7-Eleven Case Study
Q1. Evaluate 7-Eleven's competitive advantage using the Michael Potter's Five Forces model.
7-Eleven, the largest convenience retailer store in the world has been operating in more than 15 countries and well known as franchise business that operated by independent business operators running local neighborhood stores. Despite the intense competition in the market, 7-Eleven has struggled to maintain their leader position in the market. In order to sustain their competitive advantage, 7-Eleven has used information systems to keep ahead of rising customer expectations and increasingly challenging business environment. The Potter’s Five Forces Model has been used to analyze and evaluate the competitive advantage of 7-Eleven. 7-Eleven currently have various competitors, which includes superstores, hypermarkets, convenience stores and even traditional markets. The intense competition has driven 7-Eleven to enhance their competitive advantage through several ways. 7-Eleven has been able to stand out due to their highly focused on customer-orientation and effectiveness of the information systems they used to keep track and analyze their customers’ demands that resulted in product differentiation. The high switching costs and low fixed costs of 7-Eleven also have prevented their rivalry from attracting their customers by price reduction. In addition, 7-Eleven’s production is currently at the minimum efficient scale that known as the most cost efficiency level of production. They have maintained a strong customer base and remained the loyalty of their customers. Therefore, it has created a barrier to new entrants. “The market power of suppliers can always have a significant impact on firm profits” (pg123). The consolidated of four times order per day has resulted in the consistency and strong relationships between 7-Eleven and their suppliers. Furthermore, 7-eleven is also known as the model of vertically integrated company who
7-Eleven, the largest convenience retailer store in the world has been operating in more than 15 countries and well known as franchise business that operated by independent business operators running local neighborhood stores. Despite the intense competition in the market, 7-Eleven has struggled to maintain their leader position in the market. In order to sustain their competitive advantage, 7-Eleven has used information systems to keep ahead of rising customer expectations and increasingly challenging business environment. The Potter’s Five Forces Model has been used to analyze and evaluate the competitive advantage of 7-Eleven. 7-Eleven currently have various competitors, which includes superstores, hypermarkets, convenience stores and even traditional markets. The intense competition has driven 7-Eleven to enhance their competitive advantage through several ways. 7-Eleven has been able to stand out due to their highly focused on customer-orientation and effectiveness of the information systems they used to keep track and analyze their customers’ demands that resulted in product differentiation. The high switching costs and low fixed costs of 7-Eleven also have prevented their rivalry from attracting their customers by price reduction. In addition, 7-Eleven’s production is currently at the minimum efficient scale that known as the most cost efficiency level of production. They have maintained a strong customer base and remained the loyalty of their customers. Therefore, it has created a barrier to new entrants. “The market power of suppliers can always have a significant impact on firm profits” (pg123). The consolidated of four times order per day has resulted in the consistency and strong relationships between 7-Eleven and their suppliers. Furthermore, 7-eleven is also known as the model of vertically integrated company who