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Making Convenient 7-Eleven 2018

Experiment Findings · December 2018

DOI: 10.13140/RG.2.2.16876.82567

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 Making Convenient 7-Eleven 2018

Muhammad I’rfan Abdul Latif

irfan94.al@gmail.com,

Minaim Elsherbini

minaimsherbini@gmail.com

Muhammad Faizul Azmi Fauzi

faizulazmi19@gmail.com,

Hamidullah Hamat

hhemat2021@gmail.com,

Izfadly Iskandar

iz.fadly@yahoo.com,

Suhaimi Mhd Sarif

suhaimims@iium.edu.my

International Islamic University Malaysia

ABSTRACT
Making convenient to 7-Eleven Company in the retailing is essential to create,
maintain and sustain competitive advantage. Superior value in terms of contents and
services are essentials. Retailing is growing very fast in the digital era with the
Internet of Things, Big Data, Artificial Intelligence and Society 6.0. This report aims
to recommend strategies for 7-Eleven to consider in securing competitive advantage.
The report uses strategy generation and selection framework as basis to generate and
recommend strategies. Taqwa (integrity) allows for good governance in the oil and
industry that needs to adhere to standards, norms and behavior of oil and gas industry.
While deciding the next action, Tawfik (invisible force) or group cohesiveness guided
by Allah through Tawhidic paradigm and Maqasid al-Shariah provides contingency
perspective to this report. The results of the report are essential for 7-Evelen to make
the business convenient to the stakeholders.

Keywords: Competitive advantage, Retailing, Malaysia.

1
Introduction

Company Background

7-Eleven was formerly known as Southland Ice Company, which was found in Dallas,
during the year 1927. When an employee began selling eggs, bread, and milk to
houses. While they sold other goods, the employee believed that basic items were
better, as customers would reduce the need to travel long distances. Eventually,
Southland faced high debts and had to file for bankruptcy, and had to transfer 70%
control to a Japanese company. Consequently, it led to the formation of 7-Eleven, a
Japanese-owned American international chain of convenience stores. However, 7-
Eleven Malaysia Holdings Berhad is a wholly owned subsidy that was established in
4 June 1984, which handles the operations of the 7-Eleven convenience stores in
Malaysia. It is the most established convenience store brand in Malaysia. Their 30
years of operations has allowed them to become the consumer’s number one choice
for convenient products. Citizens are able to find 7-Eleven stores all over the country,
even in the rural areas. It is one of the largest convenient stores in Malaysia, in terms
of having the highest number of stores of 2,250 stores nationwide, while serving over
900,00 customers daily. Recently, other companies have seen the potential of the
convenience retail industry and entered the market. Foreign and local convenience
store brands such as myNEWS, 99 Speedmart, and Family Mart are entrants of the
market that are competing with 7-Eleven for the best convenience store.

Vision

The vision of 7-Eleven Malaysia is “To be the best retailer of convenience.”

The vision they have provided is too broad, since the ‘best’ can be interpreted as
ambiguous. While they state what they want to become in the future, it is however
quite ambiguous, as well as the kind of service they are providing and to whom. A
proposed vision would be, “To be the leading convenience retailer for Malaysia”,
seeing as the vision states which market position they aim to achieve, while
addressing the customers they wish to serve. It highlights what they want to become
in future, and how they will do it.

Mission

Their mission statement, “To consistently serve the changing needs of

customers for their convenience” is a broad statement that focuses on adapting to
change and to satisfy the needs of the consumers. However, they have developed
values that complement their mission statement. As they will be attending to uphold
these values in order to achieve their mission statement.

1. Understand- “We seek to understand the needs of stakeholders & the company
to make the best (balanced) decisions”.
2. Simplify – “We work towards making things convenient for people to increase
the effectiveness of our solutions”.
3. Solve- “We find ways to resolve issues that prevents us from delivering value
to those we serve”.
4. Connect- “We communicate to manage people’s expectations in the most
effective manner”.

2
 The value of ‘Understand’ focuses on their employees and survivability aspect
of the company. Seeing as they aim to meet the needs of stakeholders of the company
to achieve the best results through wise decision-making. ‘Simplify’ addresses the
customers, self-concept, and market elements. They are thriving to provide the best
convenience by building stores and providing a range of retail services.
They should add values that cover their technology, philosophy, and public image as
it is a form of practice they have been doing for years. For instance, Adapt- “We will
continue to integrate innovative technology to provide convenience for the public”

Input Stage

IFE Matrix

No. Strength Weight Rating Weight score

1 Foreign 0.06 4 0.24
investors are
interested in
investing in 7-
Eleven stocks.
2 Possess the 0.05 4 0.20
most amounts
of convenience
stores
amounting to
2,250 stores.
3 Customers are 0.04 4 0.16
able to pay their
bills, top-up
mobile prepaid,
and purchase
gift cards.
4 Most well- 0.05 4 0.20
known
convenience
store brand in
Malaysia.
5 Franchise 0.02 3 0.06
program for
local
entrepreneurs to
open their own
7-Eleven.
6 Revenue grew 0.07 4 0.28
from RM2.1
billion to
RM2.19 billion
by RM83.7
million or 4.0%

3
 compared to the
preceding
financial year.
7 Store count 0.06 4 0.24
increased by
103 stores or
4.8 % from
2,122 stores to
2,225 stores.
8 Operating 0.05 4 0.2
income
increased by
RM21.6 million
or 18.7% to
RM137.2
million as
compared to the
preceding
financial year.
9 Won numerous 0.03 4 0.12
awards for
corporate social
responsibility
(CSR)
contributions
10 Profit from 0.07 4 0.28
operations
increased by
8.5% or RM6.3
million.

No. Weaknesses Weight Rating Weight score

1 Opening only 0.06 2 0.12
100 stores and
not the initial
200.
2 Increase 0.06 2 0.12
overhead costs
for stores.
3 No mobile app 0.05 2 0.10
to connect
stakeholders
with the store.
4 No loyalty 0.05 2 0.10
program to data
mine consumer
activities.
5 Low quality 0.03 2 0.06
ready-to-eat
products.

4
6 Increase in 0.05 2 0.10
product prices.
7 Losing market 0.06 1 0.06
share due to
competitive
nature of
industry.
8 Decline in 0.06 2 0.12
profit after tax
from RM50.1
million
compared to
RM52.2 million
recorded for the
preceding
financial year.
9 Finance cost 0.04 1 0.04
increased by
RM6.6 million
from credit and
term loan
facilities.
10 Administrative 0.04 2 0.08
and other
operating
expenses
increased by
RM5.0 million
or 5.4%.
Total 2.88

One of the strengths of 7-Eleven that should be highlighted is the company’s

revenue that has shown a significant increase from RM2.1 Billion to RM2.19 billion
by RM83.7 million or 4.0% compared to the preceding financial year due to the
expansion of store outlets across Malaysia, thus giving a weight of 0.07 and a rating
of 4 to show how significant this factor is. Nevertheless, the company also possesses
total amount of store outlet to 2250 stores in Malaysia that shows a big impact and a
major strength for the company, thus deciding to give a weighted score of 0.5 and a
rating of 4. Since the company is well known for its outlet and brand, foreign
investors are interested to invest in the company’s stocks, thus boosting its awareness
and brand recognition in the convenience store industry with having a weight of 0.06
and rating of 4. With the update on technological advancement allowing the company
to implement payments of bills, mobile top ups and gift card purchasing, this factor is
given a weight of 0.04 and a rating of 4 to signify the level of strength it reflects for
the company.

