talents of them. )t#s often cheaper to ac4uire an existing unit than to build a new one. Through this. the costs will decrease and the opportunities to expand business will high. Restoran Minang can strengthen the business network by improving market reach with other companies such as ME". This might also explore the possibility of their business in term of increase the new sales opportunities. new areas and expand business. 8owever. using ME" strategy is not always getting to successful because of the combination companies may be complexity. "ll the operation and controls will become more difficult because of ME". This may affect the efficiency and profitability will decline also. >oint venture >oint venture is a business which two or more companies agree to use their resources for the goal to accomplish a specific task and the task may be new pro!ect or any other business activity. "lthough Restoran Minang is partnership business by Pak u and his wife. Mak u. this business also can use !oint venture with other restaurants or companies for expand this business to other places such as kedah area. " !oint venture can help business to grow faster. increase productivity and gain profits. Pak u can use this !oint venture strategy to access to new markets. distribution networks and increased capacity. 1esides that. Pak u also can share the risks and costs with a partner by using this strategy to expand their business together. Moreover. this also can access to a greater resources by their both restaurants and companies to expand their business. The resources are included the staff. technology and finance. The !oint venture of both can reduce the cost because they are sharing together to operating business. 9et. there are also have risks for !oint venture. There might be complexity if partnering with other businesses. This is because of the ob!ectives of partners are different. difference of cultures and management style influenced the poor result of business. partners don#t have commitment and others. These factors can affect the business decline and unsuccessful !oint venture.

ost!benefit analysis :ostFbenefit analysis is a systematic process for calculating and comparing benefits and costs of a pro!ect. decision or government policy. :ross all capital budgeting analysis. the ideal evaluation method should include all cash flows that occur during the life of the pro!ect consider the time value of money. and incorporate the re4uired rate of return on the pro!ect. " cost evaluation is estimated for Pak u to open a new branch in Kedah area. Initial invest"ent The first cash flow estimate is the initial investment in the pro!ect. "n approximate cost is estimated for opening a new branch. 1ased on data provided. below is the initial outlay that would incur in the pro!ect.

?lement Table :hair *ishes /ork and spoon Refrigerator tove "ir7conditioner /an Total

Price &RM per unit' == +6 ; = 3666 +666 +=66 <66

Guantity +6 26 =6 +66 + < 3 @

Total "mount &RM' ==6 266 <=6 =66 3666 <666 <666 +266 +3666

"ssuming thatH )nitial investment I RM+3666

)nternal rate of return of 3J *iscount rate of @J :ash flow is the movement of money into or out of a business. pro!ect. or financial product. )t is usually measured during a specified. limited period of time.

9ear :osts &RM' *evelopment cost Operating cost Total :ost avings&RM' (orking capital saving ,66 +366 266 3666 266 @66 +-66 ;66 @66 +<66 + 3=66 <666 ==66 3 +266 +366 <666 < +666 +666 3666 =66 =66 +666

Process and procedure cost saving -66 Total saving +<66

#ayback $eriod Payback period is the length of time re4uired to recover the cost of an investment. The payback period of a given pro!ect is an important determinant of whether to undertake the pro!ect or not. 9ear 6 :ash /low &RM' &+3666' :umulative :ash /low&RM' &+3666'

+ 3 < -

==66 <666 3=66 +666

&@=66' &<=66' &+666' 6

The payback period for Pak u to expand the business is - years. The shorter the payback period. it is better in the investment.

%et #resent &alue $et present value is the present value of net cash inflows generated by a pro!ect and less the initial investment on the pro!ect. $PK is a techni4ue where cash inflows expected in future years are discounted back to their present value. This is calculated by using a discount rate e4uivalent to the interest that would have been received on the sums. had the inflows been saved. @J is used as discount rateH 9ear :ash /low&RM' *iscount Rate &@J' 6 + 3 < &+3666' ==66 <666 3=66 +666 +.666
0.9434 0.8900 0.8396 0.7921

Present Kalue &RM' &+3666' =+22.;6 3@;6.66 36,,.66 ;,3.+6 +3=6.36

$et present value

/rom the calculation above. the $PK show the positive value which is RM+3=6.36. This positive value indicates that expected return on pro!ect more than the re4uired rate of return. 1esides.

$PK accounts for time value of money and its show that it is more reliable compare to any other investment techni4ue.

Internal rate of return The )nternal rate of return is the annual percentage return achieved by a pro!ect. at which the sum of the discounted cash inflows over the life of the pro!ect is e4ual to the sum of the capital invested. )t is also the interest rate that makes the $et Present Kalue 0ero.

