Assignment 1 : Question 1

An organization's core competency focused on satisfying customer needs or preferences in order

to achieve above average returns. This is done through Business level strategies. Business level
strategies define are actions taken to provide value to customers and gain a competitive
advantage by exploiting core competencies in specific, individual product or service markets and
concerned with a firm's position in an industry, relative to competitors.

Retailer 1 : The business level strategy Seven-Eleven

Seven-eleven (7-Eleven) Malaysia Sdn Bhd is the owner and operator of all 7-Eleven outlets
in Malaysia. 7-eleven are the pioneer and largest 24-hour convenience store operator in
Malaysia. Incorporated on June 4, 1984, 7-Eleven Malaysia has made its mark on the retail
scene and have been a prominent icon for over 20 years. Following below there are business
level strategies use in 7-eleven Malaysia. (Company Factsheet)
Strategy formulation
7-Eleven has put in place a business strategy that is fully cross functional. The strategy
incorporates the strengths and potential of all sectors at the functional level and is aligned with
the mission statement of the business. The operations and supply chain activities of 7-Eleven are
aligned in the Internally Supportive stage with the overall business strategy of providing
convenience to its customers. This growth has been very carefully planned exploiting the core
strengths that 7-Eleven Malaysia has developed in the areas of Information systems and
Distribution systems and a variety of storage services.
Strategy implementation
To begin with, 7-Eleven made particular a very efficient franchise system where in only one out
of a hundred applicants received the license and had to adhere to very strict requirements such as
operation and management of the store, customer service and appearance in order to keep with
the overall image and reputation of 7-Eleven convenience stores. Additionally, according to
Eleven filling in the entire map of Malaysia is a priority, instead look for demand where
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Eleven stores already exist based on the fundamental area dominance strategy of concentrating
stores in a specific area. This strategy works wonders for the 7-Eleven stores as the following
advantages follow such practice; Boosts distribution efficiency; Improves brand awareness;
Increases system efficiency; Enhances the efficiency of franchise support services; Improves
advertising effectiveness; Prevents competitors entrance into the dominant area. For example
7-Eleven Group plans to upgrade its logistics function by setting up a new logistics centre of its
4-acre piece of land in Bukit Jelutong, Selangor Darul Ehsan. The new logistics centre will be a
dedicated purpose-built facility that is designed to maximize efficient receiving, processing and
distribution of goods. (Announcement, 2009)

Strategy evaluation and control

The Company had chosen a direction for 7-Eleven will go up in the future already for control
local market. In addition, every franchise that, have a good system and management will be
successful. Selection and development of products and services to satisfy each customer group
and solve management problems before actual implementation at every branch. The Company
has used a product management principles to learn about product assortment and increase
efficiency in area utilization such as decreasing the space between shelves in order to gain more
shelf space and expanding shelf space. The future plans, strategies and prospects in the following
there are:
New Premium Fresh Food And Beverage
The 7-Eleven Group is expanding its food service offerings at its 7-Eleven convenience stores by
offering new premium fresh food and beverage items to customers. The 7-Eleven Group plans to
work closely with fresh food manufacturers that are located close to its 7-Eleven convenience
stores to supply freshly prepared food items are sold in stores has a certified HALAL and
undergo stringent quality control to ensure taste and freshness. following example roast coffee is
a combination of some of the finest 100% Arabica coffees from Colombia and Brazil.
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Retailer 2 : The business level strategy of McDonalds

Background
In December 1980, Golden Arches Restaurants Sdn. Bhd. Won the license to operate
McDonalds in Malaysia. The first McDonalds restaurant subsequently opened its doors at Jalan
Bukit Bintang on 29 April 1982. To date, McDonald's Malaysia employs more than 12,000 local
people. The company was named as AON-Hewitt Best Employers in Malaysia in 2009 and 2011,
as well as AON-Hewitt Best Employers in Asia Pacific in 2011. (McDonalds)