7-Eleven is a well-known convenience store brand in Malaysia competing

with several other brand stores such as Family Mart, KK Speed mart and 99
Speedmart. Therefore, the weight of 0.05 and a rating of 4 due to the fact that it is
considered one of the major strengths. The company also supports local entrepreneurs

5
to open their own stores, by providing franchising programs for entrepreneurs to
enroll in. thus having a weighted score of 0.2 and a rating of 3. The company’s store
outlet has showed a significant increase in number of stores increasing by 4.8% (103
Stores) which amount to a total of 2225 stores. Thus, given a weight of 0.06 and a
rating of 4 to show the significant strength of the company. The company resulted in a
financial income increase by 18.7% as compared to the preceding financial year with
an amount of RM137.2 Million, thus with a weight of 0.05 and a rating of 4. Since the
company has been involved in winning numerous social responsibility contribution
shows a significant strength for the company with a weight of 0.03 and a rating of 4.
Profit from operations has increased by 8.5% or RM6.3 Million given a weighted
score of 0.07 and a rating of 4.

Moving on to the 7-Eleven weaknesses, every entity must have several

weaknesses in running a business. Weakness of an entity are basically due to the
internal problems or limited access to certain resources such as financial resources
and human resources. First and foremost, the company is now facing an increase in
the overhead cost for stores making it a significant weakness of the company, given a
weighted score of 0.06 and a rating of 2 to show its impact on the company operation
activities. Secondly the planning of the company was to generate in opening a total of
200 stores, however with several restriction and poor resources management, the
company was able to open only 100 stores. Showing a great weakness of the company
with a weight of 0.06 and a rating of 2. The company lacks in customer and store
relationship, without a mobile app for the interconnection between the customers and
the business, shows a significant weakness for the company resulting to weighted
score of 0.05 and a rating of 2. Unlike other retail outlets they have loyalty cards and
programs to enhance the customer relationship with the company, whereas 7-Eleven
does not have such loyalty cards or programs to better understand the customers
wants and needs making it a significant weakness for the company with a given
weighted score of 0.05 and a rating of 2.

Taking into consideration of the company’s biggest competitor Family Mart,

the company lacks in offering good quality ready-to-eat food, thus losing an
advantage to the competitor as they offer good quality ready-to-eat food. Thus, having
a weighted score of 0.03 and a rating of 2. The increase in prices of the products due
to the implementation of taxes such as GST or most frequent SST shows a significant
impact on the business thus given a weighted score of 0.05 and rating of 2. The
increase in competitors for the retail stores making it losing its market share due to the
competitive nature of the industry, thus having a weighted score of 0.06 and rating of
1. One of the major weakness of the company resolves behind the fact that the profit
after tax has declined from RM 52.2 Million to RM51 Million recorded from the
preceding financial year. Nevertheless, financing cost has increased by 6.6 Million
from credit and term loan facilities shows a great impact on the weakness of the
company with a given weighted score of 0.04 and a rating 1. Administrative and other
operating expense has also increased by 5.4% (RM 5 Million) thus given a weighted
score of 0.04 and rating of 2.

EFE Matrix

No. Opportunity Weight Rating Weight score

6
1 Increase of 0.06 4 0.24
eWallet
payment
methods.
2 Consumer 0.05 4 0.2
demand for
unique ready-
to-eat food
products
3 Rural areas 0.04 4 0.16
demand for
convenience
stores.
4 Consumer 0.06 4 0.24
demand for
loyalty and
store app
5 Intermediaries 0.06 4 0.24
demand for
integration of
technology to
improve supply
chain
management.
6 Abundance of 0.05 4 0.2
rental space
properties
available.
7 Consumers 0.06 4 0.24
seeking for
more payment
services, such
as paying their
bills, gift cards,
and mobile
reloads.
8 Consumer 0.05 3 0.15
demand for
foreign
imported
products.
9 New Malaysian 0.05 4 0.2
government
supporting
technology
integration
from stores.
10 Lower rental 0.05 4 0.2
costs due to
SST.

7
No. Threats Weight Rating Weight score
1 Households 0.06 2 0.12
with income
levels below
RM2, 000 spent
95% of their
income on
everyday
essentials and
those earning
below RM5,
000 will have to
reduce on
household food
consumption.
2 RM100 per 0.06 2 0.12
month increase
in minimum
wage.
3 More 0.05 2 0.1
convenient
stores opening
nearby 7-
Eleven stores
(KK Mart,
Speedmart,
Family Mart).
4 Government 0.05 2 0.1
implemented a
soda tax.
5 Family Mart 0.05 2 0.1
obtaining more
daily revenue
due to ready-to-
eat food
products
offered to
consumers.
6 Other 0.05 2 0.1
convenient
store retailers
have loyalty
programs.
7 Competitors are 0.05 2 0.1
taking viable
retail space to
expand.
8 Price increase 0.04 2 0.08
from

8
 manufacturers,
suppliers, and
importers of
products.
9 Over 3,000 24 0.05 2 0.10
hours
convenience
stores from
Petronas, Shell,
Petron, Caltex,
and more.
10 Numerous 0.06 2 0.12
robbery cases,
because stores
are opened for
24 hours.
TOTAL 3.01

External Factor Evaluation (EFE) Matrix is another strategic management tool

that often been used in assessing current business conditions. Additionally, it is also
very helpful for an organization’s ability to analyze their opportunities and threat, so
that a corrective action can be taken to gain strong competitive advantage. The
opportunities that was analyzed, firstly the increase in eWallet payment methods,
since all business industry has started to adapt into using the technology framework in
the business to better suit the operations and ease customer interaction with the outlet.

Thus, a weighted score of 0.6 and a rating of 4 was given.

Secondly the demand of the consumers on ready-to-eat product would generate a
great opportunity for the business to start offering ready-to-eat products to suit
customers and demand and preferences. Thus, being a major opportunity with a
weighted score of 0.05 and a rating of 4.

Since mainly 7-Eleven stores are located in major parts of cities, the demand
of the outlet in rural areas gives the opportunity for the company to spread more outlet
location to other areas thus having a larger market share in the convenience store
industry, thus given a weighted score of 0.04 and a rating of 4 to show the significant
impact of this opportunity for the company. The company is lacking loyalty cards and
programs for frequent customer users of the outlets, thus developing such platform of
loyalty cards and programs would definitely have a positive impact on the customer
relationship thus boosting revenues and profit, thus given a weighted score of 0.06
and a rating of 4.

