Assignment 1 : Question 1

An organization's core competency focused on satisfying customer needs or preferences in order

to achieve above average returns. This is done through Business level strategies. Business level
strategies define are actions taken to provide value to customers and gain a competitive
advantage by eploiting core competencies in specific! individual product or service markets and
concerned "ith a firm's position in an industry! relative to competitors.
#etailer 1 : The business level strategy $even%&leven
$even%eleven '(%&leven) * +alaysia $dn Bhd is the o"ner and operator of all (%&leven* outlets
in +alaysia. (%eleven are the pioneer and largest ,-%hour convenience store operator in
+alaysia. .ncorporated on /une -! 101-! (%&leven* +alaysia has made its mark on the retail
scene and have been a prominent icon for over ,2 years. 3ollo"ing belo" there are business
level strategies use in (%eleven +alaysia. '4ompany 3actsheet)
$trategy formulation
(%&leven has put in place a business strategy that is fully cross functional. The strategy
incorporates the strengths and potential of all sectors at the functional level and is aligned "ith
the mission statement of the business. The operations and supply chain activities of (%&leven are
aligned in the 5.nternally $upportive6 stage "ith the overall business strategy of providing
convenience to its customers. This gro"th has been very carefully planned eploiting the core
strengths that (%&leven +alaysia has developed in the areas of .nformation systems and
7istribution systems and a variety of storage services.
$trategy implementation
To begin "ith! (%&leven made particular a very efficient franchise system "here in only one out
of a hundred applicants received the license and had to adhere to very strict re8uirements such as
operation and management of the store! customer service and appearance in order to keep "ith
the overall image and reputation of (%&leven convenience stores. Additionally! according to (%
&leven 5filling in the entire map of +alaysia is a priority! instead look for demand "here (%
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&leven stores already eist based on the fundamental area dominance strategy of concentrating
stores in a specific area. This strategy "orks "onders for the (%&leven stores as the follo"ing
advantages follo" such practice9 Boosts distribution efficiency9 .mproves brand a"areness9
.ncreases system efficiency9 &nhances the efficiency of franchise support services9 .mproves
advertising effectiveness9 :revents competitor6s entrance into the dominant area. 3or eample
(%&leven ;roup plans to upgrade its logistics function by setting up a ne" logistics centre of its
-%acre piece of land in Bukit /elutong! $elangor 7arul &hsan. The ne" logistics centre "ill be a
dedicated purpose%built facility that is designed to maimize efficient receiving! processing and
distribution of goods. 'Announcement! ,220)
$trategy evaluation and control
The 4ompany had chosen a direction for (%&leven "ill go up in the future already for control
local market. .n addition! every franchise that! have a good system and management "ill be
successful. $election and development of products and services to satisfy each customer group
and solve management problems before actual implementation at every branch. The 4ompany
has used a product management principles to learn about product assortment and increase
efficiency in area utilization such as decreasing the space bet"een shelves in order to gain more
shelf space and epanding shelf space. The future plans! strategies and prospects in the follo"ing
there are:
<e" :remium 3resh 3ood And Beverage
The (%&leven ;roup is epanding its food service offerings at its (%&leven convenience stores by
offering ne" premium fresh food and beverage items to customers. The (%&leven ;roup plans to
"ork closely "ith fresh food manufacturers that are located close to its (%&leven convenience
stores to supply freshly prepared food items are sold in stores has a certified =A>A> and
undergo stringent 8uality control to ensure taste and freshness. follo"ing eample roast coffee is
a combination of some of the finest 122? Arabica coffees from 4olombia and Brazil.
