Irriena Sandy

1340000405

MA1-13T3

7-11 in Taiwan

Introduction:

Founded in 1927, Dallas, Texas selling ice blocks; then selling milk, egg,

bread

In 1946, opening time: 7am – 11pm, brand name changed to 7-eleven

In 1962, extended opening time to 24hrs in Austin, Texas.

First international store: Canada 1969

Late 1970s – early 1980s, opened in Australia, Sweden, Taiwan, Hong Kong,

Singapore, Guam, Malaysia and the Philippines (2.500 stores)

Largest retailer and franchisor

Annual sales $62 billion

7-Eleven in Taiwan

First store: 1980

Dense population

Vertical zoning

Unique growth

Guaranteed footfall

7-Eleven Taiwan Service Differentiation:

Phase 1: Imitation

Phase 2: Localization (local food, store location, travel planning)

Phase 3: Innovation (Pre-ordering, Delivery and Pick-up, Telecom, i-Cash, Coffee

Counter, Seating Area, Taxi Services)

Differentiation between 7-Eleven Taiwan and 7-Eleven US stems from a

fundamental difference in what the management envisions a convenience store to be.

7-11 in US 7-11 in Taiwan Offers food + household product 24/7 Location tends to be rural – population

density low Areas where people concentrated e.g.

street corner Products are basic to modern living: fast

food, frozen food, instant noodles, newspapers, magazines, and cigarettes

Social gathering place Myriad of services Local products (tea egg, baozi, fantuan,

biandang..) Location in high density places, mainly

in the residential communities Central hub for productivity

U.S. VS Taiwan Model

Position Store Design

U.S. Taiwan U.S. Taiwan

Created the

concept of

convenience

stores

Opening 24

hours

Customer

groups white-

collars: less

time to go

shopping

Products and

services make

daily lives

easier

Chain of high-end

stores, target

consumer:

housewives

No longer target

to the price-

sensitive

housewives but

young urban

professionals

Reinforces the

concept at the

level of

technology

Standard

format

areas: 2,400

~ 3,000

square

meters floor

plan.

Difficult to

conform to the

U.S. model of

stores of

standard size,

format and

floor plan

Average area

smaller, at 700

square meters,

¼ of the store

areas in U.S.

Market selection

China is the 2nd economy of the world with 13 billion populations and annual growth

of GDP is about 9%. Therefore, many companies want to invest this market.

Moreover, 7-11 plans to enter China market due to market characteristics below:

Political:

China wants to improve its commerce, and develop its domestic market in

every industry; consequently, it encourages foreign capital to invest and

expand the scale of economy.

Economic:

The convenience retail market of China is still in developing. Moreover, China

has large profits from domestic demands.

Social:

7-11 expands very fast, and it has changed the customers’ behavior. Moreover,

the local convenience retail market has compressed by 7-11, which means

profits of local competitors will be reduced.

Legal:

In 1992, the government of China permitted foreign convenience retail to

invest in China.

Competitive advantages

1. Market segmentation and Taiwanese experienced store operation. 7-11 not

only sells products but high quality of services; consequently, consumers

would like to shop at 7-11. Moreover, it has the same background; therefore,

7-11 can blend into China culture quickly.

2. Efficient logistics. Depending on powerful logistics system with advanced

software and hardware. 7-11 can defeat small scales chain convenience stores

easily.

International Strategy (Think Global, Act Local)

A company accepting an international strategic orientation makes no

differentiation between domestic and foreign market opportunities, searching to serve

an essentially same market appearing in many countries around the world and

developing global strategies to compete with other international companies

Porter 5 Forces:

Competitive rivalry

The convenience store industry in Taiwan is very concentrated, with the top 5

companies having more than 95% of market share. Besides, many new

strategies, such as free gifts, e-wallet and e-commerce, are easily to be copied.

Hence, companies have to keep developing new strategies for increasing their

competitiveness.

The power of buyer

Chain convenience stores are industry of domestic demand, their downstream

are consumers. Their role of the market is to offer convenience at shopping

and service. So, they have more advantages on pricing than other retailers,

which means they do not have to make discount for consumers.

The power of supplier

Chain stores have the advantages of last mile; every supplier has to compete

with others, and convenience stores can set a high slotting fee. In addition,

every company begins to develop the products of private brand; therefore, the

power of suppliers is not a threat.