Nevertheless, having a variety of payment services such as bill payment, top

ups and gift cards would definitely have a positive impact on the business, thus
weighted score of 0.05 and a rating of 4 was given. The demand in foreign imported
products may give an opportunity for the company to provide several products and
services to customers aiming for different alternatives of products, thus having a
weighted score of 0.05 and a rating of 3.
The governmental support in implementing technology integration of business
operation would have a positive impact for the business to improve its efficiency in

9
supply chain and customer relationship, thus having a weighted score of 0.05 and a
rating 4. Lower rental cost would be helpful in making the prices of the products
offered in the store in a lower price compared to other retail convenience stores. Thus,
having a weighted score of 0.05 and a rating of 4.
As for threats, we managed to figure out about ten threats that may give a negative
impact for 7-Eleven. Due to the restriction of income for households, spending in the
outlet may be reduced due to the limitation of purchasing power thus giving a
negative impact for the business resulting to a lower spending in the stores, thus we
decided to give it a weighted score of 0.06 and a rating of 2 to show how significant
this factor is as a threat for the business. The increase in minimum wage of employees
would affect the business into a higher operating cost and employee wages, thus the
company would have to spend more for employee’s wage in complying with
governmental rules and regulations. Thus, given a weighted score of 0.06 and a rating
of 2.

There is an increase in convenient store opening nearby 7-Eleven thus may

lead to high competition in the respective areas since customers have the choice in
choosing which convenience store to purchase products. Thus, having a weighted
score of 0.05 and a rating of 2. Family Mart a major competitor for the company is
offering ready-to-eat food for customers, thus making it a threat for the company
since customers are able to enjoy ready-to-eat food in their stores. Thus, a weighted
score of 0.05 and a rating of 2 was given. The business is lacking in customer
relationship programs, since most business have developed loyalty cards and
programs for customers to enjoy the merits and benefits of shopping in the outlet.
Thus, this is a major negative impact for the business thus given a weighted score of
0.05 and a rating of 2.
A price increase in products would definitely be a threat for the business since most of
convenience store is offering products that are affordable for customer convenience,
thus the increase in the price would force the business to implement a higher price for
the products it offers. Thus, having a weighted score of 0.04 and a rating of 2. The
existence of 24 hours convenience store is a direct competition for the business
allowing customers to choose which store they find convenience for them, thus given
a weighted score of 0.05 and a rating of 2.

After evaluation of the total scores given for the weights and the ratings for
each factor, the results are as follows; the EFE matrix calculation have resulted to a
weighted score valued at 3.01. while the IFE Matrix calculation has resulted to a
weighted score valued to 2.88 respectively.

Competitive Profile Matrix

10
 To create CPM matrix, two major competitors of 7-Eleven are currently
Family Mart and 99 Speedmart which they have branched all over the world. These
two competitors are chosen, because they also involved in convenience retailing
market and the competitors that are taking the market share of 7-Eleven. Based on the
table above, it showed that 7-Eleven have the higher rating compare to Family mart
and 99 Speedmart. Generally, it can be highlighted that 7-Eleven is still the strongest
company.

11
Financial Report and Ratio Analysis

Liquidity ratios

Current ratio = Current Assets / Current Liabilities

=408,865/ 651,698
=0.627

Current ratio basically is to measure the ability to pay short-term debt with its
current assets. This is a rough estimation, which incorporates all current assets over
all current liabilities. The data shows that the ability of the 7-Eleven is not in the very
best level to repay their short-term obligations because of having a low current ratio.

Quick ratio = (Current Assets – Inventories) / Current Liabilities

=408,865-221,957/651,698
=0.28

Similar to the previous ratio, this ratio is more specific in measuring short-
term liquidity and ability to repay short-term debt by its most liquid assets. The
difference from current account is that it accounts for more specific components than
current ratio because this one ignores inventories in its calculation. This is because the
inventories are not necessary can be converted into cash in the very short time. This
ratio is also often being called as acid test ratio.to look at to 7-eleven overall
performance in term of ratios, their liquidity management is not at the optimum level,
enough to cater all the current obligations with the available quickest asset.

Capital structure

Debt to Assets Ratio = Total Liabilities/Total Assets

=720,934/794,968
=0.90

Debt to Total Asset Ratio is a solvency ratio that evaluates the total liabilities
of a company as a percentage of its total assets. The ratio indicates that a higher
percentage of assets are financed through debt. This means that the creditors have
more claims on the company’s assets

Debt to Equity Ratio = Total Liabilities /Total Stockholders’ equity

=720,934/1,485,138
=0.48
Debt to equity ratio shows the relation between the portion of assets financed
by creditors and the portion of assets financed by stockholders. The ratio indicates
that the portion of assets provided by stockholders is greater than the portion of assets
provided by creditors, as it is less than 1.

12
Times Interest Earned Ratio = Profit before interest and tax/Total Interest charges
=79,728/9,232
=8.64
The times interest earned ratio, sometimes called the interest coverage ratio, is
a coverage ratio that measures the proportionate amount of income that can be used to
cover interest expenses in the future. The company has a high times interest earned
ratio, which is a good sign of the company strength to pay the interest on the money
that they have borrowed from the banks.

Asset Management/ activity ratios

Total Asset Turnover= (Net Sales/Average Total Asset)

= 2,187,102/413767
=5.29
Asset turnover ratio measures the value of a company’s sales or revenues
generated relative to the value of its assets. The Asset Turnover ratio can often be
used as an indicator of the efficiency with which a company is deploying its assets in
generating revenue. The ratio of 7-eleven shows that they are using their assets
efficiently to generate revenue.

Non - Current Asset Turnover= (Net Sales/Average Fixed assets)

=2,187,102/370563.5
=5.91
Non-current asset turnover ratio determines the efficiency with which a
business uses its non-current assets to generate revenue for the business. So, from the
findings we can say that 7-eleven company has the highest ratio which shows that hey
gain a big portion of revenue from their non-current asset or fixed asset in 2017.

Account receivable turnover= (Net Sales/Average Gross Receivables)

=2,187,102/55080.5
=39.71
Accounts receivable turnover is an efficiency ratio or activity ratio that
measures how many times a business can turn its accounts receivable into cash during
a period. By having high account receivables turnover, we could comment that
company is in the best position to receive the receivables during the year.

Account Receivable turnover (days) = (Average Gross Receivables) / (Net Sales/365)

=55080.5/
(2,187,102)/365=55080.5/5992.06

13
 =9.20 days
Accounts Receivable Turnover (Days) – An activity ratio measuring how
many days per year averagely needed by a company to collect its receivables. In this
case we can say that the company is very collaborative with the clients because they
take very less time to collect their receivables.

Inventory Turnover= (COGS/Average inventory)

=1,495,772/242952.5
=6.16
Inventory turnover, is a measure of the number of times is sold or used in a
time of period such as a year. The inventory turnover can be also defined as a ratio
that shows how many times a company has sold and replaced inventory with a new
one during a period of time. The ratio that we calculated is the positive sign for the
company because it has the lower average inventory. Which means they are doing
well in term of inventory turnover ratio.

Profitability ratios

Return on asset = Net Income before No controlling Interest / Average Total Assets
= 79,728 /784330.5
=0.1017
Return on assets or commonly known as ROA is a measurement of profitability in
relative to the company’s assets. The 7-eleven company has the highest ratio, which is
more than 10%, which means they generate high income from their assets by using
then effectively. As we know that the higher the ratio means the higher the capability
of the company’s asset generate income for the business.