@A, Bords
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#etailer , : The business level strategy of +c7onald6s
Background
.n 7ecember 1012! ;olden Arches #estaurants $dn. Bhd. Bon the license to operate
+c7onald6s in +alaysia. The first +c7onald6s restaurant subse8uently opened its doors at /alan
Bukit Bintang on ,0 April 101,. To date! +c7onald's +alaysia employs more than 1,!222 local
people. The company "as named as AC<%=e"itt Best &mployers in +alaysia in ,220 and ,211!
as "ell as AC<%=e"itt Best &mployers in Asia :acific in ,211. '+c7onald6s)
$trategy formulation
+c7onald6s uses demographic segmentation strategy "ith age as the parameter. The main target
segment are children into consideration! children are more attracted to"ards toys and delicious
meals including today6s youth prefer such places for their entertainment and urban families select
+c7onald6s on various occasions like birthday party! treat for their children. '+c7onald6s)
3ollo"ing eample! mission +c7onald6s are to be customer6s favourite place and "ay to eat
"ith inspired people "ho delight each customer "ith unmatched 8uality! service! cleanliness and
value every time. The eternal environment can be divided into several sectors. There are t"o
important parts9 competitors! social concept 'healthy problem) and uncertainty situation! "hich
can greatly influence +c7onald6s strategies. The follo"ing core values guide actions as "e
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strive to achieve the mission. There are customers are the reason for our eistence. +c7onald6s
demonstrate our appreciation by providing "ith high 8uality food and superior service! in a
clean! "elcome environment! at great value for each customer every time. +c7onalds6
committed to people and provide opportunity! recognize talent! and develop leaders and believes
that a diverse team of "ell trained individuals "orking together in an environment that fosters
respect and drives a high level of engagement essential to continued success.
$trategy implementation
+c7onald6s using fe" gro"th strategies of the product like as +arket ;ro"th +atri defined by
Ansoff. +arket penetration occurs "hen a company enters a market "ith the current product.
The is the best "ay to achieve gains competitor6s customers.
.n business +c7onald6s al"ays "ithin the fast%food industry! but fre8uently markets ne"
burgers. +c7onald6s are al"ays enhancing their eisting product along "ith it9 they also try to
introduce ne" and ne" product they can easily survive in the market. Another "ay includes
attracting non user of the product or convincing current clients to use more of a product or
service. +arket penetration occurs "hen the product and market already eists in the market.
+c7onalds is one most popular brand in fast food in the entire "orld. &very manager user these
four groups to give more focus to the market segment decision e.g. eisting customers!
competitor customer! non buying in the current segment! ne" segments. +c7onalds is currently
follo"ing above mentioned strategy! to focus on market segments. 3or serving synonymously to
the eisting customers +c7onalds coming up "ith different menus as per change in taste and
preference of their customer e.g. =appy price menu! beverages including float ice%cream.
$upply 4hain
The company6s recognition as having one of the best supply chains in the "orld speaks for itself
in terms of the strengths of the company in the area. The company has its unrelenting focus on
speed! "ith /ust%in%Time 7elivery '$mall Business) and the economies of scale that it reaps on
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account of its global presence eerting considerable influence on suppliers! serving as its
strength.
$trategy &valuation
Bith the economic development! people6s living standards have increased dramatically these
years. :eople are becoming more concerned about their health issues. .t cannot be denied that
+c7onald6s has attempted to make it more convenience for the people. =o"ever! people also
believe that such kinds of fast food are not good for their health. The "orld health organization5s
report presented that those foods not only can cause the obesity of children! but also is part of the
reason of causing cancer. =ealth issues became the biggest stumbling block to the development
of +c7onald6s. 4ustomers "ere s"itching to healthier offering! such as $ub"ay6s sand"iches!
or D346s mashed potato instead of fried potato. +c7onald6s has responded to this healthy trend.
.n order to compete! +c7onald6s has added salads and other lighter options in their menu. .f a
mother comes in! she is not only buying the happy meal for her children! she "ill also be likely
to buy herself a meal too. The lighter options also encourage eisting customers to come back
more often! because there is a greater variety of choices.