The threat of substitutes

Convenience stores are functional in present. They sell food, stationery,

newspaper and magazines; moreover, they provide shipping, ATM, photocopy

and laundry. There is no other industry can replace the market because

convenience store depends on its powerful channel to serve customers.

Consequently, the thread of substitutes is low.

The threat of entry

The market of convenience store in Taiwan has saturated; therefore, the

growth has become slowly. Moreover, every organization has increased large

capital, and keep improving and integrating logistics system. Also, they have

accumulated much experience on developing products, techniques, profits and

advertising; hence, they have great advantages at economies of scale and

brand value. Consequently, the newcomers are difficult to develop their

market share and quality of service. Hence, the threat of new brands is low.

Competitors Analysis

In the past, convenience stores in Taiwan were all single-handed operation;

however, they were eliminated through competition when chain convenience stores

were coming into the market of Taiwan. In present, there are three main chain

convenience stores in Taiwan, which are 7-11, Family Mart and Hi-life.

Family Mart came from Japan. In 1999, it was the second organization,which

uses POS system to operate its convenience stores. Its brand value is only behind 7-

11; moreover, it focuses on fresh food, fashion products and agency. Also, it

cooperates with other industries to sell digital products for attracting more customers

and increasing the image of brand.

Hi-life was built by local business organization. It built it logistics system and

focused on shipping. Therefore, it has good comments on shipping. Furthermore, Hi-

life sells its exclusive toys and received strong acceptance by the customers. Hi-life

wants to become toy convenience store to differentiate the market with other

convenience stores.

SWOT Analysis

Strengths

24 hours a day, 7 days a week.

7-11 provides various convenient services.

7-11 has advantages at logistics because of intensive distribution.

Well connection with other industry.

Weaknesses

Price of products is higher than supermarket.

Limited products.

Great location needs high costs.

Opportunity

Taiwanese pursuit efficient lifestyle.

Focus on e-commerce

Complex convenience store (combined with coffee shop, book

store and bakery).

Threats

Saturated market.

Shopping malls are booming in recent years.

Consumers would not like to buy products because of recession.

Conclusion:

o 7-11 Taiwan localized product

o Range of service offered are beyond the conventional meaning of convenience

store

o 7-11 strengthened the concept of convenience stores

o “Whatever bothers customers, is our business opportunity”

o The operation format of 7-11 in Taiwan can be expanded to South Korea but

not the UK

o Cultural, geographical and economic differences or similarities should be

taken into account when considering expanding business to other regions.

Name : Frengky

NIM : 1340000310

Source : http://prezi.com/yhzzpjqgj8eo/mktg227-7-eleven-case/

7-Eleven Key Success Factors

-. Localization: local foods, store location, travel planning.

-. Innovation: pre-ordering, delivery and pick up, telecom, I-cash, and coffee

counter, seating areas, taxi services.

U.S VS Taiwan Model

Cultural Differences

Economic Differences

Business Hours Differences

BCG Analysis

According to my opinion, 7-Eleven’s market position is in cash cows. The reason

is, whether 7-Eleven has high market shares, thus it market growth rate is low,

the price of the products are higher than other supermarket.

Conclusion

The operation format of 7-Eleven in Taiwan can be expanded to South Korea but

not the UK. Cultural, geographical and economic differences or similarities

should be taken into account when considering expanding business to other

regions.

Name :Ryan Andrian

Nim : 1340000304

Store

In Taiwan, seven Eleven ranked number 4th that has the most stores in the

country.

Taiwan : 35.980 kilometres square.

So it has a Seven Eleven Store every 7 kilometers square.

USA : 9.826.675 kilometres square.

So it has Seven eleven store every 13.864 Kilometers square

It has big differences.

Competitive Advantage

the services offered by 7-Eleven stores in Taiwan did add on to the competitive

advantage of the store chain because it was perceived as one stop shop where people

can purchase their daily necessities and can also use many of its stated supplementary

services. The basic notion behind adding these services were to ensure that the footfall

in the store increases which the store can capitalize on and use it to increase its sales.

Hence, a consumer who wants to renew his license can use the I-Bon service of 7-Eleven

and can also purchase some necessary good for himself. This increases the sales of the 7-

Eleven stores and works as a competitive advantage to the store since this was first of

its kind experience for the Taiwanese consumer who had a unique trait of obsession

with immediacy.

Conclusion of Global market of Seven Eleven

the operational format of 7-Eleven can be expanded to other countries. With the advent

of IT and cloud servers, a consumer gets access to a range of whole new experience. This

model can be a hit since; consumers now want the service to be quick and a one stop

solution. The concept of localization will also add to the increment in the sales since a

consumer of a particular region will have more liking towards his traditional products.