Return on equity = Net income / Average Total Equity

=79,728 /54682.5
=1.46
This ratio is a measurement of profits generated for each dollar invested by the
shareholders. The lower ratio indicates that company generates a small amount
income from equity which is not a good sign for them.

14
Gross profit margin= (sales-COGS)/sales
= (2,187,102-1,495,772)/ 2,187,102
=0.32
Operating profit margin=EBIT/Sales
=79,728/2,187,102
=0.037

15
Matching Stage
SWOT Matrix
Strength Weakness
1. Foreign investors 1. Opening only 100
are interested in stores and not the
investing in 7- initial 200
Eleven stocks. 2. Increase overhead
2. Possess the most costs for stores
amounts of 3. No mobile app to
convenience stores connect
of 2,250. stakeholders with
3. Customers are able the store
to pay their bills, 4. No loyalty program
top-up mobile to data mine
prepaid, and consumer
purchase gift cards. activities.
4. Most well-known 5. Low quality ready-
convenience store to-eat products
brand in Malaysia. 6. Increase in product
5. Franchise program prices
for local 7. Losing market
entrepreneurs to share due to
open their own 7- competitive nature
Eleven. of industry
6. Revenue grew 8. Decline in profit
from RM2.1 billion after tax from
to RM2.19 billion RM50.1 million
by RM83.7 million compared to
or 4.0% compared RM52.2 million
to the preceding recorded for the
financial year. preceding financial
7. Store count year.
increased by 103 9. Finance cost
stores or 4.8 % increased by
from 2,122 stores RM6.6 million
to 2,225 stores. from credit and
8. Operating income term loan facilities.
increased by 10. Administrative and
RM21.6 million or other operating
18.7% to RM137.2 expenses increased
million as by RM5.0 million
compared to the or 5.4%.
preceding financial
year.
9. Won numerous
awards for
corporate social
responsibility
(CSR)
contributions.

16
 10. Profit from
operations
increased by 8.5%
or RM6.3 million.

Opportunity Strength-Opportunity Weakness-Opportunity

1. Increase of eWallet Strategies Strategies
payment methods.
2. Consumer demand  Create a new  Create a store
for unique ready- payment channel, loyalty app for
to-eat food where customers customers to data
products. can pay online and mine (W3, W4,
3. Rural areas collect their food O1, O4, O9, O7)
demand for without paying at  Innovate and
convenience stores. the counter. (S2, develop more
4. Consumer demand O2, O3, O7, O9) unique ready-to-eat
for loyalty and  Joint venture with products. (O2, O8,
store app. more online W5, W7)
5. Intermediaries retailing channels  Integrate
demand for to provide management
integration of customers access to information system
technology to payment services. in supply chain
improve supply (S3, S4, O1, O5, process for
chain management. O7, O9) efficiency and
6. Abundance of  Open more stores lowering costs.
rental space in the rural area to (W2, W3, W6, W7,
properties maintain market W10, O5, O7, O8,
available. share. (S4, S5, S7, O9)
7. Consumers seeking O3, O6, O10)
for more payment
services, such as
paying their bills,
gift cards, and
mobile reloads.
8. Consumer demand
for foreign
imported products.
9. New Malaysian
government
supporting
technology
integration from
stores.
10. Lower rental costs
due to SST.
Threats Strength-Threats Weakness-Threats
1. Households with Strategies Strategies
income levels
below RM2, 000  Data mine  Open more in rural

17
 spent 95% of their consumer areas to avoid high
income on purchasing habits overhead and
everyday essentials to develop operating costs.
and those earning effective (W1, W2, W10,
below RM5, 000 promotions (S2, T2, T3, T7, T9)
will have to reduce S4, S7, S10, T1,  Acquire properties
on household food T3, T5, T6, T8, and rent to
consumption T9) businesses. (W2,
2. RM100 per month  Provide CSR W8, W10, T7, T9,
increase in initiatives in rural T10)
minimum wage areas where store
3. More convenient is located (S4, S9,
stores opening T3, T10)
nearby 7-Eleven
stores (KK Mart,
Speedmart, Family
Mart)
4. Government
implemented a
soda tax
5. Family obtaining
more daily revenue
due to ready-to-eat
food products
offered to
consumers.
6. Other convenient
store retailers have
loyalty programs.
7. Competitors are
taking viable retail
space to expand.
8. Price increase from
manufacturers,
suppliers, and
importers of
products.
9. Over 3,000 24
hours convenience
stores from
Petronas, Shell,
Petron, Caltex, and
more.
10. Numerous robbery
cases, because
stores are opened
for 24 hours.

18
 The SWOT Matrix is utilized to come up with strategies based on the internal
and external factors identified. Utilizing and capitalizing the strength and
opportunities of 7-Eleven, they can continue to integrate technology and integrate a
new cashless and more convenient payment channel that will change the Malaysian
retailing industry. Additionally, they can joint venture with new payment channels
that will offer more options for the customers at the counter. For example, eWallet
apps that will easiness the payment method by using their smartphone. Finally, their
strong ability to expand and become more accessible can allow them to focus more on
rural areas. They are able to use their new franchising program to encourage
expansion in rural areas the locals are knowledgeable in.

The weakness and opportunity focus on reducing internal weakness by

capitalizing on the external opportunities. Other retailers are integrating loyalty apps
to data mine consumer purchases for better analyzation. A concept that 7-Eleven has
not adopted yet, but can benefit significantly if done so. The entrant of Family Mart
has resulted to an increase in demand for more ready-to-eat products that can be
conveniently accessed for customers. If 7-Eleven is able to develop such consumables
with better or equivalent quality, then they are able to regain back their market share
and improve their current ready-to-eat. Finally, since there are high costs that is
reducing the profit of 7-Eleven, then they must figure out ways to reduce and
maintain costs. It can start by improving the supply chain by making the movement of
products more efficient and effective. Utilizing technology can improve
communication and efficiency between intermediaries.
The strength and threats strategies are utilized to minimize the impact of the
external environment. Which is greatly needed, since there is change in the Malaysian
government that will significantly affect companies. They can take advantage of the
government’s support for technology by beginning to develop a system that allows
them to data mine better. Therefore, they are able to understand their loyal customers
and promote towards them. Moreover, they should continue to participate in CSR
activities, which can improve their brand recognition and community presence.
Therefore, they are able to develop a better customer relationship with locals in the
rural areas. Thus, when they want to spend, they will choose 7-Eleven as their main
source.

The weakness and threats strategies are needed to minimize the impact and
damage it can have on the company. Therefore, 7-Eleven must find ways to reduce
their costs. Which can be done by focusing more on rural or outside the city regions,
where the costs for rent and property is lower. Additionally, they frequently close
certain stores that are not successful in certain areas. These stores can then be
acquired and rented towards certain business properties. Hence, they are able to
receive a steady income from property investment.

SPACE Matrix

19
 Based on the above figure, 7-Eleven is located in the aggressive quadrant of
the matrix. The company has the possibility of taking advantage of external
opportunities, overcome internal weaknesses, and avoid external threats.