3ollo"ing competitor analysis +c7onald6s has been a leading fast%food outlet. But the
understudy has another competitor eating a"ay into its market share. .n addition to its traditional
rival like being D34. 7ominos! :izza =ut. The firm encounters ne" challenges. +cEalue >unch
and +cEAlue 7inner compete using a back%to%basic approach of 8uickly serving up burgers for
time%pressed consumers. Cn the higher end! the D34 has become a potent competitor in the
8uick service field! taking a"ay customers from +c7onald6s. :erhaps in a ne" environment!
fast! convenient service is no longer enough to distinguish firm! at this time! a ne" critical
success factor may be emerging9 the need to create a rich! satisfying eperience for consumers.
This brings +c7onald6s more eperience based competition "hich +c7onald6s can use for
competitive advantages against Dids6 Fone and provided B.%3i enabled the outlet to cater to the
student community.
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#etailer A : The business level strategies for Tesco $tore +alaysia $dn Bhd.
Tesco $tores '+alaysia) $dn. Bhd. Bas started on ,0 <ovember ,221! as a strategic alliance
bet"een Tesco :>4 GD and local conglomerate! $ime 7arby Berhad of "hich the latter holds
A2? of the total shares. Tesco opened its first store in +alaysia in 3ebruary ,22, "ith the
opening of its first hypermarket in :uchong! $elangor.
$trategy 3ormulation
.n ,22-! Tesco+alaysia launched its o"n house brand! Tesco 4hoice. .n 7ecember ,22@! Tesco
also ac8uired +akro 4ash H 4arry in +alaysia! a local "holesaler "hich "as rebranded to
Tesco &tra and provides products for small local retailers. .n ,22(! Tesco launched 54lub 4ard6
for a loyal and "ay to say thank you to customers by giving back their money to them. 4lub card
has received an over"helming response from customers "ith nearly , million household
members signed up to date. As of /anuary ,220! Tesco has re"arded nearly #+12 million "orth
of 4lub card 4ash Eouchers to the customers. >ater in the year ,221! Tesco introduces ;reen
4lub card and ;reen bags making Tesco +alaysia to be the first Tesco .nternational business to
introduce the ;reen 4lub card scheme. As part of its global commitment! Tesco +alaysia is a
market leading on tackling climate change in techni8ues of energy saving! launching ;reen 4lub
card :oints to incentivise customers shopping "ith their o"n bags! introduce degradable carrier
bags! promote positive behaviour among staff though &nergy >eague competition intra stores
and a recycling centre to facilitate customers to do their part for the environment. Apart from
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that! Tesco has launched ne" promotional campaign to the consumers! I2 basic needs guaranteed
not beaten on price. '3aisal! ,211)
$trategy .mplementation
Tesco currently the focus of a lot of business development and change! provides insight into the
small medium business. The stated strategy from elements of fleibility! local operations
including customers! cultures! supply chains and regulations! focus on a fe" loose items! multi%
format offerings in order to meet the needs of the local market! capability in people! processes
and systems! and brand%building to create lasting customer relationships. The name! 3resh and
&asy! "as intended to take advantage of the local culture and values. Their product offerings
"ithin the store! "ith a strong emphasis on fresh fruits and vegetables! natural and organic foods!
"ere intended to not only appeal to the tastes of the local culture but also to fill a gap in the
current supermarket offerings "ithin the region.
Tesco has a strong o"n brand value "hich is becoming kno"n throughout +alaysia due to the
eisting epansion program. $econd strength is competitive :ricing $trategy for eample the
targeted price cuts enabled Tesco to attract more shoppers from competitors and capture the
volume that supported the lo"er prices. Tesco has etended its lo" price positioning in core
groceries across non%foods lines to undercut competition "hich actually Tesco selling "ith lo"
price but provide high volume. Third are customer loyaltyJrelationship e.g. Tesco gained
customer loyalty or relationship by launching a 4lub 4ard scheme. 4ustomers like the 4lub card
program mainly due to the personalized treatment they receive and the relevance of re"ards.
Tesco ac8uires +akro and convert it to Tesco &tra. Bhat Tesco does is they operate it similar to
+akro! but more fleible. 3or eample! +akro do not allo" customers to buy in small 8uantity!
