Strategic Mgt PDF

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Summary

The report utilizes various tools in strategic management to propose the best strategic plan for the company...

Description

TABLE OF CONTENTS

1.0 VISION & MISSION.............................................................................................................2 1.1 Vision...................................................................................................................................2 1.2 Mission................................................................................................................................2 2.0 EXTERNAL ANALYSIS.......................................................................................................3 2.1 EFE Matrix..........................................................................................................................3 3.0 INTERNAL ANALYSIS........................................................................................................6 3.1 IFE Matrix...........................................................................................................................6 4.0 FORMULATING...................................................................................................................9 4.1 SWOT Analysis...................................................................................................................9 4.2 GE Matrix..........................................................................................................................14 4.2.1 Strategies Suggestions.................................................................................................16 5.0 IMPLEMENTATION..........................................................................................................17 5.1 Corporate Strategy.............................................................................................................17 5.1.1 Joint venture with more online retailing channels to provide customers access to payment services....................................................................................................................17 5.2 Business Strategy...............................................................................................................18 5.2.1 Innovate and develop more unique ready-to-eat products...........................................18 6.0 EVALUATION AND CONTROL.......................................................................................20 6.1 Monitoring of Strategy Implementation............................................................................20 6.2 Performance Measurement................................................................................................20

1.0 VISION & MISSION 1.1

Vision

The vision of 7-Eleven Malaysia is “To be the best retailer of convenience”. The vision they have provided is too broad, since the usage of the word ‘best’ can be interpreted into various meanings therefore making it ambiguous. While the company state what they want to become in the future, this however was not clearly mentioned and described considering that the vision statement failed to clearly indicate the kind of service that the company is providing as well to whom it will be provided. These two elements represent important ingredients for a good vision statement that is clear and specific. A proposed vision would be, “To be the leading convenience retailer in Malaysia”, whereby this vision helps to states the market position that the company aim to achieve while addressing the market segment or customers that they wish to serve, which in this case is the Malaysians. This vision statement highlights what 7-Eleven Malaysia aspire to be in the future; which is to be the leading convenience retailer, and how they will do it; which is by serving the Malaysians. 1.2

Mission

The company’s mission statement which is “To consistently serve the changing needs of customers for their convenience” is a broad statement that focuses on adapting to change and to satisfy the needs of the consumers. In ensuring that this mission statement can be realized, the company has developed a set of values that complement this mission statement. By upholding these values, the company believe that they will be able to achieve their mission. These values are as follow: i.

Understand: “We seek to understand the needs of stakeholders & the company to make the best (balanced) decisions”;

ii.

Simplify: “We work towards making things convenient for people to increase the effectiveness of our solutions”;

iii.

Solve: “We find ways to resolve issues that prevents us from delivering value to those we serve”; and

iv.

Connect: “We communicate to manage people’s expectations in the most effective manner”.

2

The value of ‘Understand’ signify that the company focuses on their employees and survivability aspect of the company. Seeing as they aim to meet the needs of stakeholders of the company to achieve the best results through wise decision-making. ‘Simplify’ addresses the customers, selfconcept, and market elements. They are thriving to provide the best convenience by building stores and providing a range of retail services. However, in addition to these four values, the company also should add values that cover their technology, philosophy, and public image as it is a form of practice they have been doing for years. For instance, the company can introduce the value of “Adapt: We will continue to integrate innovative technology to provide convenience for the public”. 2.0 EXTERNAL ANALYSIS 2.1

EFE Matrix Key External Factors

Opportunities: Increase of e-Wallet payment methods. Consumer demand for unique ready - to -eat food products Rural areas demand for convenience stores. Consumer demand for loyalty and store app Intermediaries demand for integration of technology to improve supply chain management. Abundance of rental space properties available. Consumers seeking for more payment services, such as paying their bills, gift cards, and mobile reloads. Consumer demand for foreign imported products. New Malaysian government supporting technology integration from stores. Lower rental costs due to SST. Threats: Households with income levels below RM2, 000 spent 95% of their income on everyday essentials and those earning below RM5, 000 will have to reduce on household food consumption. RM100 per month increase in minimum wage. More convenient stores opening nearby 7 - Eleven stores (KK Mart, Speedmart, Family Mart). Government implemented a soda tax. Family Mart obtaining more daily revenue due to ready -to -

Weight

Rating

Weighted Score

0.06 0.05 0.04 0.06

4 4 4 4

0.24 0.20 0.16 0.24

0.06

4

0.24

0.05

4

0.20

0.06

4

0.24

0.05

3

0.15

0.05

4

0.20

0.05

4

0.20

0.06

2

0.12

0.06

2

0.12

0.06

2

0.12

0.05 0.05

2 2

0.10 0.10 3

eat food products offered to consumers. Other convenient store retailers have loyalty programs. Competitors are taking viable retail space to expand. Price increase from manufacturers, suppliers, and importers of products. Over 3,000 24 hours convenience stores from Petronas, Shell, Petron, Caltex, and more. Numerous robbery cases, because stores are opened for 24 hours. TOTAL