20
 Based on the industry position axis, which indicates that the firm in a growing
and stable industry. It can be assumed that the best strategies would be market
penetration, market development, product development, backward integration,
forward integration, horizontal integration, or diversification are some recommended
strategies for this firm. Consequently, the strategies that 7-Eleven can be used are
product development and market development. Product development would be
introducing ready-to-eat food to gain back daily revenue. Additionally, the market
development is to target the rural geographical regions to maintain the competitive
position.

21
Boston Consulting Group (BCG) Matrix

High Relative Market Low Relative Market

Share Share

Star Question Marks

High Sales Growth Rate Convenience products

(Food, beverage, cosmetics, Ready-to-eat food products
and toiletries merchandise)

Cash Cow Dog

Low Sales Growth Rate
MOL, Touch ‘n Go,
uMobile services

The Boston Consulting Group (BCG) matrix evaluates the relative position of
the products that are offered by the company, based on their sales growth rate and
relative market share.

The cash cow of 7-Eleven is the technological services they offer for their
customers through MOL, Touch ‘n Go, and uMobile channels. For instance,
numerous 7-Eleven stores allow the payments of bills, mobile reloads, and card
reloads through various payment channels. When customers utilize these channels to
pay off their debts or bills, 7-Eleven receives a small commission for providing the
service. This technological integration has enhanced the convenience retailing
experience, due to the fact that customers who do not know how to perform online
banking and purchases, or want easiness of payment can just visit the nearest 7-
Eleven. While the commission is not high, it does provide them a steady income for
them annually. Since more people can perform these tasks on their phones or
computer when connected to the Internet, it has a low sales growth for 7-Eleven.

The star of 7-Eleven is the convenience goods they offer, such as food,
beverages, cosmetics, reading material, toiletries, basic medicine, and more. These are
local products that are easily accessible for consumers at a relatively low price. The
number of stores they possess, their brand recognition, and ability to maintain steady
prices is the reason customers continue to visit 7-Eleven stores. It has a high sales
growth rate, because 7-Eleven’s strong market position of being the most convenient
will be the most favorable store for shoppers. Moreover, it has relative high market
share, seeing as these are necessary products that are often sought by customers.

The question marks have low relative market share, but high sales growth rate.
Therefore, they have the potential to become a star in the future. In this case, it is the
ready-to-eat products that 7-Eleven is slowly introducing to the market. At Family
Mart, their star is the ready-to-eat products, while their merchandise are the question

22
marks, because it is foreign goods that are not often sought. However, 7-Eleven has
the potential to make their ready-to-eat food stars, if they are able to provide the same
or better quality has Family Mart.

IE Matrix

The internal-external (IE) matrix involves plotting a firm’s divisions in a

schematic diagram and positions organization’s various divisions in a nine-cell
display. The overall IFE and EFE score for 7-Eleven on the “grow and build” region
with IFE score 2.88 and EFE score of 3.01. This suggest 7-Eleven to employ the
strategies of product development and market development to continue to grow.

23
Grand Matrix

The grand matrix displays that 7-Eleven has a strong competitive position as
they control 80% of the market share of convenience store since they own 2,250
stores nationwide. However, the penetration of new companies, such as Family Mart,
99 Speedmart, and myNEWS has resulted to slow market growth over the years.
These competitors are alternatives to customers seeking for convenience products.
Since they have numerous alternatives to choose from, it slows the market growth of
other stores. However, Family Mart has managed to experience a rapid growth rate
due to the nature of their convenience products. Their success has allowed them to
consistently open new branches around Malaysia. They have the competitive
advantage of providing unique Japanese ready-to-eat and imported convenience
products. These products are highly sought by consumers, as any other retailer does
not offer it. While they may not have the strong competitive position as 7-Eleven and
99-Speedmart, their momentum of growth can lead them to that position. Although,
7-Eleven’s strong competitive position has allowed them to continue experiencing
high growth in 2018. While the new Malaysian government’s policies has altered and
made achieving their annual objectives more challenging. They still have the
objective of sustaining their competitive position by opening more stores nationwide
and provide cheaper prices.

The competitors of 7-Eleven are unable to compete in relation to brand

recognition and number of stores. Therefore, they are providing unique and different
products and retail experiences that allow them to have a competitive advantage for 7-
Eleven. Since 7-Eleven controls a majority of the market share of the convenience
retail industry, which makes it difficult for start-up or local convenience retailers to
compete. For instance, Family Mart is also a Japanese convenience store, but the store
is similar to the ones in their home country. As they distribute Japanese ready-to-eat
products that consumers are extremely fond of. They are constantly promoting and

24
introducing new products that are satisfying consumers. Therefore, they are
experiencing a more rapid market growth rate. Consequently, one of 7-Eleven’s
strategies are to introduce and develop products for the ready-to-eat categories to
compete. Product development will allow them to contribute towards their market
growth. They should slowly start introducing various products, such as ice cream,
baked goods, and sandwiches that are unique in specific branches. Customers, more
specifically the youth will be attracted to food they offer 24 hours.

Every year 7-Eleven continues to target a specific number of stores they plan
to open to maintain their market position of being the most convenient. While this
year has been difficult for them to expand, because of the economic and political
factors that is changing the business environment. For instance, the new change of
government in Malaysia has altered the business environment, since they are
beginning to introduce new taxes and policies. Initially, they aimed to open 200 stores
nationwide, but due to the external forces they aim to only open 100. Nonetheless,
they can still increase their profit rates and while lowering their operating costs. They
can open their new stores in rural areas, and depend more on their new initiative.
They are involving forward integration strategies, as 7-Eleven is introducing a new
program that allows citizens to own their own 7-Eleven convenience store. They plan
to expand, as well as helping young entrepreneurs to open up their own franchise.
Thus, it will allow them to expand to certain areas that locals would have optimum
knowledge of that can provide profit. Maintaining their consistent rate of opening
stores annually will allow them to keep their strong competitive position of being the
most convenient store.

25
Decision Stage

QSPM

26
 To identify the best strategy for 7-Eleven two strategies are considered and
evaluated product development and market development. Which are introducing more
ready-to-eat meals and opening more convenient stores in rural area. After analyzing
the impacts of these two strategies on IFE and EFE, it can be observed that total sum
of attractiveness of the two scores is introducing more ready-to-eat meals, which is
higher than opening more branches in rural area. Therefore, it is the best to said that
introducing more ready-to-eat meals is the best strategy for 7-Eleven.

27
Strategies and Implement Issues

Strategic Marketing

The implementation of new strategies requires a change in the strategic

marketing approach of the company. 7-Eleven will be introducing new ready-to-eat to
increase their daily revenue and to compete with Family Mart and myNEWS. They
have to promote their new product in various ways to increase sales volume.
Although, 7-Eleven is not a company that can frequently advertises their own
products, due to the limited range they possess. They do not perform a high amount of
promotions, but provide store discounts for food, as well as “combos”, which is
pairing food and beverages and offering a cheaper price. For instance, a customer that
purchases a certain brand of chocolate with a brand of beverage, will receive a
cheaper price. Moreover, they promote their original product, the Slurpee to pair it
with convenience products.

