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The Porter 5 Forces Analysis Tool On 7 Eleven Convenience Stores In Malaysia

1213 words - 5 pages

For assessing the industry profitability, Porter 5 Forces analysis tools were used to analyze one organization evaluation. In this case, the technique were used to analyze 7-Eleven Convenience Store specifically in Malaysia. Porter 5 Forces consists of 5 important area which is Threat of New Entrants, Bargaining Power of customers, Threat of substitute Products and services, Bargaining Power of suppliers, and competitive rivalry within the industry. Theoretically, the more powerful these forces in an industry, the lower its profit potential. The strength of each force differs by industry and changes over time. The competitive advantage that 7-Eleven has using these five forces is it has raised the barrier of entry for other competitors to enter the convenience store market as new competitors will require a huge capital investment in order to implement the information technology in their business in order to be competitive. Also, hypothetically being the first in the market, 7-Eleven could have made contracts with the Malaysia government to not allow other 24-hour convenience stores in the market for a certain time period, such as Astro had done, thus having a monopoly market in the beginning of their operations which will allow them to target a bigger market share.

I. Threat of New Entrants

The system adopted by 7-eleven maximizes the threat for new entrants. That’s means that threat of new entrants of 7-Eleven is low. It is because 7-Eleven has already reached economies of scale through maintaining a strong customer base and brand loyalty. Over the years, 7-Eleven has increases their customer and brand loyalty. The access to latest technology and capital investments in the same ensures that the barrier for entries for new entrants is huge .The chain also maintains a wide distribution channel thus the likelihood of retaliation from existing players is diminished. The other competitor of 7-Eleven are most probably need to come out with something really new to tackle the market. In addition, 7-Eleven has established retailer shifting strategy to discounting and megastore all over the world. In Malaysia, 7-Eleven build a good relationship with other retailer and megastore. The threat of new entrants in convenience store industry in Malaysia has proven that 7-Eleven is leading the market. Many other convenience store experienced difficulties in competing 7-Eleven in the market. As for example, Kk Mart Store is not yet preferable by the customer as the customer are more familiar with 7-Eleven. However, other convenience are always up to date in order to stay competent in the market. Many other convenience store are offering the same approach and services to their customer. Similar with the tagline of the company which is ‘Always be there for you’, 7-Eleven’s services provided is at the good standard and fully met the satisfaction from the customer. Nevertheless, 7-Eleven has to maintain the brand loyalty and improves the services in order to keep...

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