Entering Indian Market

Present by:
LIANG JUN
JIE YING

SHERMIN
POH HUI
MATTHEW
ADELYN

Introduction
Background Information:
7-11 started off as an icehouse in Texas
It is now the worlds largest retailer
Mission: to be Your convenient neighbourhood store, to make the
purchasing of products easy, especially with the wide range of items
that are fresh and of high quality and are sold at affordable prices.

Why we chose India:

India has been and is one of the largest economies in the world
and is said to surpass China.
Due to Indias growing middle class and middle aged working
class, and Chinas growing ageing population. Furthermore India
has a large population with booming potential.

Proposed Business: 7-ELEVEN

7-11 offers ready to eat foods, snacks, and beverages
7-11 also provides top up services, courier services, ticket sales,
online shopping payment or collection and cash withdrawal.
This industry has its primary emphasis placed on providing the
public a convenient location for quick purchase

Although industry competition is intense in this industry, the

industry revenue has been on the rise.

Stability of Government
Stability of
Government

Stability of
Policies

The new Modi

government is able to
stay in power.

The Indian government

does not change
policies frequently.

The new Modi government

was elected through a
general election in 2014,
which records the highest
voter turnout at 66.4%.

Comparing this with Indias

neighbour, Indias voting
system demonstrates more
transparency and democracy.

According to The Economist,

Indias way of promoting reforms
are steady procession of changes.
711 do not have to worry about
frequent change of policies in India.

Political Relationships

Relationship with neighbours

Relationship with US

Relationship with WTO

In 2015, India and China

both agreed to enhance
border cooperation
through border trade.

US is one of Indias
largest direct investors

participation in
World Trade
Organization

Since 711 is from US, it

can safely enter the
Indian market without

This shows that

India supports free
trade

Legal environment
The Indian legal environment is
favorable for investment. The Indian
government is friendly towards foreign
investors.

The Indian government has approved

100% FDI in single-brand retailing,
presenting multi-billion dollar
opportunity for 711.
The new government is willing to ease
corporate tax, protect property rights,
reduce red tape and increase efficiency.

Technological

T in PESTE refers to Technology in a

country , in India , there are
infrastructures , information technology ,
capital equipment know-how and skill
level of their workforce.
Infrastructure in India includes , bridges,
dams, roads and urban infrastructure
development.
Underinvestment in infrastructure have
left the country with poorly functioning
transit systems and power grids that have
further endangered its slowing economy.
Therefore, India is technologically ready
to receive investments, especially in its IT
and telecommunication technologies
from other countries so that they can
further improve their infrastructure.

Technological

Information technology in India is an industry

consisting of 2 major components : It services
and business process outsourcing.
The computer software and hardware sector in
India attracted cumulative foreign direct
investment. The sector has increased its
contribution to India's GDP from 1.2% in 1998 to
7.5% in 2012.
Skill level of workforce in India consist of mostly
youths as they have the highest population of
youths in the country around the world.
Indias youths will not be an advantage to them
while so many of them lack skills. There are
currently many skills development initiatives
underway, but supporting on the job training in
the massive unorganized sector should be a
priority as this is where most jobs for the youth
are created.

Environmental Factors
Geography

3448KM

Environmental Factors
Actions to mitigate climate change effects
54% of 4031 Indians said that India is making a large or moderate-scale effort to reduce
global warming, even if it has large or moderate economic costs. in a national survey.
GLOBAL WARMING
TO

NATURAL DISASTERS

US provides $1 billion to
create a low-carbon and
climate-resilient energy
economy, launching the
new 'Partnership for Climate
Resilience' program.

PM proposed to amend the

Montreal Protocol to cut down
on climate-damaging refrigerant
HFCs (hydrofluorocarbons), used
in air-conditioners, refrigerators
and insulating foams, which is
damaging to ozone layer.
India PM targeted of
generating 175,000
megawatts of renewable
energy which will save 350
million tonnes of carbon
emissions each year.

Socioculture

Most of the
population
speaks Hindi.

While overall,
25% of the
population speaks
English. Majority
of workers in a
company
converse in
English.

Mainly
Hinduism,
Buddhism,
Jainism, Sikhism
13% of the
population
are Muslim.

81.3% Hindu,
2.3% Christian

Karma

Following ones
fated path.

Values and attitudes

There are 5
categories to the
caste system.

Religion and beliefs

Sociial Structure

Caste systemplacement of
people according
to their
occupation.

Language

Cooperation
required for
one to survive
in a family or
group.
Being modest
or down to
earth.
Time is fairly
fluid

Contact between
men and women is
allowed in bigger/
more westernized
cities.

Punctuality

One has to greet

the eldest person
first due to the
hierarchical
structure.

Emphasis on
inducing special
spiritual or
philosophical states
in the audience.

