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SWOT: Philippine Seven Corporation

Strengths: Weaknesses:
1. Convenient Locations 1. High rental costs
2. Overall brand equity 2. High Capital Expenditure
3. Individually branded products 3. High staff costs
4. Franchised model 4. Franchisees
5. Technology 5. Competitive Market
6. Low Barriers of Market entry 6. Pricing
7. 7-Eleven's loyalty program (CLiQQ
Rewards)
8. High visible website
9. High experienced Owner-Operator
Opportunities: Threats:
1. Continued market development 1. Supermarkets moving to 24/7 hours
2. Increased product offering 2. Supermarkets moving to online deliveries
3. Loyal Coin 3. Security
4. Engage more for exclusive product offerings 4. Shoplifting
5. Enhance efforts to be environmentally 5. Increasing retail segment competition
friendly 6. Difficult economy
6. Increase advertising for private brands 7. TRAIN law
7. Co-branding locations 8. New products and Technologies that change
demand

STRENGTHS
 Convenient locations
7-Eleven has over 50,000 outlets throughout the world, which gives them a significant location and convenience
advantage. Obviously, being a convenience store, their primary benefit to consumers is that commonly purchased
products are located at nearby stores. Therefore, greater market coverage through a greater number of outlets will
provide increase convenience to more consumers. Reference: Economic(Article 5 and 6)
 Overall brand equity
7-Eleven is generally perceived as the market leader by consumers in the convenience store sector. This brand
equity translates into customer loyalty and reduced price sensitivity and, therefore, continued stability of revenue
streams across its outlets. PSC is also engage on different Corporate Social Responsibility initiatives like Project A-
Game program, Operation Chill program, Support for our military families and Developing Women through
NEW (Network of Executive Women).

 Individually branded products


In addition to having a strong overall brand, 7-Eleven also has several branded product offerings. The most famous
of this are probably the Slurpee and the Big Gulp. In some countries they also have other branded offerings such
as Movie Quik in the United States. These individual product brands provide a further strength to 7-Eleven, as
consumers may choose to seek out these particular products/brands as their preferred choice.
 Franchised model
Many of the 7-Eleven stores throughout the world are franchised. This provides to strengths for the
organization – the first being that they can continue to grow the number of outlets throughout the world
without having significant capital requirements, as the franchisee is typically responsible for the setup costs
of the outlet – and the second advantage being that the stores are run by motivated individuals who have a
profit incentive for the store to perform well. Reference: Economic(Article 5)
 Logo of 7/11
According to research: the logo ‘7-ELEVEN’ seemed a little harsh with ALL CAPS, and the wife of the
company’s president during the 1960s suggested that the N be changed to lower case to make the logo look more
graceful. In addition, its green and red stripes attracts the eyes of consumers—eye catching.
 Low Barriers of Market Entry
IN addition to market access, the ease of doing business in a jurisdiction is also a decisive factor for
investors. According to the Global Competitiveness Index 2015-2016, the Philippines ranked 47th out of
140 countries, while in the World Bank Doing Business Report 2016, it ranked 103rd out of 189.This
ranking demonstrates that the Philippine business environment, despite positive developments in recent
years, still remains challenging. This not only serves as a barrier to entry but also encourages
entrepreneurs and start-up investors to stay “underground.” Creating a competitive business environment
will not just benefit foreign investors, it will also support increased efficiency and productivity for all, create a
transparent business environment and a level playing field that will benefit every Filipino, from exporters, to
micro, small and medium enterprises, to consumers. Reference: Economic (Article 9)
 High experienced Owner-Operator
Through time, stability and consistency of Philippine Seven Corporation, it showed a high experience
Owner-Operator as a strength of this business. Professionals who endeavor success of PSC are the one
talked about in this area.
 Highly Visible Website
According to observation, 7/11 is visible in common social media platforms like Twitter with 10,800
followers, Facebook with 1,500,000 followers and Instagam with 32,000 followers. This is a strength of this
company because with such visibility it creates a more opportunity for profit. Leads are everywhere in
social media platforms like these. With a simple marketing online, a lot of people can be reached due to its
visibility and due to the number of followers their account has.

 Technology
7-Eleven has been using Standby in a production environment since 2011. Standby replicates production data from
the primary database to the secondary (backup) database at a frequency of between five and fifteen minutes, 24
hours a day, seven days a week. When one of the database tables within the warehouse management system
became corrupt, 7-Eleven was able to switch (failover) to the standby database instance almost immediately. Once in
failover mode the activated standby database supported the production system while 7-Eleven’s IT team prepared
the replacement primary database server. Once this was ready, they used Standby to recreate the database on the
replacement server by replicating from the standby database. Once this process was complete, the application was
reconfigured to use the replacement database server.