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but Tesco &tra allo" but charge higher than those buys in bulk. By doing so! Tesco could earn
profit from those $mall +edium &nterprise as "ell! besides individual customers or family type
customers. >ast one is the strong hypermarket format! for eample develop a ne" store by
adding space to eisting locations has contributed to the gro"th of a Tesco supermarket. Besides
that! Tesco runs t"o types of hypermarket format "hich Tesco =ypermarket and Tesco &tra
=ypermarket
$trategy evaluation
Tesco aim is to buy and sell products responsibly! so that customers kno" that everything they
buy is produced under decent conditions! and everyone involved is treated fairly. They believe
firmly in the benefits of trade. 3or customers! they use trading to put products "ithin the reach of
ordinary people! and ensure economic gro"th. 3or suppliers! they have a "ide influence on the
"ay they treat their "orkforce. They "ant the right values in supply chain! decent prices and
conditions for suppliers. At the same time! they also need to provide good value products to
customers.
Tesco also uses various methods like! +arketing 4ommunication Tools "hich includes print
pamphlets! retail advertising and short send message '$+$) via phone. 3ree parking are some of
the lures used by Tesco seems to "ork in their favour. Tesco is very good at using design across
their o"n label! especially strategically. Tesco is often used as one of the best eamples of o"n
brand label in the retail industry. The maKority of consumers buys the basic Tesco brand as it is
cheap and good value for money. Tesco also use of =A>A> logo is consistent in each of the
product design.
Today! an &very 7ay >o" :ricing '&7>:) strategy of Tesco is more popular "ith shoppers than
one driven purely by promotions. But a combination of the t"o is the best means of keeping
shoppers happy. :ricing "as a key strategy and selling point for Tesco. >o" prices "ere adopted
to maimize sales. Tesco's value%added products at lo" prices attracted many customers. After
the launch of 'unbeatable value' campaign! Tesco "ent in for massive price reductions. The
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company adopted the strategy of &7>:! "hile continuing its other promotional activities. The
&7>: program aimed to regularize lo" prices for Tesco customers.
0A1 Bords
Assignment 19 Question ,
:orter's 3ive 3orces +odel in the Automobile .ndustry
This analysis focuses on the automotive industry! specifically! large%scale manufacturers of
automobiles. The automotive industry is inherently interesting: it is massive! it is competitive!
and it is epected to undergo maKor restructuring in the near future due to globalization and
decreasing oil reserves. :orter's 3ive 3orces! is a "ay of eamining the attractiveness of an
industry. .t does so by looking at five forces "hich act in that industry. These forces are
determinants of that industry's profitability. There are the threat of ne" entrants! the bargaining
po"er of buyersJcustomers! the threat of substitute products! the amount of bargaining po"er
suppliers and the intensity of the competitive rivalry.
1. The threat of ne" entrants
.n the auto manufacturing industry! this is generally a very lo" threat. 3actors to eamine for this
threat include all barriers to entry such as upfront capital re8uirements e.g. .t costs a lot to set up
a car manufacturing facility! brand e8uity e.g. A ne" firm may have none! legislation and
government policy e.g. $afety and emissions! the ability to distribute the product! :erodua has
been out of the since the early 02s largely due to the inability to re%establish a dealer net"ork.
These reasons are all tied to the concept of barriers to entry9 namely! the obstacles and hindrances
that make it difficult to enter the market and restrict competition. +ultiple barriers to entry eist!
"hich makes it difficult for any ne" automobile manufacturer to come into the industry and have
success. Cne of the greatest barriers to entry in the automobile industry is the etremely high
amount of capital that is re8uired to purchase physical manufacturing plants! ra" materials! as
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"ell as to hire and train employees. .t takes a great amount of capital! not only for the
manufacturing process! but also to keep up "ith the latest innovations in order to compete "ith
the industry leaders. #esearch and development is an integral part of automobile manufacturing.