"ssume used 3J and @J as discount rate. 3J is used as discount rateH 9ear :ash /low&RM' *iscount Rate &3J' 6 + 3 < &+3666' ==66 <666 3=66 +666 +.666
0.9804 0.9612 0.9423 0.9238

Present Kalue &RM' &+3666' =<,3.36 322<.@6 3<==.;= ,3<.26

$et present value

---.@=

The $PK for @J discount rate is RM+3=6.36 as shown above. )nternal rate return is 3J because the $PK is near to 0ero. ?videnceH calculation by the )RR formula )RRI@JL&&+3=6.36'M&<J7@J''N&&+3=6.36L---.@=''I3J

Internal rate of return The )nternal rate of return is the annual percentage return achieved by a pro!ect. at which the sum of the discounted cash inflows over the life of the pro!ect is e4ual to the sum of the capital invested. )t is also the interest rate that makes the $et Present Kalue 0ero. "ssume used 3J and @J as discount rate. 3J is used as discount rateH 9ear 6 + 3 < :ash /low&RM' &+3666' ==66 <666 3=66 +666 *iscount Rate Present &RM' &+3666' =<,3.36 322<.@6 3<==.;= ,3<.26 ---.@= Kalue

&3J' +.666 6.,266.,@+3 6.,-3< 6.,3<2 $et present value

The $PK for @J discount rate is RM+3=6.36 as shown above. )nternal rate return is 3J because the $PK is near to 0ero. ?videnceH calculation by the )RR formula

)RRI@JL&&+3=6.36'M&<J7@J''N&&+3=6.36L---.@=''I3J

Reco""endation' "fter the feasibility study conducted for Restoran Minang. we recommend that Pak u should develop his Restoran Minang into a new market that is located in >itra. )t is because >itra is the place where Pak u gets all his raw material which is vegetables. chicken meat. beef. fish and so on from the supplier who live at >itra. Thus. this will decrease transportation cost for Pak u and also decrease the production cost. /urthermore. Pak u also can en!oy the benefits of economy of scales when he order in large amounts of raw material. )t can make Restoran Minang more competent by offering lower price for their foods and services provided around >itra. "fter doing some calculation based on :ostFbenefit analysis to comparing benefits and costs for Pak u to develop another restaurant in >itra. we found that the benefits are positive as Pak u still has the saving around RM+<66. (hile the payback period for the initial investment is until -th year only. )t is because the profit that Pak u gained from the operating restaurant can

cover the initial investment for the - year period. o it is preferable that Pak u invest in market development into a new marketplace as the market in the %%M campus will be saturated in the future. 1esides that. the $et Present Kalue also shows the positive value which is RM+3=6.36. This positive value indicates that expected return on pro!ect more than the re4uired rate of return. $et Present Kalue accounts for time value of money and its show that it is more reliable compare to any other investment techni4ue. "fter calculated. )nternal rate return for Restoran Minang is 3J because the $PK is near to 0ero. (hen the )RR rate increasing number of cafeteria opened inside the campus. )t is recommended that Pak u should use the market development strategy to expand his business to >itra area. )t is to attract the new customer and tap into a new market. The challenge is to determine the best place to insert Restoran Minang specific capabilities into that market. This re4uires an understanding of current and emerging solutions in a way that yields insights relative to functional differentiation and sustainability. Then. Pak u restaurant will be able to compete there as he has a lot of experience handling his restaurant here in %%M. is greater than the cost of capital. the investment adds value. Pak u should consider the new competitor in the future as there are

onclusion Pak u should find a new market for his restaurant as there are increasing numbers of competitors in the campus. Restoran Minang should adopt a growth strategy that is by finding a new market for its to operate. /inding new customers is not only critical to generate new revenues. it is also part of the back7up plan for maintaining existing revenue. To remain successful. Restoran Minang must have a plan in place for replacing its largest customer if its lose that customer. $ew customer business strategies should focus on securing larger customers in >itra area as well as smaller ones to help maintain the revenue stream. (hen Pak u does its due diligence in research and customi0es its strategies to develop a new market. it helps to ensure that the new market penetration is successful. o we suggest the company knows the market it is targeting more better. the better position it has to create

marketing strategies that reach the new target customers. Planning ahead of time helps the restaurant approach the new market in a proactive manner through the creation of adaptive advertising and marketing based on different responses the restaurant may receive from new customers. "ccessing new markets allows Pak u to broaden its reach and increases its potential to sell products and services to more customers. This increase in sales can also boost the bottom line of his business. )n order to help to ensure a successful transition. Pak u need to develop the strategies to use in order to penetrate the new market. 1usiness development strategies can include marketing promotions. advertising. public relations and any other activities the company uses to promote its products or services and reach its new intended customer around the >itra area.

References
Kristie Lorette (1996). Florida State University, Master of Business Administration from Sout!eastern University. ova