In addition, the warehouse management system includes physical Windows-based application servers and
Linux-based database servers. The database servers are running Oracle 10g Standard Edition and store
around 900GB of data, with a weekly growth rate of approximately 3GB. The system maintains a daily volume of
around 14GB of transactional data, and archive logs of approximately 100GB, all of which need to be replicated to
the standby database. This is a large volume of data to be kept replicated across multiple servers without impacting
performance. Reference: Techonological (Article 3 and 4)
 Increase advertising for private brands
An important evolution in the retailing industry is the growing success of store brands. This can increase
intrinsic loyalty of their customer base, and the conquesting power to attract potential
switchers. Reference: Economic(Article 11)

 CLiQQ Rewards
CLiQQ Rewards is 7-Eleven's loyalty program (formerly Every Day!Rewards). You can already earn points every time
you shop at 7-Eleven using your Every Day! Rewards Card even before activation. However, you will need to activate
your card before you can redeem or inquire your balance. Activation links your card to your mobile phone number so
that you can sign in to your account to update your profile, link your Facebook account. Reference: Technology

WEAKNESSES
 High rental costs
Due to the need to locate the 7-Eleven outlets in very convenient locations, they are likely to incur higher
rental costs as a result. This higher operating cost structure will mean that they will need to adopt a price
premium approach. There are some consumers who are happy to pay a little bit more for convenience and
speed of purchase, however other budget-conscious consumers a more price sensitive. Reference:
Economic (Article 7)
 Higher Capital Expenditure
PSC expanded its existing distribution centers and opened new warehouses in 2015, ending the year with
nine warehouse facilities compared to only four as of mid-2014.
PSC has increased its capital expenditures budget to P3.5 billion to support its accelerated store expansion
strategy on 2016.

 High staff costs


Similar to the high rental costs above, because the store operates on a 24/7 basis in some locations, this
type of retailing operation is likely to have a higher ongoing operating cost structure. As a consequence of
these higher costs, 7-Eleven will be required to have higher price offerings in order to protect their margins.

All their stores require overnight staff, unlike supermarkets, where majority of their outlets are not open
24/7. This means that 7-Eleven has to hire a few hundred staff to cover the night shift, which wages,
logically, should be higher than day shift staff. This contributes to cost for the company, more so when
there are rarely any customers making purchases in the wee hours of the night. Reference: Economic
(Article 7)

 Competitive Market
IN addition to market access, the ease of doing business in a jurisdiction is also a decisive factor for
investors. According to the Global Competitiveness Index 2015-2016, the Philippines ranked 47th out of
140 countries, while in the World Bank Doing Business Report 2016, it ranked 103rd out of 189. This
ranking demonstrates that the Philippine business environment, despite positive developments in recent
years, still remains challenging. This serves as a barrier to entry. Reference: Economic(Article 9)
 Pricing
Consumers view the prices of 7/11 to be of a high price. According to a research, this may be caused by
marketing costs, maintenance of machines, rental costs, 24/7 Staff
and cost for convenience. Reference: Economic (Article 7)
 Franchisees
Although the overall franchised model is a strength as indicated above, running a large team of franchisees
is also a weakness. This is because it removes some element of direct control of the day-to-day operation
of each outlet and passes it to the franchisee. In addition, a management team is required to recruit, train
and monitor the various franchisees, which also adds to the overall cost structure on an operational basis.
Hence according to Economic Article 4, “Franchisees control 55 percent of all stores while the remaining
45 percent are corporate-owned.” – The Philippine Star
Reference: Economic(Article 4 and 8)

OPPORTUNITIES
 Continued market development
One of the obvious ways to grow their business is through market development. This means increasing the
number of stores they have in existing markets and cities and increasing the number of countries that they
operate in. While there is potential to cannibalize sales of existing outlets, much of this concern is passed to
the franchisee and does not necessarily affect the parent company. Reference: Economic-Article 6
 Increased product offering
In many of the 7-Eleven stores, there would be physical capacity to increase the product range and
offering. This provides the opportunity of being able to offer a greater selection of both physical products,
as well as services, such as ATMs, cellphone cards, and perhaps even car insurance. Certainly in some
countries, 7-Eleven has expanded into offerings of wine, beer, fuel, ATMs, coffee, donuts, pizza,
sandwiches and so on. Thus, according to PSC, “We aim to further expand our product offering, remodel existing
stores and implement our market development plan over the next five years to enable us to achieve new milestones.”
Reference: Economic-Article 6

 Exclusive product offerings


7-Eleven has managed to form some strong relationships with key manufacturers that have strong brands.
An example here is Gatorade, where certain flavors are only offered through 7-Eleven stores. This has
advantages to both of the strategic partners, and is something that will broaden the range of benefits that 7-
Eleven delivers to its consumers.

