Академический Документы
Профессиональный Документы
Культура Документы
<KOD KURSUS>
<TAJUK KURSUS>
NO. MATRIKULASI
<NO MATRIKULASI>
NO. TELEFON
<TELEFON>
E-MEL
<EMEL ID>
PUSAT PEMBELAJARAN
<PUSAT PEMBELAJARAN>
Table of Contents
1.0
Introduction .................................................................................................................................. 1
1.1 Overview ............................................................................................................................ 1
1.2 Purpose and Scope.............................................................................................................. 2
2.0
3.0
4.0
5.0
BIBLIOGRAPHY ................................................................................................................................. 15
1.0
Introduction
1.1
Overview
1|
Firms may choose any one of the four strategies based on the source of
competitive advantage i.e. the uniqueness or cost, and breadth of competitive scope
either broad or narrow. A company choosing to compete across a broad market
determines that it should compete in a number of customer segments. This is achieved
through offer of unique products called a differentiation strategy or by establishing a
low-cost position and providing standardized products at the lowest competitive price
called a cost leadership strategy. In a narrow customer segment, focus strategy is
employed either using a focused differentiation strategy (few segments, unique
products) or a focused cost leadership strategy (narrow segment, standardized
products at the lowest competitive price). Figure 2 presents the differences in these
strategies.
1.2
The purpose of this paper is to discuss about business level strategy of three retailers.
This paper also shows the use of Porters Five Forces Model as a means to seek the
core advantages or the competitiveness in an industry.
2|
2.0
CKS
Supermarket
is
large
scale
retailer
operating
in
Sabah.
It
uses
CKS Supermarket uses a cost leadership strategy which means that it uses the lowest
cost of operation in the industry. The cost leadership is driven by its efficiency, size, scale,
scope and cumulative experience. In cost leadership, the scale of production is exploited
which is done in CKS through the marketing of products using a supermarket concept, a large
retailing outlet which can offer customers variety and bulk of products. In general, cost
leadership strategy emphasizes on the provision of products and services at the lowest cost
per unit within an entire market.
CKS Supermarket uses the cost leadership strategy as an integrated set of action
taken to provide goods and services with features that are acceptable to customers at the
lowest cost, in comparison to other retailers. CKS Supermarket creates its competitive
advantage by offering the lowest cost in its industry. It is competitive with other retailers
such as G-Mart, Giant and Servay.
3|
4|
Figure 5:
Economy of Space with Efficient Arrangement of Space to Ensure
Customers are Offered with a Large Line of Products with Varied Price Choices
CKS Supermarket operates in a wide market and sustains its competitiveness in the
stiff retailing industry through the right application of a cost leadership strategy.
5|
3.0
Porter (1980) stressed that competitive strategies require development of attributes that
characterize a firm and differentiate the value it creates which is different from to its
competitors.
7-Eleven provides products and services that are mostly needed by customer.
However, 7-Eleven also offers private label products including Slurpee, a partially frozen soft
drink introduced in 1967 and the Big Gulp, introduced in 1980 that packaged soft drinks in
large cups ranging in size from 20 to 64 US fluid ounces. In addition to Slurpee and the Big
Gulp, 7-Eleven would come to own or operate several brands of food and concepts including
Movie Quik, an in-store video-rental. In 2007, 7-Eleven took opportunity from the popularity
of The Simpsons Movie with the creation of Kwik-E-Mart where fans can purchase themed
merchandise from the store.
Most often, differentiation strategy is opted by chain store operations such as 7Eleven which is one of the popular franchise systems in Malaysia. The use of differentiation
in their retail business is closely related to the fulfilment of specific needs of chosen customer
7|
segments (Morshett et al., 2006). Hence, 7-Eleven appeals to the busy executives, those who
are busy that dropping at the store at 3 am is normal to them. Most 7-Eleven stores are
located in busy city areas, usually at the junction as well in heavily populated areas. They
offer an alternative choice to buy a wide range of products with small packaging size as
means of convenience and ease of access during off-business hours of other retail shops such
as supermarkets and sundry shops.
