FACULTY OF BUSINESS AND MANAGEMENT

SEMESTER MEI 2013

BBPS 4103
STRATEGY MANAGEMENT
NAME :SYED MOHD FAIZAL BIN SYED OTHMAN
MATRIC NO : 800327016051002
NRIC NO : 800327-01-6051
TELEPHONE NO : 012-758051
E-MAIL :!"#$%&$'()*"+,-*+".
PP/ 0
No Title Pages
Assignment 1.
1
1.
The business level strategy for Seven-Eleven.
1-2
2. The business level strategy for McDonalds. 3-4
3. The business level strategies for Tesco Store Malaysia Sdn Bhd. 5-7
4. Assignment .
6 !orter"s #ive #orces Model in the Automobile $ndustry. 8-11
7 %eferences 12-14
TABLE OF
CONTENT
P $ 1 , 2 1
Assignment 1 & 'uestion 1
An organi(ation"s core com)etency focused on satisfying customer needs or )references in order
to achieve above average returns. This is done through Business level strategies. Business level
strategies define are actions ta*en to )rovide value to customers and gain a com)etitive
advantage by e+)loiting core com)etencies in s)ecific, individual )roduct or service mar*ets and
concerned -ith a firm"s )osition in an industry, relative to com)etitors.
%etailer 1 & The business level strategy for Seven-Eleven
Seven-eleven ./-Eleven0 1 Malaysia Sdn Bhd is the o-ner and o)erator of all /-Eleven1 outlets
in Malaysia. /-eleven are the )ioneer and largest 2-hour convenience store o)erator in
Malaysia. $ncor)orated on 3une 2, 1452, /-Eleven1 Malaysia has made its mar* on the retail
scene and have been a )rominent icon for over 6 years. #ollo-ing belo- there are business
level strategies use in /-eleven Malaysia. .7om)any #actsheet0
Strategy formulation
/-Eleven has )ut in )lace a business strategy that is fully cross functional. The strategy
incor)orates the strengths and )otential of all sectors at the functional level and is aligned -ith
the mission statement of the business. The o)erations and su))ly chain activities of /-Eleven are
aligned in the 8$nternally Su))ortive stage -ith the overall business strategy of )roviding
convenience to its customers. This gro-th has been very carefully )lanned e+)loiting the core
strengths that /-Eleven Malaysia has develo)ed in the areas of $nformation systems and
Distribution systems and a variety of storage services.
Strategy im)lementation
To begin -ith, /-Eleven made )articular a very efficient franchise system -herein only one out
of a hundred a))licants received the license and had to adhere to very strict re9uirements such as
o)eration and management of the store, customer service and a))earance in order to *ee) -ith
the overall image and re)utation of /-Eleven convenience stores. Additionally, according to /-
Eleven 8filling in the entire ma) of Malaysia is a )riority, instead loo* for demand -here /-
P $ 1 , 2 2
Eleven stores already e+ist based on the fundamental area dominance strategy of concentrating
stores in a s)ecific area. This strategy -or*s -onders for the /-Eleven stores as the follo-ing
advantages follo- such )ractice: Boosts distribution efficiency: $m)roves brand a-areness:
$ncreases system efficiency: Enhances the efficiency of franchise su))ort services: $m)roves
advertising effectiveness: !revents com)etitors entrance into the dominant area. #or e+am)le
/-Eleven ;rou) )lans to u)grade its logistics function by setting u) a ne- logistics centre of its
2-acre )iece of land in Bu*it 3elutong, Selangor Darul Ehsan. The ne- logistics centre -ill be a
dedicated )ur)ose-built facility that is designed to ma+imi(e efficient receiving, )rocessing and
distribution of goods. .Announcement, 6640
Strategy evaluation and control
The 7om)any had chosen a direction for /-Eleven -ill go u) in the future already for control
local mar*et. $n addition, every franchise that, have a good system and management -ill be
successful. Selection and develo)ment of )roducts and services to satisfy each customer grou)
and solve management )roblems before actual im)lementation at every branch. The 7om)any
has used a )roduct management )rinci)les to learn about )roduct assortment and increase
efficiency in area utili(ation such as decreasing the s)ace bet-een shelves in order to gain more
shelf s)ace and e+)anding shelf s)ace. The future )lans, strategies and )ros)ects in the follo-ing
there are&
<e- !remium #resh #ood And Beverage
The /-Eleven ;rou) is e+)anding its food service offerings at its /-Eleven convenience stores by
offering ne- )remium fresh food and beverage items to customers. The /-Eleven ;rou) )lans to
-or* closely -ith fresh food manufacturers that are located close to its /-Eleven convenience
stores to su))ly freshly )re)ared food items are sold in stores has a certified =A>A> and
undergo stringent 9uality control to ensure taste and freshness. #ollo-ing e+am)le roast coffee is
a combination of some of the finest 166? Arabica coffees from 7olombia and Bra(il.