One of my favorite reasons to shop at a natural retailer is that they offer unique crafted items and high-
quality products that I can’t get locally anywhere else. You already know that offering your customers
exclusive products gives you a huge advantage over mass retailers. Exclusive products are a way to add
allure to your store’s brand, and when marketed well can mean not only an increase in your bottom line, but
an increase in loyal customers. Reference: Economic(Article10)
 Enhance efforts to be environmentally friendly
Philippine agencies like DENR RECOGNIZES 11 'ECO-FRIENDLY' BUSINESSES, INDIVIDUALS. The Department
of Environment and Natural Resources (DENR) has recognized nine business establishments and two individuals for
their exemplary performance under the agency's Philippine Chiller Energy Efficiency Project (PCEEP) and the
Philippine Environment Partnership Program (PEPP).
With awards like this, PSC can further create a good reputation in the market which can be beneficial to the business.
Reference: Environmental (Article 4)


 Loyal Coin
Aside from reward points that the consumer can get from loyalty programs like CLiQQ Rewards, their
members get exclusive access to some services like wifi for instance.
We’ve seen a tremendous growth in mobile smart phone and the use of technology not just in the
Philippines, but also globally, Comparing to the biggest loyalty rewards in the country, Loyalcoin has the full
advantage being the first mover in this industry. Loyalcoin is the first blockchain-based digital loyalty
rewards you can use not just in the Philippines but globally as well. Loyalcoin, has a wider scope of usage,
more rewarding customer experience, and an incentive for customers to stay loyal with the brands.

It can be used at various stores in the Philippines and global stores as well. As of this writing, this already
served about 2 million customers, in the following Philippine companies such as Petron, Bench, and
FamilyMart and others brands. Reference: Technological(Article 4)

 Co-branding locations
7-Eleven could expand their geographic coverage through co-branded outlets with other significant retail
offerings. For example, they could partner with a coffee chain or a sandwich chain and set up a co-branded
store – where both stores operate independently but out of the same location. This has the advantage of
attracting more consumers, who are possibly less reliant on the convenience aspect, and are likely to buy
from both businesses over time.

THREATS
 Supermarkets moving to 24/7 hours
In some parts of the world, major supermarket chains have adopted a 24/7 operating system. It is common
for most major supermarket chains to have extended hours. This erodes 7-Eleven’s natural competitive
advantage of having extended shopping hours. This is a significant threat to 7-Eleven over time, as they
would not have the low cost structure required to compete effectively on a price basis with a major retail
chain, such as Walmart for example.
 Supermarkets moving to online deliveries
Some consumers are adopting the system of ordering their groceries online and then having them
delivered. Although this requires some pre-planning, it does also offer significant levels of convenience to
organized consumers, which does represent a threat to 7-Eleven’s convenience-based competitive
advantage.
 Security
Because 7-Eleven is a convenience store that handles cash and may be open on a 24/7 basis, it is always
likely to be a target for theft and armed hold-up. Obviously the chain has put in various security measures
in different parts of the world, including video cameras, safes, and window barriers and so on.
 TRAIN Law
This is one of the Threats of PSC due to the reason that some prices of commodities will increase their
price. This may negatively affect consumer behavior. For instance, this may increase the potential
switchers.
 Shoplifting
According to Manila Bulletin, a Philippine newspaper, theft cases in the Philippines is rising.
Like most retail stores, 7-Eleven will have the continued threat of minor shoplifting and stealing. In some
locations, these stores operate on a lean budget and only have minimal staff, which presents the
opportunity for some consumers to occasionally shoplift. Like with the security threat above, video cameras
may assist in this regard.

References:

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business-environment-in-asean-and-in-the-philippines/

Joylin, E. (2018, January 17). Loyalcoin - the first Filipino loyalty rewards conquering the world. Retrieved February 17, 2018,
from https://medium.com/@Elegant_Joylin/loyalcoin-the-first-filipino-loyalty-rewards-conquering-the-world-83bc5ce86c88

Miguel, C. (n.d.). DENR recognizes 11 'eco-friendly' businesses, individuals. Retrieved February 17, 2018, from
http://www.denr.gov.ph/news-and-features/latest-news/2800-denr-recognizes-11-eco-friendly-businesses-individuals.html

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from http://www.gmanetwork.com/news/money/economy/638579/dti-effect-of-train-on-prices-of-prime-commodities-
minimal/story/

News, T. C. (2018, January 04). DTI: Effect of TRAIN on prices of prime commodities minimal. Retrieved February 17, 2018,
from http://www.gmanetwork.com/news/money/economy/638579/dti-effect-of-train-on-prices-of-prime-commodities-
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Sadongdong, M. (2016, December 22). Theft cases rising; 6 ladies busted in mall. Retrieved February 17, 2018, from
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Team, G. F. (2016, January 24). Once you know the reason why the 7-ELEVEn logo has a lowercase "n", you'll love it even
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