Localization strategy to stretghening positioning

Localization helped 7-Eleven strengthening the concept of convenience stores in Taiwan. This was mainly because it helped the convenience stores to become like retail nomads. This helped the company in reducing its capital outflow and managerial time spent in monitoring the operation. It offered greater flexibility in the choice of stores and location and facilitate

rapid growth of the store by entering the burgeoning market place. The new franchises

were put up in the high density locations. Investment was made in advertising in the

local media. Though the set up and the model of the 7-Eleven stores in Taiwan were

those of the US, but the PSCS had taken steps to provide localization by adding local

flavors which were more preferred by the Taiwanese consumers. They started selling

hot microwaved packaged food which a consumer could grab at any time of the day.

Hence, localization strengthened the concept of convenience store in in Taiwan.

Comp

Competitor analysis

“Extended menu offerings have successfully increased the importance of convenience stores foodservice offering. The company derives its share from its convenience stores, under the brand 7-Eleven. At the end of 2009, there were 4,750 outlets,” 7-Eleven may be considered to be the pioneer in introducing convenience stores fast food in Taiwan, and has since constantly innovated with the launch of new products (Euromonitor international. 2010). Besides, “Family Mart said the sale of fresh food items currently accounts for only 12 percent of its revenue. In Taiwan, the industry average is 20 percent” (Business weekly. 2010), compared with other convenience.

Advertisement

If you watch any commercials on TV for a while, you will soon be aware that it is easy to find 7-Eleven advertisements. Recently, 7-Eleven’s commercials have increased, do these advertisements really influence the increasing of their profits? The article indicated that “After several failed attempts, 7-Eleven came out with the low price City Café in 2004. However, with the success of commercial advertisements in 2007, 7-Eleven has been selling 30 million cups of coffee a year” (Taiwan insights, 2010). Whatever strategy does 7-Eleven used and rises up its profits? Since November of 2009, the usage of hiring celebrities with different impressions to be with representatives, to have a strong stands in the coffee market.

According to the article “The Report of Reaching ‘The effect of advertisement’”(Table 2), in the data of December, 2009, “the rank of ‘Effective dose of advertisement’ in coffee from chain stores and fast food restaurants, ‘7-11 CITY CAFÉ’ is on the top.” With the airing 157,846 times on screens 7-11 CITY CAFÉ’ commercial have the highest budgets of 9,710,000 NTD. In return, CITY CAFÉ’ has helped 7-11 to earn

back a revenue of 17 times bigger than the actual costs being used for the campaigns. However, Family Mart has only an airing of 65,670 on screens, their advertisement effect is ranked the fourth (Liao, 2010). From the data, we can see 7-Eleven’s commercial on the screen increases their profits.

Conclusion

After the research of 7-Eleven, we can understand the 7-Eleven’s background and there are many kinds of strategies behind them. The 7-Eleven’s parent company Uni-President Enterprise Corporation (UPEC) has a lot of subsidiaries whose business tip-up make each company’s development. For example, the food industry of UPEC supports 7-Eleven’s variety of food products, and increases their outlets than other convenience stores. Especially, for the working class people whose purpose to visit convenience store is for the food, it can say the food industry of UPEC’s support relate to the success of 7-Eleven. Also, the detailed internal business management of 7-Eleven makes worker can understand clearly how they work and behave, and following its regulations which increase the efficiency of each stores. Employing people in the promoting way also give them more faith for their work. If the management does not give the stable work condition for employee, they also cannot give a good response to the upper levels. Moreover, 7-Eleven’s geographical marketing or large number of advertisements which also raising up their publicity and become the one of strategy for the success. If we do not know what is hiding behind 7-11, we will never understand why they are so popular in Taiwan and how they succeed. To the success of one company, the managements should consider a lot of possibilities to make their business more efficient and always observe people’s mind. For instance, “7-Eleven’s training materials are renewed in every six months” (Chen, 2006), from there we can see they always change their materials depending on the passage of the time, it also makes 7-Eleven’s continual improvement. In 1984, 7-Eleven closed up 33 stores because of the crisis of management, and their brand of City Café in 2004 recorded low prize; nevertheless, the history of 7-Eleven is not always successful but they come up with new ideas to solve the issues. What can we learn from 7-Eleven is that even though the result is a failure, you forge ahead and try next without giving up.