Strategy formulation
McDonalds uses demographic segmentation strategy with age as the parameter. The main target
segment are children into consideration, children are more attracted towards toys and delicious
meals including todays youth prefer such places for their entertainment and urban families select
McDonalds on various occasions like birthday party, treat for their children. (McDonalds)
Following example, mission McDonalds are to be customers favourite place and way to eat
with inspired people who delight each customer with unmatched quality, service, cleanliness and
value every time. The external environment can be divided into several sectors. There are two
important parts; competitors, social concept (healthy problem) and uncertainty situation, which
can greatly influence McDonalds strategies. The following core values guide actions as we
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strive to achieve the mission. There are customers are the reason for our existence. McDonalds
demonstrate our appreciation by providing with high quality food and superior service, in a
clean, welcome environment, at great value for each customer every time. McDonalds
committed to people and provide opportunity, recognize talent, and develop leaders and believes
that a diverse team of well trained individuals working together in an environment that fosters
respect and drives a high level of engagement essential to continued success.

Strategy implementation
McDonalds using few growth strategies of the product like as Market Growth Matrix defined by
Ansoff. Market penetration occurs when a company enters a market with the current product.
The is the best way to achieve gains competitors customers.
In business McDonalds always within the fast-food industry, but frequently markets new
burgers. McDonalds are always enhancing their existing product along with it; they also try to
introduce new and new product they can easily survive in the market. Another way includes
attracting non user of the product or convincing current clients to use more of a product or
service. Market penetration occurs when the product and market already exists in the market.
McDonalds is one most popular brand in fast food in the entire world. Every manager user these
four groups to give more focus to the market segment decision e.g. existing customers,
competitor customer, non buying in the current segment, new segments. McDonalds is currently
following above mentioned strategy, to focus on market segments. For serving synonymously to
the existing customers McDonalds coming up with different menus as per change in taste and
preference of their customer e.g. Happy price menu, beverages including float ice-cream.
Supply Chain
The companys recognition as having one of the best supply chains in the world speaks for itself
in terms of the strengths of the company in the area. The company has its unrelenting focus on
speed, with Just-in-Time Delivery (Small Business) and the economies of scale that it reaps on
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account of its global presence exerting considerable influence on suppliers, serving as its
strength.

Strategy Evaluation
With the economic development, peoples living standards have increased dramatically these
years. People are becoming more concerned about their health issues. It cannot be denied that
McDonalds has attempted to make it more convenience for the people. However, people also
believe that such kinds of fast food are not good for their health. The world health organizations
report presented that those foods not only can cause the obesity of children, but also is part of the
reason of causing cancer. Health issues became the biggest stumbling block to the development
of McDonalds. Customers were switching to healthier offering, such as Subways sandwiches,
or KFCs mashed potato instead of fried potato. McDonalds has responded to this healthy trend.
In order to compete, McDonalds has added salads and other lighter options in their menu. If a
mother comes in, she is not only buying the happy meal for her children, she will also be likely
to buy herself a meal too. The lighter options also encourage existing customers to come back
more often, because there is a greater variety of choices.
Following competitor analysis McDonalds has been a leading fast-food outlet. But the
understudy has another competitor eating away into its market share. In addition to its traditional
rival like being KFC. Dominos, Pizza Hut. The firm encounters new challenges. McValue Lunch
and McVAlue Dinner compete using a back-to-basic approach of quickly serving up burgers for
time-pressed consumers. On the higher end, the KFC has become a potent competitor in the
quick service field, taking away customers from McDonalds. Perhaps in a new environment,
fast, convenient service is no longer enough to distinguish firm, at this time, a new critical
success factor may be emerging; the need to create a rich, satisfying experience for consumers.
This brings McDonalds more experience based competition which McDonalds can use for
competitive advantages against Kids Zone and provided WI-Fi enabled the outlet to cater to the
student community.
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Retailer 3 : The business level strategies for Tesco Store Malaysia Sdn Bhd.
Tesco Stores (Malaysia) Sdn. Bhd. Was started on 29 November 2001, as a strategic alliance
between Tesco PLC UK and local conglomerate, Sime Darby Berhad of which the latter holds
30% of the total shares. Tesco opened its first store in Malaysia in February 2002 with the
opening of its first hypermarket in Puchong, Selangor.
Strategy Formulation
In 2004, TescoMalaysia launched its own house brand, Tesco Choice. In December 2006, Tesco
also acquired Makro Cash & Carry in Malaysia, a local wholesaler which was rebranded to
Tesco Extra and provides products for small local retailers. In 2007, Tesco launched Club Card
for a loyal and way to say thank you to customers by giving back their money to them. Club card
has received an overwhelming response from customers with nearly 2 million household
members signed up to date. As of January 2009, Tesco has rewarded nearly RM10 million worth
of Club card Cash Vouchers to the customers. Later in the year 2008, Tesco introduces Green
Club card and Green bags making Tesco Malaysia to be the first Tesco International business to
introduce the Green Club card scheme. As part of its global commitment, Tesco Malaysia is a
market leading on tackling climate change in techniques of energy saving, launching Green Club
card Points to incentivise customers shopping with their own bags, introduce degradable carrier
bags, promote positive behaviour among staff though Energy League competition intra stores
and a recycling centre to facilitate customers to do their part for the environment. Apart from

