-
Essay / The Porter 5 Forces Analysis Tool on 7-Eleven...
To evaluate the profitability of the industry, the Porter 5 Forces analysis tools were used to analyze the valuation of an organization . In this case, the technique was used to analyze the 7-Eleven convenience store specifically in Malaysia. Porter 5 Forces consists of 5 important areas which are 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 are in an industry, the lower its profit potential. The strength of each force differs by industry and changes over time. The competitive advantage 7-Eleven has using these five forces is that it has raised the barrier to entry for other competitors to enter the convenience store market because new competitors will need a huge investment capital to implement information technology in their business. be competitive. Additionally, being hypothetically first to market, 7-Eleven could have entered into contracts with the Malaysian government to not allow other 24-hour convenience stores into the market for a certain period of time, as Astro had done, thus having a monopolistic market. at the start of their operations, which will allow them to aim for a greater market share.I. Threat of new entrantsThe system adopted by 7-eleven maximizes the threat to new entrants. This means that the threat of new entrants to 7-Eleven is low. This is because 7-Eleven has already achieved economies of scale by maintaining a strong customer base and brand loyalty. Over the years, 7-Eleven has increased customer and brand loyalty. Access to the latest technology and capital investment ensures that the barrier to entry for new entries...... middle of paper ......strength in maintaining brand loyalty towards the supplier.V. Competitive Rivalry within the Industry7-Eleven has established itself as an undisputed market leader in terms of competition with similar convenience stores due to its strong customer-focused orientation and implementation of various information systems which complete its differentiation strategy. Rivalry is further reduced due to the switching costs that buyers face due to the presence of customized products. The organization does not have high fixed costs, which discourages competitors from manufacturing with price cuts. However, there are still a few competitors making an impact on the market. Like the large American convenience store Wall Mart. In Malaysia, the regular competitor is KkMart Store. In fact, many independent retailers these days are trying to compete in the convenience store market..