%etailer & The business level strategy for McDonalds
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Bac*ground
$n December 1456, ;olden Arches %estaurants Sdn. Bhd. @on the license to o)erate
McDonalds in Malaysia. The first McDonalds restaurant subse9uently o)ened its doors at 3alan
Bu*it Bintang on 4 A)ril 145. To date, McDonald"s Malaysia em)loys more than 1,666 local
)eo)le. The com)any -as named as AA<-=e-itt Best Em)loyers in Malaysia in 664 and 611,
as -ell as AA<-=e-itt Best Em)loyers in Asia !acific in 611. .McDonalds0
Strategy formulation
McDonalds uses demogra)hic segmentation strategy -ith age as the )arameter. The main target
segment are children into consideration, children are more attracted to-ards toys and delicious
meals including todays youth )refer such )laces for their entertainment and urban families select
McDonalds on various occasions li*e birthday )arty, treat for their children. .McDonalds0
#ollo-ing e+am)le, mission McDonalds is to be a customers favourite )lace and -ay to eat
-ith ins)ired )eo)le -ho delight each customer -ith unmatched 9uality, service, cleanliness and
value every time. The e+ternal environment can be divided into several sectors. There are t-o
im)ortant )arts: com)etitors, social conce)t .healthy )roblem0 and uncertainty situation, -hich
can greatly influence McDonalds strategies. The follo-ing core values guide actions as -e
strive to achieve the mission. McDonalds demonstrate our a))reciation by )roviding -ith high
9uality food and su)erior service, in a clean, -elcome environment, at great value for each
customer every time.
Strategy im)lementation
McDonalds using fe- gro-th strategies of the )roduct li*e as Mar*et ;ro-th Matri+ defined by
Ansoff. Mar*et )enetration occurs -hen a com)any enters a mar*et -ith the current )roduct. $n
business McDonalds al-ays -ithin the fast-food industry, but fre9uently mar*ets ne- burgers.
McDonalds are al-ays enhancing their e+isting )roduct along -ith it: they also try to introduce
ne- and ne- )roduct they can easily survive in the mar*et. Another -ay includes attracting non
user of the )roduct or convincing current clients to use more of a )roduct or service. Mar*et
)enetration occurs -hen the )roduct and mar*et already e+ists in the mar*et. McDonalds focus
to four grou)s to give more focus to the mar*et segment decision e.g. e+isting customers,
P $ 1 , 2 3
com)etitor customer, non buying in the current segment, ne- segments. #or serving
synonymously to the e+isting customers McDonalds coming u) -ith different menus as )er
change in taste and )reference of their customer e.g. =a))y )rice menu, beverages including
ice-cream. The com)any has its unrelenting focus on s)eed, -ith 3ust-in-Time Delivery and the
economies of scale that it rea)s on account of its global )resence e+erting considerable influence
on su))liers, serving as its strength.
Strategy Evaluation
=ealth issues became the biggest stumbling bloc* to the develo)ment of McDonalds. 7ustomers
-ere s-itching to healthier offering, such as Sub-ays sand-iches, or B#7s mashed )otato
instead of fried )otato. McDonalds has res)onded to this healthy trend. $n order to com)ete,
McDonalds has added salads and other lighter o)tions in their menu. $f a mother comes in, she
is not only buying the ha))y meal for her children, she -ill also be li*ely to buy herself a meal
too.