<e" technologies are constantly being discovered that improve the 8uality of automobiles on the
market as "ell as reduce costs throughout the manufacturing process. ;iven the nature of the
industry! manufacturers must be able to achieve economies of scale. Therefore! manufacturing
companies must also have the ability to mass%produce so that can make cars affordable to
customers. This can be a significant barrier for a prospective automobile manufacturer and is
often a maKor deterrent. Another barrier to entry is the access of distribution channels. .t can
sometimes be difficult for a ne" company in the industry to find an ade8uate means of
distribution because space "ithin a dealership lot is limited. .t is important to note that! "hile the
average individual does not have the means to come along and start an automobile
manufacturing company! foreign competitors such as Toyota have been able to enter the local
market to compete "ith such companies as :roton $dn Bhd and :rodua $dn. Bhd. +any foreign
companies are already "ell established in their o"n countries and have achieved a certain level
of success and customer loyalty. +any foreign automakers have the capital! managerial skills!
and re8uired technologies that are necessary to be a strong competitor. ':atterson! ,211)
,. The threat of substitute products
.f buyers can look at the competition or other comparable products! and s"itch easily 'they have
lo" s"itching costs) there may be a high threat of this force. Bith ne" cars! the s"itching cost is
high because can't sell a brand ne" car for the same price you paid for it. A :orter6s 3ive 3orces
+odel analysis of the car industry covers the ne" market! not used or second%hand. Base my on
my opinion need to kno" "hether the market you are analysing has many good alternatives to
ne" cars. A vibrant used car market perhapsL Gsed cars threaten the ne" market. The product
differentiation is important too. .n the car industry! typically there are many cars that are similar
look at any mid%range Toyota and you can easily find a very similar <issan! =onda! or :eugeot.
.n some cities such as Duala >umpur! /ohor or :enang ! a car is not as necessary eample. .n
cities such as those! the sub"ay! bus! riding a bike or "alking is the most effective means of
transportation. This reduces the cost of paying for parking! not paying high gas prices and
dealing "ith traffic "ithin a larger city atmosphere! resulting in more free money and time on
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hand for the consumer. Taking the plane across the +alaysia has even proven to be cheaper in
some situations. =o"ever! most individuals in today's society that has the ability and means to
o"n a vehicle! along "ith living in a geographic location "ith the necessary means to travel
'roads and filling stations)! "ill do so.
A. The bargaining po"er of buyersJcustomers
Traditionally! suppliers of companies "ithin the auto industry have had very little bargaining
po"er. 3or eample! if one supplier "ere to perform belo" an automotive company6s standard!
several other options eisted and the supplier could be easily replaced. #ecently! auto
manufacturers and suppliers have moved to a tier based system! "here the auto manufacturer
"ould contract "ith a limited amount of suppliers "ho "ould then contract items further
upstream. :roton! in particular! is having trouble "ith this system due to the current state of the
economy. This shift has led to an increase in the po"er of suppliers than in the former market
environment. =o"ever! the shift in the market environment has not been a profitable one for
suppliers. ;iven the volatility of current automotive production schedules due to the reduction of
consumer demand! suppliers have very limited po"er over auto manufacturers in this respect.
$uppliers6 production and overall success are dictated not only by the market conditions! but also
by the "ay in "hich auto manufacturers choose to respond to those conditions.
3ollo"ing the po"er of buyer many components used in vehicles is available only from a single
supplier and cannot be 8uickly or inepensively re%sourced to another supplier due to long lead
times and ne" contractual commitments that may be re8uired by another supplier in order to
provide the components or materials. This means that a fe" key suppliers "ill retain some
po"er. =o"ever as the average +alaysian consumer became dissatisfied "ith the products
offered by /apan automakers! they began seeking alternatives9 namely foreign auto makers. As
the foreign auto companies entered the +alaysia market! the competition became more intense!
adding po"er to the buyer. The foreign auto companies "ere producing "ith lo"er operating and
material costs than the +alaysia automakers. Therefore! foreign competitors have been able to
offer the +alaysia consumer a high 8uality product at a lo"er cost than its domestic competition.