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that, Tesco has launched new promotional campaign to the consumers, 50 basic needs guaranteed
not beaten on price. (Faisal, 2011)

Strategy Implementation
Tesco currently the focus of a lot of business development and change, provides insight into the
small medium business. The stated strategy from elements of flexibility, local operations
including customers, cultures, supply chains and regulations, focus on a few loose items, multiformat offerings in order to meet the needs of the local market, capability in people, processes
and systems, and brand-building to create lasting customer relationships. The name, Fresh and
Easy, was intended to take advantage of the local culture and values. Their product offerings
within the store, with a strong emphasis on fresh fruits and vegetables, natural and organic foods,
were intended to not only appeal to the tastes of the local culture but also to fill a gap in the
current supermarket offerings within the region.
Tesco has a strong own brand value which is becoming known throughout Malaysia due to the
existing expansion program. Second strength is competitive Pricing Strategy for example the
targeted price cuts enabled Tesco to attract more shoppers from competitors and capture the
volume that supported the lower prices. Tesco has extended its low price positioning in core
groceries across non-foods lines to undercut competition which actually Tesco selling with low
price but provide high volume. Third are customer loyalty/relationship e.g. Tesco gained
customer loyalty or relationship by launching a Club Card scheme. Customers like the Club card
program mainly due to the personalized treatment they receive and the relevance of rewards.
Tesco acquires Makro and convert it to Tesco Extra. What Tesco does is they operate it similar to
Makro, but more flexible. For example, Makro do not allow customers to buy in small quantity,
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but Tesco Extra allow but charge higher than those buys in bulk. By doing so, Tesco could earn
profit from those Small Medium Enterprise as well, besides individual customers or family type
customers. Last one is the strong hypermarket format, for example develop a new store by
adding space to existing locations has contributed to the growth of a Tesco supermarket. Besides
that, Tesco runs two types of hypermarket format which Tesco Hypermarket and Tesco Extra
Hypermarket