0.05 0.05

2 2

0.10 0.10

0.04

2

0.08

0.05

2

0.10

0.06

2

0.12 3.01

External Factor Evaluation (EFE) Matrix is a strategic management tool that is often used in assessing current business conditions. Additionally, it is also very helpful for an organization’s ability to analyze their opportunities and threat, so that a corrective action can be taken to gain strong competitive advantage. Ten opportunities for 7-Eleven Malaysia have been identified for the purpose of the EFE Matrix. The first one being the increase in e-Wallet payment methods, since all business industry has started to adapt into using the technology framework in the business to better suit the operations and ease customer interaction with the outlet. Thus, a weighted score of 0.6 and a rating of 4 was given. Secondly, the demand of the consumers on ready-to-eat product would generate a great opportunity for the business to start offering readyto-eat products to suit customers and demand and preferences. Thus, being a major opportunity with a weighted score of 0.05 and a rating of 4. Since mainly 7-Eleven stores are located in major parts of cities, the demand of the outlet in rural areas gives the opportunity for the company to spread more outlet location to other areas thus having a larger market share in the convenience store industry, thus given a weighted score of 0.04 and a rating of 4 to show the significant impact of this opportunity for the company. The company is lacking loyalty cards and programs for frequent customer users of the outlets, thus developing such platform of loyalty cards and programs would definitely have a positive impact on the customer relationship thus boosting revenues and profit, thus given a weighted score of 0.06 and a rating of 4. In addition, having a variety of payment services such as bill payment, top ups and gift cards would definitely have a positive impact on the business, thus weighted score of 0.05 and a rating of 4 was given. The demand in foreign imported products may give an opportunity for the company to provide several products and services to customers aiming for different alternatives of products, thus was given a weighted score of 0.05 and a rating of 3. The governmental support in 4

implementing technology integration of business operation would have a positive impact for the business to improve its efficiency in supply chain and customer relationship, thus having a weighted score of 0.05 and a rating 4. Lower rental cost would be helpful in making the prices of the products offered in the store in a lower price compared to other retail convenience stores. Thus, having a weighted score of 0.05 and a rating of 4. As for threats, we managed to figure out ten threats that may give a negative impact for 7-Eleven. Due to the restriction of income for households, spending in the outlet may be reduced due to the limitation of purchasing power thus giving a negative impact for the business resulting to a lower spending in the stores, thus we decided to give it a weighted score of 0.06 and a rating of 2 to show how significant this factor is as a threat for the business. The increase in minimum wage of employees would affect the business into a higher operating cost and employee wages, thus the company would have to spend more for employee’s wage in complying with governmental rules and regulations. Thus, given a weighted score of 0.06 and a rating of 2. There is an increase in convenient store opening around Malaysia apart from 7-Eleven thus may lead to high competition in the respective areas since customers have the choice in choosing which convenience store to purchase products. Thus, having a weighted score of 0.05 and a rating of 2. Family Mart, which is a major competitor for the company is also offering ready-to-eat food for customers with more varieties for customer to choose from, thus making it a threat for the company since customers are able to enjoy ready-to-eat food in their stores. Thus, a weighted score of 0.05 and a rating of 2 was given. The business is lacking in customer relationship programs, since most business have developed loyalty cards and programs for customers to enjoy the merits and benefits of shopping in the outlet. Thus, this is a major negative impact for the business thus given a weighted score of 0.05 and a rating of 2. A price increase in products would definitely be a threat for the business since most of convenience store is offering products that are affordable for customer convenience, thus the increase in the price would force the business to implement a higher price for the products it offers. Thus, having a weighted score of 0.04 and a rating of 2. The existence of 24 hours convenience store is a direct competition for the business allowing customers to choose which store they find convenience for them, thus given a weighted score of 0.05 and a rating of 2. After evaluation of the total scores given for the weights and the ratings for each factor, the EFE matrix calculation has resulted to a weighted score valued at 3.01. 5

3.0 INTERNAL ANALYSIS 3.1

IFE Matrix Key Internal Factors

Strengths: Foreign investors are interested in investing in 7- Eleven stocks. Possess the most amounts of convenience stores amounting to 2,287 stores. Customers are able to pay their bills, top-up mobile prepaid, and purchase gift cards. Most well-known convenience store brand in Malaysia. Franchise program for local entrepreneurs to open their own 7-Eleven. Revenue grew from RM2.19 billion to RM2.22 billion by RM29.96 million or 1.4% compared to the preceding financial year. Store count increased by 86 stores or 3.9 % from 2,201 stores to 2,287 stores. Operating income increased by RM21.6 million or 18.7% to RM137.2 million as compared to the preceding financial year. Won numerous awards for corporate social responsibility (CSR) contributions. Profit from operations increased by 5.06% or RM4.04 million Weaknesses: Opening only 100 stores and not the initial 200. Increase overhead costs for stores. No mobile app to connect stakeholders with the store. No loyalty program to data mine consumer activities. Low quality ready -to -eat products. Increase in product prices. Losing market share due to competitive nature of industry. Other operating income decreased by RM132.6 million or 96.7% as compared to the previous financial year. Finance cost increased by RM6.76 million from credit and term loan facilities. Administrative and other operating expenses increased by RM5.0 million or 5.4%. TOTAL