#ollo-ing com)etitor analysis McDonalds has been a leading fast-food outlet. But the
understudy has another com)etitor eating a-ay into its mar*et share. $n addition the firm
encounters ne- challenges. McCalue >unch and McCAlue Dinner com)ete using a bac*-to-basic
a))roach of 9uic*ly serving u) burgers for time-)ressed consumers. !erha)s in a ne-
environment, fast, convenient service is no longer enough to distinguish firm, at this time, a ne-
critical success factor may be emerging: the need to create a rich, satisfying e+)erience for
consumers. This brings McDonalds more e+)erience based com)etition -hich McDonalds can
use for com)etitive advantages against Bids Done and )rovided @$-#i enabled the outlet to cater
to the student community.
%etailer E & The business level strategies for Tesco Store Malaysia Sdn Bhd.
Tesco Stores .Malaysia0 Sdn. Bhd. @as started on 4 <ovember 661, as a strategic alliance
P $ 1 , 2 5
bet-een Tesco !>7 FB and local conglomerate, Sime Darby Berhad of -hich the latter holds
E6? of the total shares. Tesco o)ened its first store in Malaysia in #ebruary 66 -ith the
o)ening of its first hy)ermar*et in !uchong, Selangor.
Strategy #ormulation
$n 662, TescoMalaysia launched its o-n house brand, Tesco 7hoice. $n December 66G, Tesco
also ac9uired Ma*ro 7ash H 7arry in Malaysia, a local -holesaler -hich -as rebranded to
Tesco E+tra and )rovides )roducts for small local retailers. $n 66/, Tesco launched 87lub 7ard
for a loyal and -ay to say than* you to customers by giving bac* their money to them. >ater in
the year 665, Tesco introduces ;reen 7lub card and ;reen bags ma*ing Tesco Malaysia to be
the first Tesco $nternational business to introduce the ;reen 7lub card scheme. As )art of its
global commitment, Tesco Malaysia is a mar*et leading on tac*ling climate change in techni9ues
of energy saving, launching ;reen 7lub card !oints to incentivise customers sho))ing -ith their
o-n bags, introduce degradable carrier bags, )romote )ositive behaviour among staff though.
.#aisal, 6110
Strategy $m)lementation
Tesco currently the focus of a lot of business develo)ment and change, )rovides insight into the
small medium business. The stated strategy from elements of fle+ibility, local o)erations
including customers, cultures, su))ly chains and regulations, focus on a fe- loose items, multi-
format offerings in order to meet the needs of the local mar*et, ca)ability in )eo)le, )rocesses
and systems, and brand-building to create lasting customer relationshi)s. The name, #resh and
Easy, -as intended to ta*e advantage of the local culture and values. Their )roduct offerings
-ithin the store, -ith a strong em)hasis on fresh fruits and vegetables, natural and organic foods,
-ere intended to not only a))eal to the tastes of the local culture but also to fill a ga) in the
current su)ermar*et offerings -ithin the region.
Tesco has a strong o-n brand value -hich is becoming *no-n throughout Malaysia due to the
e+isting e+)ansion )rogram. Second strength is com)etitive !ricing Strategy for e+am)le the
targeted )rice cuts. Third are customer loyaltyIrelationshi) e.g. Tesco gained customer loyalty or
relationshi) by launching a 7lub 7ard scheme.
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Tesco ac9uires Ma*ro and convert it to Tesco E+tra. #or e+am)le, Ma*ro do not allo- customers
to buy in small 9uantity, but Tesco E+tra allo- but charge higher than those buys in bul*. >ast
one is the strong hy)ermar*et format, for e+am)le develo) a ne- store by adding s)ace to
e+isting locations has contributed to the gro-th of a Tesco su)ermar*et. Besides that, Tesco runs
t-o ty)es of hy)ermar*et format -hich Tesco =y)ermar*et and Tesco E+tra =y)ermar*et.
Strategy evaluation
Tesco aim is to buy and sell )roducts res)onsibly, so that customers *no- that everything they
buy is )roduced under decent conditions, and everyone involved is treated fairly. #or customers,
using trading to )ut )roducts -ithin the reach of ordinary )eo)le, and ensure economic gro-th.
#or su))liers, have a -ide influence on the -ay they treat their -or*force and the right values in
su))ly chain, decent )rices and conditions for su))liers.