Strategy evaluation
Tesco aim is to buy and sell products responsibly, so that customers know that everything they
buy is produced under decent conditions, and everyone involved is treated fairly. They believe
firmly in the benefits of trade. For customers, they use trading to put products within the reach of
ordinary people, and ensure economic growth. For suppliers, they have a wide influence on the
way they treat their workforce. They want the right values in supply chain, decent prices and
conditions for suppliers. At the same time, they also need to provide good value products to
customers.
Tesco also uses various methods like, Marketing Communication Tools which includes print
pamphlets, retail advertising and short send message (SMS) via phone. Free parking are some of
the lures used by Tesco seems to work in their favour. Tesco is very good at using design across
their own label, especially strategically. Tesco is often used as one of the best examples of own
brand label in the retail industry. The majority of consumers buys the basic Tesco brand as it is
cheap and good value for money. Tesco also use of HALAL logo is consistent in each of the
product design.
Today, an Every Day Low Pricing (EDLP) strategy of Tesco is more popular with shoppers than
one driven purely by promotions. But a combination of the two is the best means of keeping
shoppers happy. Pricing was a key strategy and selling point for Tesco. Low prices were adopted
to maximize sales. Tesco's value-added products at low prices attracted many customers. After
the launch of 'unbeatable value' campaign, Tesco went in for massive price reductions. The
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company adopted the strategy of EDLP, while continuing its other promotional activities. The
EDLP program aimed to regularize low prices for Tesco customers.
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Assignment 1; Question 2
Porter's Five Forces Model in the Automobile Industry
This analysis focuses on the automotive industry, specifically, large-scale manufacturers of
automobiles. The automotive industry is inherently interesting: it is massive, it is competitive,
and it is expected to undergo major restructuring in the near future due to globalization and
decreasing oil reserves. Porter's Five Forces, is a way of examining the attractiveness of an
industry. It does so by looking at five forces which act in that industry. These forces are
determinants of that industry's profitability. There are the threat of new entrants, the bargaining
power of buyers/customers, the threat of substitute products, the amount of bargaining power
suppliers and the intensity of the competitive rivalry.
1. The threat of new entrants
In the auto manufacturing industry, this is generally a very low threat. Factors to examine for this
threat include all barriers to entry such as upfront capital requirements e.g. It costs a lot to set up
a car manufacturing facility, brand equity e.g. A new firm may have none, legislation and
government policy e.g. Safety and emissions, the ability to distribute the product, Perodua has
been out of the since the early 90s largely due to the inability to re-establish a dealer network.
These reasons are all tied to the concept of barriers to entry; namely, the obstacles and hindrances
that make it difficult to enter the market and restrict competition. Multiple barriers to entry exist,
which makes it difficult for any new automobile manufacturer to come into the industry and have
success. One of the greatest barriers to entry in the automobile industry is the extremely high
amount of capital that is required to purchase physical manufacturing plants, raw materials, as
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well as to hire and train employees. It takes a great amount of capital, not only for the
manufacturing process, but also to keep up with the latest innovations in order to compete with
the industry leaders. Research and development is an integral part of automobile manufacturing.
New technologies are constantly being discovered that improve the quality of automobiles on the
market as well as reduce costs throughout the manufacturing process. Given the nature of the
industry, manufacturers must be able to achieve economies of scale. Therefore, manufacturing
companies must also have the ability to mass-produce so that can make cars affordable to
customers. This can be a significant barrier for a prospective automobile manufacturer and is
often a major deterrent. Another barrier to entry is the access of distribution channels. It can
sometimes be difficult for a new company in the industry to find an adequate means of
distribution because space within a dealership lot is limited. It is important to note that, while the
average individual does not have the means to come along and start an automobile
manufacturing company, foreign competitors such as Toyota have been able to enter the local
market to compete with such companies as Proton Sdn Bhd and Produa Sdn. Bhd. Many foreign
companies are already well established in their own countries and have achieved a certain level
of success and customer loyalty. Many foreign automakers have the capital, managerial skills,
and required technologies that are necessary to be a strong competitor. (Patterson, 2011)
2. The threat of substitute products
If buyers can look at the competition or other comparable products, and switch easily (they have
low switching costs) there may be a high threat of this force. With new cars, the switching cost is
high because can't sell a brand new car for the same price you paid for it. A Porters Five Forces
Model analysis of the car industry covers the new market, not used or second-hand. Base my on
my opinion need to know whether the market you are analysing has many good alternatives to
new cars. A vibrant used car market perhaps? Used cars threaten the new market. The product
differentiation is important too. In the car industry, typically there are many cars that are similar
look at any mid-range Toyota and you can easily find a very similar Nissan, Honda, or Peugeot.
In some cities such as Kuala Lumpur, Johor or Penang , a car is not as necessary example. In
cities such as those, the subway, bus, riding a bike or walking is the most effective means of
transportation. This reduces the cost of paying for parking, not paying high gas prices and
dealing with traffic within a larger city atmosphere, resulting in more free money and time on
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hand for the consumer. Taking the plane across the Malaysia has even proven to be cheaper in
some situations. However, most individuals in today's society that has the ability and means to
own a vehicle, along with living in a geographic location with the necessary means to travel
(roads and filling stations), will do so.