Education

Aesthetics

Manners and customs

Socioculture

Low percentage of
children attending
school.
Large amount of
students who do
not complete
school.
Increasing amount
of children
receiving
education and
going further in
their studies

Economic
Indias current population:
Approximately 1.2 billion
Large market size
Large labour force
Labour force
Labour force participation
rate is at 52.50%
About 7.2 million Indians are
added to the workforce
annually since 2012-2013
Inexpensive to hire
Literacy rate
Increase of 9% from 65.38%
in 2001 to 74.04% in 2011
Government anticipation of
increment to 80% by 2015

Influences consumer spending and

overall economic growth
Unemployment rate currently at
3.6%
Majority of the labour force is
employed
Minimizes social unrest

Economic
Inflation Rate
Decrease from 10.9% in 2013 to 6.4% 2014
Lower inflation rate allows consumers to have higher spending power
Certainty for firms and consumers
Importance of Price Stability to Firms
Determination of the value of money
Preservation of purchasing power
Gives businesses a peace of mind to plan ahead for the future without
having to worry about prices dropping.

Economic
Real Gross Domestic Product (GDP)
Real GDP growth rate

and

Indias GDP stands at 1841.70 billion USD. Its

GDP growth has been declining since 2011 and
has dropped to 3.2% recently indicating a slight
drop in output levels in India. India would thus
be able to support growing demand of goods
and services
The World Bank has projected India's economy
will grow over 6 per cent in 2014-15 and 7.1 per
cent by 2016-17 as global demand recovers and
domestic investment increases

New competition leads to innovation and

improvements in production and products.

Rivals between between businesses results in

better prices for consumers and introduction of
new jobs for the locals.
This will result in a rise of purchasing power for
the people of india thus pushing supply and
demand forces into motion that will improve
indias economy. as Indias economy will look
very attractive therefore, with the introduction
of new businesses, it would lead to the
development of the country.

Economic
Balance of Payments
Indias Current account sits at a deficit of 21.8billion US dollar. This implies
that India is currently facing trade deficits. Latest data shows that India has
been importing more than exporting which signifies that India is living
beyond what it can sustain.

Threat of new entrants

Economies of scale:7-ELevens existing partners and
suppliers are huge multi-national companies which they can
make-use of in order to achieve economies of scale of their
own. If 7-Eleven is able to utilized their existing connections,
they would be protect when other companies attempt to
enter the market as they would already be protected in the
industry through cost savings.

Government Policy: Indias tariff has been considered high

as compared to other countries. Fortunately, India has
been steadily opened up its economy and its economy
has now become one of the fastest growing in the world

Threat of new entrants

Product differentiation: 7-Eleven offers products that are
homogeneous within them relative to other convenience
stores. 7-Eleven uses advertising and customer services to
overcome this. For example, they created teams of marketing
& merchandising to develop national strategies.

Capital Requirements: According to Bloomberg, it is said that

retailers in India will have to buy 30% of manufactured
products from small and mid-sized local firms with less than $2
million invested in factories 7-Eleven would however be able
to overcome this barrier because of its multi-national status.7Eleven is able to sustain its outlets would wide with over
3,000 existing outlets

Power of Buyers
1. Needs and Demands

2. Price Sensitivity
3. Income Level

Buyers normally choose those that offer the best products and
services. 7-Eleven is driven by the constantly evolving needs of
their buyers, creating powerful changes that local market needs.
Besides that, 7-Eleven is able to satisfy a high demand in
convenience store through its everyday fresh products

4. Product Differetiation

7-Eleven provide favorable pricing and terms

7-Eleven targets the entire populations with their product;
mainly food. As such, consumers would be fewer prices sensitive
as it is a daily necessity in addition to the already low prices
offered by 7-Eleven. Therefore, buyers have low power.
7-ELEVEN company offers mainly food products amongst other
items and is an essential for the modern everyday life.

Power of Suppliers
1. Manufacturers

2. Distributors
3. Indipendent Supliers
4. Importer
5. Pricing

6. Supply

7. Quality Issue

7-Eleven currently has a huge number of suppliers. This

is suggested on 7-11 web page where it is possible for
companies to apply and register as a supplier for 7Eleven in. Amongst the various suppliers, there will be
major companies which would make-up the core
products
This is a high-threat to 7-Eleven because CREDAI is
uniting thousands of real estate companies into one
organization. India has many suppliers willing to supply
professional service.
All of the different products and service that 7-Eleven
requires can be easily found in India which thus results
in a large number of supplier for the business
operations in India. As such, the power of suppliers is
low.

Power of Suppliers
1. Manufacturers

2. Distributors
3. Indipendent Supliers

Suppliers are powerful when the industry is not an

important customer. This is because; the suppliers loss of
business with the industry would not impact much on their
profit margins.

