7 Eleven Case Study

1. Background

Purpose:

This report explains and analyzes the business model of 7-Eleven Inc. Its the worlds leading franchisor and operator of convenience stores. With annual sales at $62 billion, 7-Eleven Inc has revolutionised the market by catering the needs of the customers that were previously unfulfilled. For example in the US, by keeping the store open for a full day, 7-Eleven Inc caters to a workforce of 7 million people in the US who work late shifts. Using PESTEL and the five forces this reports aims to identify the strengths, weaknesses, opportunities and threats faced by 7-Eleven. Based on our analysis, this report aims to provide a comprehensive strategy for the company moving forward which may not only lead to improved sales but also aims to help the company gain a larger market share.

2. Methodology:

The methods of analysis used to study this company are SWOT analysis, PESTEL analysis and the five forces. Later on, the strategy of this company is going to be studied followed by recommendations.

3.Background Information

7-Eleven was first built in Southland Ice Association in Dallas in 1927. At first they provided ice bar for refrigerator for home. The stores were initially called Totem’s store is because the client toted abroad the ice bar. In 1961, the store’s name was altered to 7-Eleven because they were open from 7am to 11 pm. Nowadays, people are working early or late shifts, thus there is a need for convenient stores to have flexible hours. As a result, this popular store is opened 24/7. In 1980, the first store of 7-Eleven was opened in Taiwan.  7-Eleven has more than 36,400 franchises outside the United State, which exceeds four times the number of stores in the United States. Taiwan has the second highest population density in the world. Because of inflation, the price of food in this country has increased.  In 2010, the worth rate of trade price in this country was 116.85 Billion dollars and shaped 14% of this country’s GDP. As a result, the majority of retailers are in Taiwan. Furthermore, because of all points stated above, 7-Eleven continues to grow in Taiwan.

2. Internal Analysis

               2.1 Changing past weaknesses to strengths 7-Eleven’s entry to Taiwan was franchised by President Chain Store Corp. (PCSC) and they were focused on imitating the American model of 7-Eleven instead of coming up with their own ways of running it. They did this because they were keen on establishing a good working relationship with the original head office. This initial phase had some problems since Taiwan is different than the United States geographically, socially and culturally. Yet, the management was able to fix these mistakes from that phase and turn them into strength points. Imitating meant there was no clear strategic vision to tackle the Taiwanese market other than applying the American model. This was difficult to do as America is a large country so stores could occupy a large space while Taiwan is much smaller and has a much higher population density. This lack of freestanding sites made it hard to conform to the standard floor plan, format and size of the American stores. 7-Eleven’s average store space in Taiwan was only 700 m2, a quarter of the U.S. stores. However as 7-Eleven began to grow in Taiwan and started to cater for the local tastes, they started selling products that suit the local market’s needs such as offering local flavors in their stores. Examples of new local products are tea egg, a locally delicious appetite, baozi breakfast buns, luwei which is a vegetable and a rice called fantuan. Also there is a meal called biandang, which can be microwaved, in the store. All these local foods proved to be a success and popular with the customers. These products shifted the importance from packaged food to fresh food that can be consumed instantly instead of being held up in stock. In this way, the management improved the convenience factor and made the process easier.