3. The bargaining power of buyers/customers

Traditionally, suppliers of companies within the auto industry have had very little bargaining
power. For example, if one supplier were to perform below an automotive companys standard,
several other options existed and the supplier could be easily replaced. Recently, auto
manufacturers and suppliers have moved to a tier based system, where the auto manufacturer
would contract with a limited amount of suppliers who would then contract items further
upstream. Proton, in particular, is having trouble with this system due to the current state of the
economy. This shift has led to an increase in the power of suppliers than in the former market
environment. However, the shift in the market environment has not been a profitable one for
suppliers. Given the volatility of current automotive production schedules due to the reduction of
consumer demand, suppliers have very limited power over auto manufacturers in this respect.
Suppliers production and overall success are dictated not only by the market conditions, but also
by the way in which auto manufacturers choose to respond to those conditions.
Following the power of buyer many components used in vehicles is available only from a single
supplier and cannot be quickly or inexpensively re-sourced to another supplier due to long lead
times and new contractual commitments that may be required by another supplier in order to
provide the components or materials. This means that a few key suppliers will retain some
power. However as the average Malaysian consumer became dissatisfied with the products
offered by Japan automakers, they began seeking alternatives; namely foreign auto makers. As
the foreign auto companies entered the Malaysia market, the competition became more intense,
adding power to the buyer. The foreign auto companies were producing with lower operating and
material costs than the Malaysia automakers. Therefore, foreign competitors have been able to
offer the Malaysia consumer a high quality product at a lower cost than its domestic competition.
Given that todays auto industry is filled with a wide range of car brands, large amount of
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capacity, and zero switching costs between brands, consumers have a large amount of bargaining
power. Within the current economic environment, consumers are holding back their purchases of
new products. In fact, many consumers have opted to maintain and repair their current vehicles
rather than purchasing new ones.
4. The amount of bargaining power suppliers.
In the car industry this refers to all the suppliers of parts, tires, components, electronics, and even
the assembly line workers e.g. Unions. I founded in the Malaysia the automotive unions are
tremendously powerful. But also know that some suppliers are small firms who rely on the
carmakers, and may only have one carmaker as a client. So this force can be tricky to evaluate.
The more powerful a seller is relative to the buyer, the more influence the seller has. This
influence can be used to reduce the profits of the buyer through more advantageous pricing,
limiting the quality of the product or service, or shifting some costs onto the buyer (e.g. Shipping
costs). Suppliers are powerful if suppliers are concentrated or differentiated. If there are only a
few suppliers in the market, the suppliers will have more leverage because of the lack of
available alternatives. Significant costs involved in switching suppliers. Customers are less likely
to switch suppliers if there are large costs associated with switching. For example, In 2002,
PROTON cancelled its agreement with Mitsubishi and its sales dropped in the following years.
In 2007, PROTON was struggling to manage without an alliance with foreign firms. (Akifumi
Kuchiki, 2007) According to Protons 2007 annual report, the company intended to improve the
quality of manufacturing by investment in new R&D and through partnership with foreign
companies. However, according to research conducted by JAMA, the production capability is
still low in Malaysia. (Wanrswee Fuangkajonsak, 2006)
5. The intensity of the competitive rivalry
While a Porters Five analysis applies to all companies competing in one industry the same, what
differs is that those firms' profitability will vary between them. This is because of their own
competitive advantages and varying business models. So just because all firms in one industry
and market are subject to the same forces doesn't mean they perform equally. A Porters Five
analysis should always be done in conjunction with other assessments, and should not be
regarded as being absolute. It should only serve as an indicator, not absolute fact or even
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necessarily accurate. There are many critical assumptions that should be made and explained in
one's Porters Five analyses. The market must be described, the competition must be explained,
and the products must be defined. For example, a Porters Five analysis of the car industry in the
Malaysia would not necessarily apply in China. The markets are totally different, and the product
life cycle is not even close to being the same. Another example is the type of the automotive
industry. A Porters Five analysis of the electric car industry would be entirely different than one
of the conventional car industry
However, with an increase in globalization, domestic markets must now compete with foreign
competition. As foreign companies have gained accessibility into the local market over the past
decade, domestic car manufacturers have found it increasingly harder to compete. Most foreign
competitors have been able to obtain lower raw material and production costs while maintaining
equal, if not better, quality of their product. The current market has been fuelled by an attraction
to Japan automakers and car models. There has been new consumer interest in fuel efficiency,
which has created a void in the demand for larger gas-guzzlers like trucks and SUVs and an
increase in demand for fuel technology. This opened the market for alternative power sources for
vehicles for a new market of green-sensitive consumers and gas-pump weary ones. These types
of consumers flocked to Toyota with the advent of the highly successful Prius and Insight for
Honda Motor.
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References
Question 1