;iven that today6s auto industry is filled "ith a "ide range of car brands! large amount of
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capacity! and zero s"itching costs bet"een brands! consumers have a large amount of bargaining
po"er. Bithin the current economic environment! consumers are holding back their purchases of
ne" products. .n fact! many consumers have opted to maintain and repair their current vehicles
rather than purchasing ne" ones.
-. The amount of bargaining po"er suppliers.
.n the car industry this refers to all the suppliers of parts! tires! components! electronics! and even
the assembly line "orkers e.g. Gnions. . founded in the +alaysia the automotive unions are
tremendously po"erful. But also kno" that some suppliers are small firms "ho rely on the
carmakers! and may only have one carmaker as a client. $o this force can be tricky to evaluate.
The more po"erful a seller is relative to the buyer! the more influence the seller has. This
influence can be used to reduce the profits of the buyer through more advantageous pricing!
limiting the 8uality of the product or service! or shifting some costs onto the buyer 'e.g. $hipping
costs). $uppliers are po"erful if suppliers are concentrated or differentiated. .f there are only a
fe" suppliers in the market! the suppliers "ill have more leverage because of the lack of
available alternatives. $ignificant costs involved in s"itching suppliers. 4ustomers are less likely
to s"itch suppliers if there are large costs associated "ith s"itching. 3or eample! .n ,22,!
:#CTC< cancelled its agreement "ith +itsubishi and its sales dropped in the follo"ing years.
.n ,22(! :#CTC< "as struggling to manage "ithout an alliance "ith foreign firms. 'Akifumi
Duchiki! ,22() According to :roton6s ,22( annual report! the company intended to improve the
8uality of manufacturing by investment in ne" #H7 and through partnership "ith foreign
companies. =o"ever! according to research conducted by /A+A! the production capability is
still lo" in +alaysia. 'Banrs"ee 3uangkaKonsak! ,22@)
I. The intensity of the competitive rivalry
Bhile a :orter6s 3ive analysis applies to all companies competing in one industry the same! "hat
differs is that those firms' profitability "ill vary bet"een them. This is because of their o"n
competitive advantages and varying business models. $o Kust because all firms in one industry
and market are subKect to the same forces doesn't mean they perform e8ually. A :orter6s 3ive
analysis should al"ays be done in conKunction "ith other assessments! and should not be
regarded as being absolute. .t should only serve as an indicator! not absolute fact or even
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necessarily accurate. There are many critical assumptions that should be made and eplained in
one's :orter6s 3ive analyses. The market must be described! the competition must be eplained!
and the products must be defined. 3or eample! a :orter6s 3ive analysis of the car industry in the
+alaysia "ould not necessarily apply in 4hina. The markets are totally different! and the product
life cycle is not even close to being the same. Another eample is the type of the automotive
industry. A :orter6s 3ive analysis of the electric car industry "ould be entirely different than one
of the conventional car industry
=o"ever! "ith an increase in globalization! domestic markets must no" compete "ith foreign
competition. As foreign companies have gained accessibility into the local market over the past
decade! domestic car manufacturers have found it increasingly harder to compete. +ost foreign
competitors have been able to obtain lo"er ra" material and production costs "hile maintaining
e8ual! if not better! 8uality of their product. The current market has been fuelled by an attraction
to /apan automakers and car models. There has been ne" consumer interest in fuel efficiency!
"hich has created a void in the demand for larger gas%guzzlers like trucks and $GEs and an
increase in demand for fuel technology. This opened the market for alternative po"er sources for
vehicles for a ne" market of green%sensitive consumers and gas%pump "eary ones. These types
of consumers flocked to Toyota "ith the advent of the highly successful :rius and .nsight for
=onda +otor.
1(1I Bords
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#eferences
Question 1
The Business Level Strategy of Seven-Eleven
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