Tesco also uses various methods li*e, Mar*eting 7ommunication Tools -hich includes )rint
)am)hlets, retail advertising and short send message .SMS0 via )hone. #ree )ar*ing are some of
the lures used by Tesco seems to -or* in their favour. Tesco is very good at using design across
their o-n label, es)ecially strategically. Tesco is often used as one of the best e+am)les of o-n
brand label in the retail industry and also use of =A>A> logo is consistent in each of the )roduct
design.
Today, an Every Day >o- !ricing .ED>!0 strategy of Tesco is more )o)ular -ith sho))ers than
one driven )urely by )romotions. But a combination of the t-o is the best means of *ee)ing
sho))ers ha))y. !ricing -as a *ey strategy and selling )oint for Tesco. >o- )rices -ere ado)ted
to ma+imi(e sales. Tesco"s value-added )roducts at lo- )rices attracted many customers. After
the launch of "unbeatable value" cam)aign, Tesco -ent in for massive )rice reductions. The
com)any ado)ted the strategy of ED>!, -hile continuing its other )romotional activities. The
ED>! )rogram aimed to regulari(e lo- )rices for Tesco customers.
P $ 1 , 2 7
Assignment 1: 'uestion
'uestion
!orter"s #ive #orces Model in the Automobile $ndustry
The automotive industry is inherently interesting& it is massive, it is com)etitive, and it is
e+)ected to undergo maJor restructuring in the near future due to globali(ation and decreasing oil
reserves. !orter"s #ive #orces, is a -ay of e+amining the attractiveness of an industry. $t does so
P $ 1 , 2 8
by loo*ing at five forces -hich act in that industry. These forces are determinants of that
industry"s )rofitability.
1. The threat of ne- entrants
$n the auto manufacturing industry, this is generally a very lo- threat. #actors to e+amine for this
threat include all barriers to entry such as u)front ca)ital re9uirements e.g. $t costs a lot to set u)
a car manufacturing facility, brand e9uity e.g. A ne- firm may have none, legislation and
government )olicy e.g. Safety and emissions, the ability to distribute the )roduct.
These reasons are all tied to the conce)t of barriers to entry: namely, the obstacles and hindrances
that ma*e it difficult to enter the mar*et and restrict com)etition. Ane of the greatest barriers to
entry in the automobile industry is the e+tremely high amount of ca)ital that is re9uired to
)urchase )hysical manufacturing )lants, ra- materials, as -ell as to hire and train em)loyees.
<e- technologies are constantly being discovered that im)rove the 9uality of automobiles on the
mar*et as -ell as reduce costs throughout the manufacturing )rocess. Therefore, manufacturing
com)anies must also have the ability to mass-)roduce so that can ma*e cars affordable to
customers. Another barrier to entry is the access of distribution channels. $t can sometimes be
difficult for a ne- com)any in the industry to find an ade9uate means of distribution because
s)ace -ithin a dealershi) lot is limited.
. The threat of substitute )roducts
A !orters #ive #orces Model analysis of the car industry covers the ne- mar*et, not used or
second-hand. Fsed cars threaten the ne- mar*et. The )roduct differentiation is im)ortant too. $n
the car industry, ty)ically there are many cars that are similar loo* at any mid-range for Toyota
model and can easily find a very similar <issan, =onda, or !eugeot.
Also, there are inherent underlying social and cultural attitudes that *ee) )eo)le from o-ning
Automobiles in some )arts of the -orld. Many nations are not as s)read out or as mobile as the
Malaysia: are constrained either by geogra)hy, race, class, or religion and the need for )ersonal
trans)ortation is not as great, yet. =o-ever, the mar*eting arms of the global automotive
manufacturers are certainly -or*ing very hard to change this )aradigm, and -ith un)recedented
)roduction volumes -orld-ide, all signs indicate that they are succeeding. Most -ith the ability
P $ 1 , 2
and means to o-n a vehicle, -ho live in a society -ith the necessary infrastructure .e.g. %oads
and filling stations0.