Figure 1: Slurpee Combo (Retrieved from

https://www.syioknya.com/custom/picture/5808/syioknya1_5b6132bcd2b9a.jp)

Since they are the most convenient, consumers seek convenience goods
mainly from 7-Eleven. However, they are not interested in the ready-to-eat food and
beverages, such as Slurpee. Therefore, they must alter the way they advertise and
promote their products to increase the volume of sales. For instance, when they
advertise, they have to highlight the uniqueness of the taste, appearance, and quality

28
of their new product. If they utilize the AIDA (Attention, interest, desire, action)
model they will be able to attract the consumer to try the product. Furthermore,
utilizing social media to be more involved in viral or word of mouth marketing that
can spread positive information about their new food items.

Social Media Marketing

Companies in the convenience retailing industry are not heavily involved in

social media marketing, because the goods they provide are frequently sought.
However, several of them, such as 7-Eleven and myNEWS possess social media
accounts that they utilize to advertise new products and combo promotions. Though,
they do not have strong social media presence, seeing as they use it merely for
promotions and not customer engagement. While, Family Mart has no social media
account, they have a strong social media presence, because of their strength in viral
and word of mouth marketing. Social media users who are customers of Family Mart
will frequently post the consumption of their products. It provides Family Mart with
positive word of mouth and value to their brand, as it is a reminder to other users to
purchase the product as well. Even though 7-Eleven has the most activity out of all
the convenience store companies, they merely do basic promotions to remind users to
visit their stores. When they introduce their ready-to-eat food, they should be more
involve with viral marketing, since it can enhance their social media presence and
receive support from users to promote their brand. If they are able to pair social media
marketing during the introduction of their new products, then they are able to create a
trend among users. Consequently, it will lead to an increase of popularity and volume
sales for their goods, which will contribute towards the measurement of the success.

Market Segmentation

7-Eleven is a 24-hour convenient store that caters to the needs of the majority
of the consumers. They provide a wide range of products, such as food, beverages,
alcohol, cosmetic products, toiletry products, cigarettes, magazines, and more. They
are delivering convenience type of products that is sought by consumers frequently.
They segment their market based on geographical and demographic characteristics.
They focus on geographical regions that they have not covered, such as rural areas
and in states outside of Kuala Lumpur. In addition, they consider the demographics of
that particular region, taking into consideration of age, religion, and income level.
However, they are beginning to target a certain segment of the Malaysian market
based on lifestyle. The introduction of ready-to-eat food is targeted towards segments
that want to consume in the store or on the go easily. Moreover, these are types of
food that are more flavorful and tastier than processed packaged food that is offered
by other convenience stores. These fresh snacks are more favored by the younger
consumers from ages 15 to 35. Since 7-Eleven aims to introduce these types of
products towards certain consumers, they should target segments based on
geodemographic and lifestyle characteristics to measure the success. Therefore, they
should distribute it at limited places that would be suitable for the segment of young
consumers that live in the urbanized areas of the city. In addition, away from top
competitors such as Family Mart and myNEWS, which offer similar products.

29
Product Positioning and Perceptual Map

In relation to the characteristics of convenient stores, customers consider the

accessibility and range of products they offer. Accessibility is the concept of being
convenient and located nearby, thus the customer can easily go there. While the range
of products is the diversity in terms of the merchandise they offer.

7-Eleven has the highest accessibility, because they have the most stores out
of all their competitors. They are easily accessible for customers, seeing as they are
opened in urbanized and rural areas, while being established in all Malaysian states.
Moreover, they offer a variety of local merchandise, such as food, beverages,
cosmetics, reading material, toiletries, basic medicine, and more. Moreover, they offer
technological services for customers to pay bills, reload mobiles, or cards. However,
the ready-to-eat food and beverages they offer are quite limited and it is based on the
location. In addition, most of what is offered are local goods, and very limited
imported foreign consumables.
99 Speedmart has over 1000 stores, as they begin to expand to catch up with
7-Eleven’s market position. They are available in urbanized areas, as well as certain
rural areas. They offer a wide range of local goods that are more diverse than 7-
Eleven, such as cleaning products, fabric softener and detergent, as well as fresh
produce. They are basically a mini hypermarket that is cheap and convenient for
consumers. Although, they do not offer their services for 24 hours, and the wide range
of technological services that 7-Eleven has.
Family Mart is a new entrant to the convenience retailing industry that merely
has 50 stores in the city areas. They brought the Japanese convenience retailing
experience by offering a wide range of imported Japanese products and ready-to-eat
food. Family Mart has developed a competitive advantage by supplying an abundance

30
amount of fresh ready-to-eat products, such as baked bread, sandwiches, salads, bento
rice boxes, oden, ice cream, coffee, and more. Their unique range of Japanese
products separates themselves from other competitors. While they do not offer
toiletries, cosmetics, or cleaning supplies, customers visit their stores for the food.

myNEWS is a convenient store that is usually located inside of malls or

shopping centers that targets convenience for shoppers. They have over 430 locations
nationwide that are usually located in urban areas. They offer similar products to 7-
Eleven, but less variety as they focus more on food and beverages. Although, they do
not provide the same technological services that 7-Eleven offers. Moreover, the prices
are higher compared to 7-Eleven, because of their location.

Even though there are competitors that are offering more variety in relation to
7-Eleven’s goods. The strategy of implementing and introducing new ready-to-eat
consumables will allow 7-Eleven to gain a better product position, by expanding the
variety and number of products they offer.

Strategic Finance / Accounting Issues

The strategy at hand is to introduce more product; to be specific new ready-to-

eat foods that can directly compete with Family Mart ready-to-eat foods. 7-Eleven
business model has been since the early days that they become retailer for convenient
products of others. In recent decade, they had expanded their business model by
helping out potential entrepreneurs to put up their products up on their shelf. The case
for instant is Tao Kae Noi of Taokaenoi Food & Marketing from Thailand that has
become a great hit. The product was ready to eat seaweed that was flavored. The true-
life story has been mad into movie entitled “The Billionaire”.

So what 7-Eleven need to do now is to have their own products of the same
impact like the seaweed product can do. If they were to have the product as their own
brand like Slurpees, a lot of cost must be incurred. Much of the cost will goes into
sales and marketing related costs, production cost and training cost (more overhead
cost). This is because they need to start something new which they might not have in
the first place. Their investment spending will increase rapidly and they will
experience decrease in profit at the early introduction phase until the new product
stabilize and gain traction.

31
 Looking at the snapshot of 7-Eleven statement of cash flows for accounting
period ending 31st December 2017, it was reported that they had used RM 47,003,000
for investing activities. They had purchased property, plant and equipment of a total
RM 44,560,000 and more than RM3.5 million of intangible assets. Close to RM30
million less compared to year ending 31st December 2016 which however they see an
increase from RM49.45 million to RM69.634 million in cash and cash equivalent at
31st December 2017, year-on-year. They had opened up more than 100 new branches
in that year and they have not really properly established ready-to-eat food in their
stores. An estimation of RM90 million ringgit is needed for them to gradually develop
and introduce new and competitive ready-to-eat food and also train employees to
make and prepare the food. This cost should be expensed only a few targeted
branches to test out the water.

