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7-Eleven in Taiwan: Adaptation of convenience stores to new
Transcript of 7-Eleven in Taiwan: Adaptation of convenience stores to new
Adaptation of convenience stores to new market environments
How a US-based MNE retailer
maintains its fundamental operational procedures
while simultaneously remodeling itself,
attaining a break through into the
1. Problem Statement
2. Summary of the case
3. Case Analysis
3a. General Environment (PESTLE)
3b. Industry Environment (Porter's Five Forces)
3c. SWOT Analysis
4. Main Issues/Problems
4a. Past issues and its implications
4b. Present issues
6. Transferability of good practices
Internet Technology and Global E-commerce:
Internet penetration rate reached 80% in 2014.
E-commerce sector enjoys an estimated annual growth rate of 10% to 20%
Total population projected growth by 2030, is expected to reach 23.6 million, (Euromonitor 2015).
Population density is the highest in Taipei, 7,871,900 in population size.
Direction of the economy:
Rising levels of domestic demand being offset by Taiwan’s trade deficit.
Domestic consumption and investment contributed 1.50% and 1.19% (yoy) to the GDP growth respectively (British office, 2015)
Inflation rate -0.66 percent in 2015
Projected at 2.46 percent in 2020 (Trading economics 2015).
Political / Legal
Competition and anti-monopoly laws:
The Fair Trade Act (FTA), dictates Taiwan’s competition law provision (Taiwan.gov.tw)
Average household expenditure US$24,931 in 2013.
Food and beverages is the 2nd highest contributor, (Taiwan today 2014).
93% of Taiwanese have the habit of eating out
Employed persons in Taiwan increase to 11,200 thousands in July 2015 (Trading economics, 2015).
Summary of the Case
(Porter's five forces)
First positioned as high-end convenience stores.
Opened mainly in the residential communities
Did not appeal to its price-sensitive target consumers - housewives
Retained U.S. Model
Lacked in local taste
PCSC bought premises instead of renting space
Greater capital outflow, more managerial time spent in monitoring operations
Threat of New Entrants
High entry barriers through:
Domineering presence - occupies half of the market pie
Strong brand loyalty
Saturation of retail food and convenience store market
bargaining power of Suppliers
Able to leverage internal network (of UPEC) to meet needs of stores
Strong brand reputation ensured strong consistent sales for suppliers
Bargaining power of buyers
Low product switching costs for consumers
Buyers will still purchase from whichever store that is more convenient
Threat of Product Substitutes
Similar products sold across the industry
Rapid copy of innovations within the industry
E.g. When 7-Eleven Taiwan announced sale customized flat-screen TVs
Intensity of rivalry
Highest density of convenience stores in the world
However, 7-Eleven is still the industry leader to date
Due to first move advantage, and strong branding
Transferability of good practices
in other Asian countries
of the convenience store market
2. Constant need to introduce new innovations in order to compete > increases the
complexity of its operations
3. Tedious workload > High employer turnover rate >
Rising training costs
Founded in 1972 in Dallas, Texas
World’s largest operator, franchisor and licensor
Pioneered concept of convenience stores
8,604 stores to date
President Enterprises Corp (UPEC) established President Chain Store Corp (PCSC) in 1978
First 7-Eleven store launched in Taipei, February 1980 by PCSC
Growth in Taiwan made up of 3 stages: Imitation, Localization and Innovation
Mid-1995, PCSC opened its 1000th store
Established brand image
Excellent in-house infrastructure
Localization of food to suit Taiwanese taste buds
Technology and service innovations
Foresight in future developments
Conformity with U.S. model
Saturation of convenience store market
High employee turnover rate
Implementation of drive through 7-eleven
Introduce more innovations in i-Bon service kiosk
Foreign currency exchange services other than Chinese yuan (RMB)
7-Eleven App on iTunes store
Lack of localization
Mergers and acquisition
Intense competition from both international and domestic markets
Rising manpower costs
Rising R&D costs
How can 7-Eleven compete in the future and sustain their competitive advantage?
Technology and R&D:
Continuous service innovation
Constantly keep up with current trends
In terms of promotions, marketing and product offerings
(i ) Employee level:
Constant upgrade of employee training
Provision of good welfare
(ii) Management level:
Strong corporate governance
1. Sale of fresh and hot food
2. i-Bon E-commerce kiosk
3. Pre-ordering of unconventional items
5. Seating areas
6. Strong in-house infrastructure of HQ (UPEC)
7. Strong branding with 7-Eleven’s Taiwan Mascot, Open-Chan
Every Asian country has its own unique environment, culture, varying lifestyles and consumer tastes.
MNEs have to take careful considerations of these factors in order to employ appropriate (standardization or localization) strategies specific to the market
Therefore, business models and strategies must be reevaluated in order to achieve a breakthrough in new market environments within Asia.
Michelle Janthi (43303320)
Deborah Koh (43659544)
Differences between Taiwan and u.s.
Implications of standardization vs Localization
Consumer Tastes and Preferences
35,980 sq km
9,826,675 sq km
3rd largest country in the world
Convenience converged at one destination, aligned with their hectic lifestyle
Daily necessities which they have ran out of
Fast food, frozen/package food etc.
Mostly housewives that does purchasing of daily necessities for the entire household