6. Supply

do not see 7-Elevens industry of convenience and

important industry. This is because their services are
needed by all business around the country. The loss of
business with 7-Eleven is not substantial as they would have
more business elsewhere.

7. Quality Issue

4. Importer
5. Pricing

Thus 7-Eleven would not be able to be too demanding

on their suppliers which empower them to charge high
prices. Overall, Suppliers have medium-high threat.

Threat of Substitute
1. Unauthorized shops

2. Modernized shops
3. Online Shops

Indian consumers have an array of ways to get daily

necessities from. Among them, homemade products
from unorganized retailers post the greatest threat to
711.
offer similar perceived values as 711 in terms of low
price and convenience. This is because they can be easily
found in nearly all neighbourhood and they sell products
at affordable prices
Fortunately, 711 has several unique selling points. 711
strengths lie in its 24/7 service, great varieties of
products of consistent quality and a modernized
atmosphere in its store environment. Low threat

Threat of Substitute
1. Unauthorized shops

2. Modernized shops
3. Online Shops

modernized retail shops that offer 24/7 services also

forms a threat to 711. Eg. Twenty Four Seven
Convenience Stores
This means that the all-round-the-clock service is no
longer uniquely 711.

Having said that, 711 is not losing its edge as it offers

top up services, ticket sales, bill paying, online
shopping payment, and collection and cash
withdrawal - all of which are not found
simultaneously in a single modernized shops in India.
Threat medium to low

Threat of Substitute
1. Unauthorized shops

2. Modernized shops
3. Online Shops

Online provision shops also posts a threat to 711. This

is because online provision shops prove home delivery
service, a number of them is 24/7, and the products
are low in price.
Local websites like Justidial even sorts out grocery
shops by location, and allows for online direct
ordering from any chosen shop and any chosen time.
Their limitations: delivery takes time and it is not
24/7. Also, customers do not get to see and touch the
actual products, so they might be concern about the
quality of products. For these two reasons, online
provision shops are not strong substitute to 711
low threats.

Intensity of Rivalry
1. Number and Size of Firms

2. Market Size
3. Exit Barrier
3. Perishability

The amount of existing competitors in the food

retailers industry is numerous The estimated
number of modern food retail outlets in India has
declined slightly to 2,957 stores from the 2012
estimate of 2,971 However, their market shares are
small
The market size in India is extremely large. The
population of India stands at 1,220,800,359 which
suggest that India has an extremely large market size.
Market has also been growing at a fast pace Imports
of consumer-ready foods, led by nuts and fresh and
dried fruits have doubled since 2008 to $2.0 billion

Intensity of Rivalry
1. Number and Size of Firms

2. Market Size
3. Exit Barrier
3. Perishability

The exit barriers in the food retail industry are low as

well. In the food retail industry, there are no
complicated assets involved.
The food retail industry has little product
differentiation and is mainly perishable. Consumers
are spoiled for choice in this industry.
Overall, the competition in India relative to 7-Eleven is
low-high as 7-Eleven cane easily overcome the
obstacles it faces. This is largely due to the market size
and market growth.
Although, other factors did contribute adversely as
well, 7-Eleven has shown it has the caliber to
overcome these negativities.

Conclusion
India has a stable government and shows social stability in its country.
Also, it has good relations with other countries. For economic factor, the
only problem is the low consumer purchasing power. However, this doesnt
cause any problems to 7-Eleven as it serves to sell at an affordable price.
For social factor, Indias literacy rate is increasing. To add on, they speak
mostly in English which makes communication easier. However, their
religion beliefs and prohibited practices should be taken into consideration.
According to the Michael Portal Model, it shows that there is a mediumlow threat of new entrants, low power of buyers, low-high power of
suppliers, threat of substitutes and same goes to rivalry among existing
firms in the industry. Thus, the intensity of rivalry can be considered as low.
This further proves that retailing industry in India is favourable to invest in.

Recommendation
Based on the analysis above,
7-ELEVEN is currently at side
2 whereby there is high

capability of the industry,

High

medium to high industry

attractiveness and low
country risks.

Capability

Being at this side, almost all

High

entry modes are applicable.

Risks

Low
High

Attractiveness

Low

Low

Recommendation
Our group would like to recommend 100% FDI for 7-ELEVEN.
We recommend green field venture because India has large land to
acquire and it is not difficult to get lands from India especially after
their deregulation of FDI policies.
Based on our research, 7- ELEVEN has large amount of resources.
Since India has a large population and a significant number of them
are English-speaking, it is not difficult to acquire resources from India
as well.
This 100% FDI will allow 7-ELEVEN to have full control and full profits
of the business.
Since the greatest threat that 7-ELEVEN faces is only local
competition, 7-ELEVEN should set up its business from ground up,
cultivate its own corporate culture and further develop its unique
selling point.
Therefore, 100% FDI is recommended to 7-ELEVEN.

THANK YOU!