32
EPS / EBIT analysis: Acquired needed capital

2017 New - New – 20% New – 50% New – 100%

common stock debt financing debt financing debt financing
financing
EBIT 79,728,000 90,000,000 90,000,000 90,000,000 90,000,000
Interest 9,232,000 10,440,000 13,500,000 18,000,000 22,500,000
(11.60%) (11%) (15%) (20%) (25%)
EBT 70,496,000 79,560,000 76,500,000 72,000,000 67,500,000
Taxes 20,389,000 23,868,000 (22,950,000) (21,600,000) (20,250,000)
30%
EAT 50,107,000 55,692,000 53,550,000 50,400,000 47,250,000
#shares 1,110,385,000 1,110,385,000 1,110,385,000 1,110,385,000 1,110,385,000
EPS (sen) 4.51 5.01 4.82 4.54 4.25

Based on the tabulation above, in order for 7-Eleven to acquire more capital,
financing 100% through common stock is more profitable and sounds decision to be
made in order to increase the wealth of shareholders. The second option would be
through a mixture of equity : debt of 80:20. Both option yield EPS of 5.01 and 4.82
respectively.

Implementation Issues

Projected financial statements

Before looking into the projected financial statements, we need to look into
historical performance in order for us to be able whether we need to do a risky
projection, moderate projection or safe projection. Overall trend shows and increase
or there was growth in 4 major indicator which are the number of stores, total
revenue, earnings before interest, taxes, depreciation and amortization (EBITDA) and
earnings after tax (EAT). However, if we were to look closely, there’s a decline in
EAT from 2014 to 2017. That was three years in a row and for 2017, EBITDA shows
an increase of RM13.4 million to RM139.9 million. This shows that the company
incurs higher cost of interest and taxes since they had incurred close to RM20 million
in borrowing.

33
 Looking at the overall trend and year-on-year performance, it is wise and safe
for 7-Eleven to have a much more moderate to active financial projection. According
to their Q3 financial report which was released on 30th November 2018, they had a
total revenue of more than RM1.5 billion, profit before tax of more than RM50
million and profit after tax of RM38.8 million. These figures were all up to 30th
September 2018 operations and it is only short of not more than RM13 million to at
least have an increase year-on-year profit growth.

Past year Current year Next year

2017 2018 2019
EBIT 79,728,000 Undisclosed 90,000,000
Interest (11.60%) 9,232,000 Undisclosed 10,440,00 (Assuming
the same cost)
EBT 70,496,000 52,737,00 79,560,000
Taxes 30% 20,389,000 13,915,000 23,868,000
EAT 50,107,000 38,822,000 (as of 55,692,000
30th September)
#shares 1,110,385,000 1,461,000,000 (as of 1,400,000,000
5th December 2018) (Assuming number of
shares decreases)
EPS (sen) 4.51 2.65 3.97

34
Corporate Valuation

7-Eleven Malaysia Holding Bhd (SEM) has a current market cap of RM1.461
billion with an outstanding share of 1.13 billion shares. The current P/E ratio stood at
26.63 with EPS of 0.05. The company is gradually enjoying an increase in its
revenue, net income and profit margin for the first Q3 2018. There is a positive
outlook for the year end 2018 and for the beginning of 2019 as the company is
pushing hard to satisfy the crave of ready-to-eat foods amongst its target group that
the competitors are surging in.

35
 IPOs, cash management and corporate bonds
7-Eleven Malaysia Holding Bhd was initially listed on the Bursa Stock
Exchange on 30th of May 2014 issuing 1,233,385,000 shares at RM0.10 with total
paid up capital of RM123,385,000.

Strategic research and development (R&D) issues

The strategy to develop and distribute ready-to-eat products requires

investment towards the research and development department to innovate. Seeing as
the purpose of these products is to gain back the daily revenue that is dominated by
Family Mart. These new products have to be able to compete with Family Mart’s in
terms of quality in relation to appearance, taste, and creativity. They cannot simply
copy and replicate similar products to Family Mart, because these will not attract
customers to try it. Therefore, 7-Eleven will be investing money towards their
research and development department. Nonetheless, they can choose to outsource the
task towards a local producer. Though, it may not be beneficial for the long-run, since
prices will be raised by manufacturers, they will have less control over the quality of
the product, and it is not a product that matches their corporate identity.

Strategic Management Information (MIS) issues

7-Eleven has been adapting and integrating the technological changes

occurring since they were established. Their ability to adopt technological aspects into
their retailing services resulted to the enhancement of convenience retailing services.
The development and distribution of ready-to-eat goods will not necessarily affect
their management information system (MIS) methods, though they can improve it to
implement the strategy more effectively. For instance, they will be building
connections new intermediaries in their supply chain. These manufacturers and
suppliers will be integral when it comes to distribution of these new products at
certain locations. Therefore, it provides them the opportunity to improve their MIS
system in relation to the communication between intermediaries of the supply chain,
as well as the movement and logistics of consumables. Technological integration of
an app or system that easiness the flow the supply chain can reduce costs and
difficulties that would occur during the process. Moreover, when it comes to the stage
of distributing the product to consumers, they will need to have a system that allows
them to measure the success. While volumes of sales can be effective, technology has
allowed more in-depth and detailed analysis that can further enhance decision
making. For example, viewing the type of customer that purchases in terms of
demographics, ;the time of purchase, and other merchandise that is paired with the
consumable. These data can be turned into information that can contribute to augment
the success and profitability of the product.

36
Recommendations

Incorporated into Annual Objectives

The new strategy of developing ready-to-eat product is to maintain the

competitive position 7-Eleven has achieved and held for the last 30 years. The new
entrants are providing a unique retailing experience that 7-Eleven is lacking.
Moreover, 7-Eleven annual objective is to continue becoming the most convenient
retailer in Malaysia. This would be done by the range of products and services they
offer, as well as the number of stores they open annually. The strategies of opening in
rural areas and introducing ready-to-eat food will help them become more convenient.
The ready-to-eat food can be accessed from numerous stores for segments who have
the lifestyle of eating their food on the go. Additionally, rural areas lack convenience
stores that offer a wide range of products. The competitors of 7-Eleven do not target
these areas, because they do not have enough brand recognition and community
presence. Thus, continue being the number one choice for Malaysians, 7-Eleven
should incorporate these strategies.

Change in Policies

The introduction of improved ready-to-eat goods will result to a change in the

procedures regarding serving consumables. 7-Eleven will have to develop new
policies regarding the handling of fresh food. Assuming that 7-Eleven is able to
obtain halal certification, they must uphold to the values of the halal regulations and
laws. For example, the handling of the food must be proper, the environment must be
clean and sanitized, and the employees must be knowledgeable in relation to the food.
These standards of procedures in relation to handling of fresh food will make sure
their food meet the requirements of halal standards. Furthermore, they need to make
sure the quality is up to standard and meets or exceeds the expectations of the
consumers. If new policies are not implemented to support the changes that the
strategies caused, then the quality and the success of the new ready-to-eat food
products will not improve. In addition, resources, time, and money invested towards
the strategy will be wasted due to poor execution.