8|
4.0
Bestermart is a local grocery store located in Penampang. It is a small retail shop, hence
operating in a narrow market. The shop is situated in Donggongon Point and is one of the
popular grocery stores patronized by the students from the nearby college, customers from
other offices in the vicinities and travellers going to Tambunan/Keningau. The shop offers
many grocery items such as sundry goods, stationeries, refrigerated drinks and over-thecounter goods. It is open on a daily basis with operation time from 10 am to 10 pm.
9|
Bestermart uses a focus strategy to gain benefits from both strategies of cost
leadership and differentiation strategy. Differentiation enables the firm to charge
premium prices and cost leadership enables the company to charge the lowest
competitive prices. Therefore, the retail shop can achieve competitive advantage by
delivering value to customer based on product features and low price.
It targets a particular buyer, group and segment of the product line and
geographic market. The store is located near the vicinities of a college and several
offices, quite far from any pharmacies. In order to fulfil customers needs, the store
also provides over-the-counter medicines as this is also one of the popular items
demanded by customers.
10 |
11 |
5.0
The Porters Five Competitive Forces Model is based on five factors contributing to the
competitiveness of the industry. In this case, the industry is the retailing business, specifically
convenient stores like 7-Eleven. Figure 1 presents a summary of Porters model for the
retailing industry seen from the perspective of a convenient store like 7-Eleven in Malaysia.
Substitute Products and
Services
Home shopping network
(TV)
Electronic shopping
(Internet)
Telemarketing
Purchasing clubs
Door to door sales
Bargaining Power of
Suppliers
US product
manufacturers
Foreign
manufacturers
IT product and service
suppliers
Business partners
Intra-Industry Rivalry
Big retailers e.g. Giant,
Tesco, Carrefour, Servay
Other 24-hr outlets
Other small retailers shops
Other attractive retail
franchise system
Bargaining Power of
Buyers
Consumers in
metropolitan and urban
areas of Malaysia
Consumer in suburban
areas of Malaysia
Tourists from Western
countries & others
Corporate buyers
Figure 11:
Porter 5 Forces Model for Retailing Industry from the perspectives of
Convenient Store
12 |
5.1
7-Eleven stores are available in almost all metropolitan and cities in Malaysia as well
as in small townships and populated suburban areas. The customers or market
segment of this convenient store are local residents living in the areas or those
working in the vicinity who need convenient products with high standard of quality
and they are willing to pay a premium price for that.
7-Eleven is an international franchise with chain stores in numerous countries
that western tourists and other foreign tourists such as from Japan, Taiwan and Hong
Kong feel comfortable to patronize the shop. These tourists would feel at ease and
familiar with the store ambience, its products and services than going into other local
convenient or small retail stores in this country.
5.2
13 |
5.3
7-Eleven is one of the many types of retailing outlets in a highly competitive retailing
industry. It offers many convenient products such as cigarettes, communication
network prepaid reload, contraceptives for males, newspapers and drinks. Other
specialty products most favoured by customers are like the Slurpee drinks. In
addition, there are other substitute products which may become threats to 7-Eleven
such as home shopping network (through TV marketing), electronic shopping
(through Internet such as eBay, www.lelong.com.my), telemarketing, purchasing cubs
and door-to-door sales.
5.4
The retail industry in Malaysia is a growing business with many innovations being
introduced in the market. Potential new entrants may include foreign general
merchandisers and distributors. These new entrants use numerous entry methods such
as franchise, e-commerce business models or brick-and-mortar business outlets.
Although the market is competitive but the attractiveness of the market is pulling
more entrants into the market.
5.5
The retail industry is highly competitive with large scale retailers such as Giant,
Tesco, Carrefour, Servay, Bestmart, CKS, Mydin, and many others. Other than 7Eleven, there are also other convenient shops in the market like Orange which is
slowly gaining popularity. In the retail franchising sector, there are other offers to
potential entrepreneurs and businesses with competitive offers.
2,918 WORDS
14 |
BIBLIOGRAPHY
15 |