Weight

Rating

Weighted Score

0.06

4

0.24

0.05

4

0.20

0.04

4

0.16

0.05

4

0.20

0.02

3

0.06

0.07

4

0.28

0.06

4

0.24

0.05

4

0.20

0.03

4

0.12

0.07

4

0.28

0.06 0.06 0.05 0.05 0.03 0.05 0.06

2 2 2 2 2 2 1

0.12 0.12 0.10 0.10 0.06 0.10 0.06

0.06

2

0.12

0.04

1

0.04

0.04

2

0.08 2.88

6

One of the strengths of 7-Eleven that should be highlighted is the company’s revenue that has shown a significant increase by RM29.9 million or 1.4% to RM2.22 billion compared to revenue in the previous financial year of RM2.19 billion to the expansion of store outlets across Malaysia, thus was given a weight of 0.07 and a rating of 4 to show how significant this factor is. Nevertheless, the company also possesses total amount of store outlet to 2,287 stores in Malaysia that shows a big impact and a major strength for the company, thus deciding to give a weighted score of 0.5 and a rating of 4. Since the company is well known for its outlet and brand, foreign investors are interested to invest in the company’s stocks, thus boosting its awareness and brand recognition in the convenience store industry with having a weight of 0.06 and rating of 4. With the update on technological advancement allowing the company to implement payments of bills, mobile top ups and gift card purchasing, this factor is given a weight of 0.04 and a rating of 4 to signify the level of strength it reflects for the company. 7-Eleven is a well-known convenience store brand in Malaysia competing with several other brand stores such as Family Mart, KK Speed mart and 99 Speedmart. Therefore, the weight of 0.05 and a rating of 4 due to the fact that it is considered one of the major strengths. The company also supports local entrepreneurs to open their own stores, by providing franchising programs for entrepreneurs to enroll in, thus having a weighted score of 0.2 and a rating of 3. The company’s store outlet has showed a significant increase in number of stores increasing by 3.9% (86 Stores) which amount to a total of 2,287 stores. Thus, given a weight of 0.06 and a rating of 4 to show the significant strength of the company. The company resulted in a financial income increase by 18.7% as compared to the preceding financial year with an amount of RM137.2 Million, thus with a weight of 0.05 and a rating of 4. Since the company has been involved in winning numerous social responsibility contribution shows a significant strength for the company with a weight of 0.03 and a rating of 4. Profit from operations increased by 5.06% or RM4.04 million given a weighted score of 0.07 and a rating of 4. Moving on to the 7-Eleven weaknesses, every entity must have several weaknesses in running a business. Weakness of an entity are basically due to the internal problems or limited access to certain resources such as financial resources and human resources. First and foremost, the company is now facing an increase in the overhead cost for stores making it a significant weakness of the company, given a weighted score of 0.06 and a rating of 2 to show its impact on the company operation activities. Secondly the planning of the company was to generate in 7

opening a total of 200 stores, however with several restriction and poor resources management, the company was able to open only 100 stores. Showing a great weakness of the company with a weight of 0.06 and a rating of 2. The company lacks in customer and store relationship, without a mobile app for the interconnection between the customers and the business, shows a significant weakness for the company resulting to weighted score of 0.05 and a rating of 2. Unlike other retail outlets they have loyalty cards and programs to enhance the customer relationship with the company, whereas 7-Eleven does not have such loyalty cards or programs to better understand the customers wants and needs making it a significant weakness for the company with a given weighted score of 0.05 and a rating of 2. Taking into consideration of the company’s biggest competitor Family Mart, the company lacks in offering good quality ready-to-eat food, thus losing an advantage to the competitor as they offer good quality ready-to-eat food. Thus, having a weighted score of 0.03 and a rating of 2. The increase in prices of the products due to the implementation of taxes such as GST or most frequent SST shows a significant impact on the business thus given a weighted score of 0.05 and rating of 2. The increase in competitors for the retail stores making it losing its market share due to the competitive nature of the industry, thus having a weighted score of 0.06 and rating of 1. Other operating income of the company has decreased by RM132.6 million or 96.7% as compared to the previous financial year. Nevertheless, financing cost has increased by RM6.76 million from credit and term loan facilities shows a great impact on the weakness of the company with a given weighted score of 0.04 and a rating 1. Administrative and other operating expense has also increased by 5.4% (RM5 million) thus given a weighted score of 0.04 and rating of 2. From the computation of the weighted score for each of the internal factors identified above, the total weighted score for the IFE Matrix of 7-Eleven Malaysia is 2.88.

4.0 FORMULATING 4.1

SWOT Analysis

SWOT Matrix Strengths 1. Foreign i...