Resource Allocation and Conflict Management

As of the current progression and the direction that the company are growing,
the board of directors are clear that they need to act towards the emergence of new
competitors like Family Mart. They are addressing the issue of the establishment not
having enough attraction to their store which is ready-to-eat food. Hence, it was
reflected in the Q3 2018 report and coverage by news outlet that 7-Eleven is
progressing very well in providing more ready-to-eat food and opening up more
branches does add up substantially to the company profits which was align from our
group suggestion based on 2017 data.

Organizational Structure
37
 To implement and establish the strategy of ready-to-eat fresh food, 7-Eleven
has to create a new division that focuses directly towards the product. These
employees will be focusing on developing, handling and regulating the fresh food.
Thus, in their organizational structure, Fresh Food Services division will be included.
A whole division focused towards these products will allow the enhancement of the
quality and success of the strategy. Other departments will now have to cooperate
with the Fresh Food Services division to make sure the strategy implemented will
result to a success. As the integration of resources and effort will allow the
maximization of the most positive outcome desired.

Changes in Operations and Human Resource Management

In relation to the operations of the 7-Eleven stores, there will be new changes
to personnel. For instance, the fresh food product requires the new material
procurement and handling, new food processing facilities, and employees who
specialize in the logistics and movement of fresh food products. Moreover, in relation
to production, there is the involvement of material processing, conversion, adding
value, packaging, and shipment therefore the product will reach it’s location of
distribution. In terms of human resources, the new division requires recruitment and
the investment towards training the staff. The changes in operations and human
resource management are integral towards the success of the strategy.

38
Islamic perspectives (Tawhidic paradigm, Maqasid al-Shari’ah)

In relation to the policies and strategies that 7-Eleven will be implementing,

they are looking for potential market diversification and penetration by establishing
new products on their shelf. They are gearing up to introduce more ready-to-eat food
in order for them to regain back strength and to fight directly with competitors like
Family Mart and myNEWS.

Under the Maqasid al-Shar’iah, “Protection of wealth”, 7-Eleven should

expand their newly found market by working closely with small-to-medium (SMEs)
companies that are in food and beverages industry. As a result, customers are starting
to become a contributor towards the organization. Specifically, those that are
unemployed, stay at home wife and husband, seniors, and OKU citizens. Numerous
products that exist already have a name, but they need to improve the logistics issues
and distribute their products to more outlets. For example, Sambal Hitam Pahang,
Anis Choc Moist Cake, and Delicious Choco Rice.

Furthermore, 7-Eleven should uphold the legal maxim of “the presence

difficulty of requires that allowance be made to effect ease”. They should be the
enablers for small businesses to further grow their business. They can be strategic
partner or 7-Eleven can full own the company. Therefore, 7-Eleven should also look
into what are the trends existing in the market especially that have been forward by
SMEs that have potential and something can be used to be above what its competitors
can offer.

Conclusion

7-Eleven is one of the leading convenience store brands in Malaysia. They

have been in operation for over 30 years and have established a strong brand
recognition and community presence. When it comes to purchasing convenience
products and services, Malaysian consumers will constantly seek for a 7-Eleven store
for their wide range of goods and the technological services they offer. Additionally,
the number of stores established in all Malaysia has made the company the most
accessible and convenient store for Malaysian customers. Nonetheless, the entrants of
the market have made it difficult for 7-Eleven to compete as they are offering the
similar products and services, but with a unique twist that differentiates them. These
new competitors are pulling the market share from 7-Eleven, as well as taking their
daily revenue. While 7-Eleven has the strongest competitive position and most of the
market share, it has slowly reduced due to the new entrants. Therefore, two new
strategies that will augment their competitive advantage would be the implementation
of improved and new ready-to-eat consumables that will increase daily revenue and
store traffic. Furthermore, the penetration of rural areas to increase convenience and
easiness of obtaining products would allow them to maintain the market position.
Although, they have to consider the community when it comes to implementing these
strategies. 7-Eleven already performs numerous and quality CSR initiatives that has
been helping the citizens of Malaysia. Based on the Maqasid al Shari’ah, the
objectives of serving the needs and necessities of improving the community can
incorporate into the strategy. Nonetheless, it will also help improve the company’s
reputation and community presence.

39
 References

Books:

David, F. R., & Forest, F. R. (2017). Strategic Management: Concepts and Cases.

Harlow: Pearson Education Limited.

Annual Reports:

7-Eleven Malaysia Holdings Berhad. (2018). 2017 annual report. Retrieved from

http://www.7eleven.com.my/pdf/ar-2017.pdf

USDA Foreign Agriculture Service: Malaysia Retail Foods (2018). 2018 annual

report. Retrieved from

https://gain.fas.usda.gov/Recent%20GAIN%20Publications/Retail%20Foods

_Kuala%20Lumpur_Malaysia_6-29-2018.pdf

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target-100-new-minimum-wage-rate-shave-future-earnings-—

Azman, S. (2018, September 05). Malaysia to standardise minimum wage at

RM1,050 nationwide from January. Retrieved from

http://www.theedgemarkets.com/article/malaysia-standardise-min-wage-

nationwide-rm1050month-next-year

Bernama. (2018, October 16). Win a trip to EPL match with 7-Eleven & Cardiff City

FC. Retrieved from http://www.theedgemarkets.com/article/win-trip-epl-

match-7eleven-cardiff-city-fc

CGSCIMB Research. (2018, September 03). 7-Eleven 1H results below expectations.

Retrieved from http://www.theedgemarkets.com/article/7eleven-1h-results-

40
 below-expectations

Ho, S. (2018, August 10). 7-Eleven Malaysia appoints Colin Harvey as CEO.

Retrieved from http://www.theedgemarkets.com/article/7eleven-malaysia-

appoints-colin-harvey-ceo

Kumar, P. C. (2018, October 13). New Malaysia, new taxes. Retrieved from

https://www.thestar.com.my/business/business-news/2018/10/13/new-

malaysia-new-taxes/

Maybank IB Research. (2018, October 15). MyNEWS expected to remain

competitive with new products. Retrieved from

http://www.theedgemarkets.com/article/myNEWS-expected-remain-

competitive-new-products

Rashid, A. H. (2018, October 23). Store operators in space race. Retrieved October

30, 2018, from https://www.nst.com.my/business/2018/10/423810/store-

operators-space-race

Surendran, S. (2018, October 15). Malaysian households earning less than RM2,000

spend 94.8% of their income on daily essentials. Retrieved from

http://www.theedgemarkets.com/article/malaysian-households-earning-less-

rm2000-spend-948-their-income-daily-essentials

Toh, B. (2018, August 29). 7-Eleven 2Q profit up 29% on better gross margin.

Retrieved from http://www.theedgemarkets.com/article/7eleven-2q-profit-29-

better-gross-margin

WORLD OF BUZZ. (2018, October 07). Viral Video of Staff Refusing to Scan

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for-purchase-causes-massive-debate/

41
 Zhu, M. (2018, June 19). Cardless cash withdrawal service launched at 7-Eleven

stores for POSB, DBS & StanChart clients. Retrieved from

http://www.theedgemarkets.com/article/cardless-cash-withdrawal-service-

launched-7eleven-stores-posb-dbs-stanchart-clients

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