E. The bargaining )o-er of buyersIcustomers
The auto manufacturer -ould contract -ith a limited amount of su))liers -ho -ould then
contract items further u)stream. !roton, in )articular, is having trouble -ith this system due to
the current state of the economy. This shift has led to an increase in the )o-er of su))liers than
in the former mar*et environment. =o-ever, the shift in the mar*et environment has not been a
)rofitable one for su))liers. ;iven the volatility of current automotive )roduction schedules due
to the reduction of consumer demand, su))liers have very limited )o-er over auto manufacturers
in this res)ect.
#ollo-ing the )o-er of buyer many com)onents used in vehicles is available only from a single
su))lier and cannot be 9uic*ly or ine+)ensively re-sourced to another su))lier due to long lead
times and ne- contractual commitments. This means that a fe- *ey su))liers -ill retain some
)o-er. =o-ever as the average Malaysian consumer became dissatisfied -ith the )roducts
offered by 3a)an automa*ers, they began see*ing alternatives: namely foreign auto ma*ers. As
the foreign auto com)anies entered the Malaysia mar*et, the com)etition became more intense,
adding )o-er to the buyer. The foreign auto com)anies -ere )roducing -ith lo-er o)erating and
material costs than the Malaysia automa*ers. Therefore, foreign com)etitors have been able to
offer the Malaysia consumer a high 9uality )roduct at a lo-er cost than its domestic com)etition.
$n fact, many consumers have o)ted to maintain and re)air their current vehicles rather than
)urchasing ne- ones.
2. The amount of bargaining )o-er su))liers.
$n the car industry this refers to all the su))liers of )arts, tires, com)onents, electronics, and even
the assembly line -or*ers e.g. Fnions. $ founded in the Malaysia the automotive unions are
tremendously )o-erful. The more )o-erful a seller is relative to the buyer, the more influence
the seller has. This influence can be used to reduce the )rofits of the buyer through more
advantageous )ricing, limiting the 9uality of the )roduct or service, or shifting some costs onto
the buyer .e.g. Shi))ing costs0. Su))liers are )o-erful if su))liers are concentrated or
P $ 1 , 2 10
differentiated. Significant costs involved in s-itching su))liers. 7ustomers are less li*ely to
s-itch su))liers if there are large costs associated -ith s-itching. e.g. $n 66, !%ATA<
cancelled its agreement -ith Mitsubishi and its sales dro))ed in the follo-ing years. $n 66/,
!%ATA< -as struggling to manage -ithout an alliance -ith foreign firms. .A*ifumi Buchi*i,
66/0 According to !rotons 66/ annual re)ort, the com)any intended to im)rove the 9uality of
manufacturing by investment in ne- %HD and through )artnershi) -ith foreign com)anies.
=o-ever, according to research conducted by 3AMA, the )roduction ca)ability is still lo- in
Malaysia. .@anrs-ee #uang*aJonsa*, 66G0
K. The intensity of the com)etitive rivalry.
All firms in one industry and mar*et are subJect to the same forces doesn"t mean they )erform
e9ually. A !orters #ive Model should al-ays be done in conJunction -ith other assessments, and
should not be regarded as being absolute. $t should only serve as an indicator, not absolute fact or
even necessarily accurate. #or e+am)le, a !orters #ive analysis of the car industry in the
Malaysia -ould not necessarily a))ly in 7hina or Euro. The mar*ets are totally different, and the
)roduct life cycle is not even close to being the same. Another e+am)le is the ty)e of the
automotive industry. A !orters #ive analysis of the electric car industry -ould be entirely
different than one of the conventional car industry
=o-ever, -ith an increase in globali(ation, domestic mar*ets must no- com)ete -ith foreign
com)etition. As foreign com)anies have gained accessibility into the local mar*et over the )ast
decade, domestic car manufacturers have found it increasingly harder to com)ete. Most foreign
com)etitors have been able to obtain lo-er ra- material and )roduction costs -hile maintaining
e9ual, if not better, 9uality of their )roduct. The current mar*et has been fuelled by an attraction
to 3a)an automa*ers and car models. This o)ened the mar*et for alternative )o-er sources for
vehicles for a ne- mar*et of green-sensitive consumers and gas-)um) -eary ones. These ty)es
of consumers floc*ed to Toyota -ith the advent of the highly successful !rius and $nsight for
=onda Motor.
E,666 @ords
P $ 1 , 2 11
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