The Business Level Strategy of Seven-Eleven

Company Factsheet. (n.d.). Retrieved Jan 05, 2013, from 7eleven:
hytp://www.7eleven.com.my/html/default.aspx?ID=2&PID=12
Johnson, G., Scholes, K., Whittington, R., (2005) Exploring Corporate Strategy Text and Cases,
7th Edition, FT Prentice Hall
M.E. Porter(1985) Competitive Advantage: Creating and Sustaining Superior Performance, Free
Press,
(2010, 10). 7eleven Case Study. StudyMode.com. Retrieved Jun 10, 2010, from http: //www.
studymode. Com /essays/7Eleven-Case-Study-452097.html

The business level strategy of McDonalds

Corporate Info. (n.d.). Retrieved Jun 10, 2013, from McDonad's:
http://www.mcdonalds.com.my/abtus/corpinfo/history.asp
Han, J. (2008). The Business Strategy of McDonald's. International Journal of Business and
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(2009). Corporate Responsibility Report. McDonald'd.
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The business level strategies for Tesco Store Malaysia Sdn Bhd.
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Woods, M. (2008). Linking risk management to strategic controls: a case study of Tesco plc. Int.
Journal of Risk Assessment & Management , Vol.7.

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Assigment 1 : Question 2
Donald Bradley,Morgan Bruns,Adam Fleming,Jay Ling, Lauren Fleming and Felipe Roman.
(2005, December 05). Automotive Industry Analysis. Retrieved July 07, 2013, from
http://www.srl.gatech.edu/Members/bbradley/me6753.industryanalysis.teamA.pdf
Patterson, A. (2011, November 11). Porter's Five Forces. Retrieved Jun 21, 2013, from
http://porters-5-forces.blogspot.com/2011/11/porters-5-forces-in-automobile-industry.html
Donald Bradley,Morgan Bruns,Adam Fleming,Jay Ling, Lauren Fleming and Felipe Roman.
(2005, December 05). Automotive Industry Analysis. Retrieved July 07, 2013, from
http://www.srl.gatech.edu/Members/bbradley/me6753.industryanalysis.teamA.pdf
Patterson, A. (2011, November 11). Porter's Five Forces. Retrieved Jun 21, 2013, from
http://porters-5-forces.blogspot.com/2011/11/porters-5-forces-in-automobile-industry.htm

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