BACKGROUND OF THE BUSINESS

7-Eleven Inc. is a Japanese-American international chain of convenience stores,

headquartered in Dallas, Texas. It was named Tote'm Stores between 1928 and 1946. The
company's first outlets were in Dallas, named "Tote'm Stores" because customers "toted" away
their purchases. Some stores featured genuine Alaskan totem poles in front of the store. In 1946,
the chain's name was changed from "Tote'm" to "7-Eleven" to reflect the company's new, extended
hours, 7:00 am to 11:00 pm, and seven days per week. 7-Eleven operates, franchises, and licenses
68,236 stores in 17 countries as of June 2019. 7-Eleven has different variety of products like
Slurpee beverage, Big Gulp beverage cup and other products including coffee, candy, prepared
foods, gasoline, dairy, snacks, and various assortment of beverages.

PESTLE ANALYSIS

Political Factors

The political factors play a huge role in not only investment decision by transnational
corporations but also by companies such as – 7 Eleven.

Political environment and other factors not only impact the cost of doing business but also
long term sustainability. Some of the political factors are – governance system, democracy &
institutions, military coup chances, probability of armed conflict, law and order in market etc.

The Political Factors that Impact 7-Eleven are:

 Unrest within the Country & Chances of Civil Unrest – We don’t think that Eleven 7 business
operations are facing any dangers from any kind of civil unrest or internal militant operations in
the country.
 Likelihood of Entering into an Armed Conflict – From the information in the 7-Eleven case
study, I don’t think there is a likelihood of country entering into an armed conflict with a
neighboring country.
 Role Local Governments Play – Local governments are highly influential in the policy making
process and implementation as most of the policies and regulations are implemented by the local
government as enforcement agencies mostly report to local government in their own states
regarding various laws.
 Democracy & Other Democratic Institutions – According to Javier Santoma, Carmen Marce the
democratic institutions are needed to be strengthened further so that business such as Eleven 7
can thrive in an open, transparent and stable political environment. Strengthening of democratic
institution will foster greater transparency and reduce the level of corruption in the country. -
Regulatory Practices
 The regulatory practices are streamlined with global norms which have helped the country to
improve its “ease of doing business” ranking.
 Political Governance System – Based on the information provided in the 7-Eleven case study, it
seems that the country have a stable political system. Eleven 7 can make strategies based on the
stable political environment.
 International Trade & Other Treaties – The country has a good record of adhering to international
treaties it has done with various global partners. The government of each party has adhered to
the treaties done by previous governments, so there is a consistency in both rule of law and
regulations.
 Transition of Government and Changes in Policy – There is consistency in policy making from
one government to another. Secondly governments from all parties adhere to the treaties made
by the previous governments.

Economic Factors

Economic factors of a country and region have a direct impact on the potential
attractiveness of a given market. Some of the economic factors that Eleven 7 should evaluate both
in the present market and one in which it wants to enter are – inflation rate, GDP growth rate,
disposable income level etc. Economic factors are all those that pertain to the economy of the
country that 7 Eleven, such as changes in the inflation rate, the foreign exchange rate, the interest
rate, the gross domestic product, and the current stage of the economic cycle. These factors, and
their resulting impact on aggregate demand, aggregate investment and the business climate, in
general, have the potential to make a company highly profitable, or extremely likely to incur a
loss. The economic factors in the PESTEL analysis are macroeconomic.

 Work Force Productivity Work force productivity in US has grown by 25-30 % in last two
decades even though the salaries are not reflecting those gains. It can enable 7 Eleven to hire
skilled workforce at competitive salaries.
 Fiscal and Monetary Policies the Republican government tax break culture has increased the
deficit and it can lead to fiscal trouble for the economy in coming years.
 Inequality Index / Ranking on Gini Index Gini Index and level of inequality are a great barometer
for harmony and development of a society. If there is huge income inequality in the society then
the likelihood of conflict and crime increases. It can lead to uncertainty and suppression of
consumption in both short term and long term.
 Level of Household Income and Savings Rate Increasing consumption and stagnant household
income in United States had led to credit binge consumption. It has decimated the culture of
savings as people don’t have enough to save. 7 Eleven needs to be careful about building
marketing strategy that is dependent on “Purchase on Credit” consumer behavior.
 Foreign Exchange Rate Number of companies have incurred losses in past few years because of
forex risk in – Venezuela, Brazil, and Argentina. 7 Eleven should be careful about the history of
forex risk before entering new market. Many US companies have incurred losses in Mexico in
regular forex crisis in that country. The exchange rate of the country 7 Eleven operates in would
impact the profitability of 7 Eleven, particularly if 7 Eleven engages in international trade. The
stability of the currency is also important- an unstable currency discourages international
investors
 Price Fluctuations in both Local and International Markets Compare to the level of quantitative
easing in last decade the prices of 7 Eleven products and prices of overall products have remained
sticky in the US market. 7 Eleven should consider the fact that at deficit levels of United States
in an emerging economy can lead to rampant inflation and serious risks of currency depreciation.
 Employment Rate If the employment rate is high then it will impact 7 Eleven strategies in two
ways – it will provide enough customers for 7 Eleven products, and secondly it will make it
expensive for 7 Eleven to hire talented & skillful employees. A high level of unemployment in
the country would mean there is a greater supply of jobs than demand, meaning people would
be willing to work for a lower wage, which would lower the costs of 7 Eleven
 Economic System The economic system that is currently operational in the sector in question-
whether it is a monopoly, an oligopoly, or something similar to a perfect competition economic
system.
 Gross Domestic Product The rate of GDP growth in the country will affect how fast 7 Eleven is
expected to grow in the near future. 2.11
 Interest Rates The interest rates in the country would affect how much individuals are willing to
borrow and invest. Higher rates would result in greater investments that would mean more
growth for 7 Eleven.

Social Factors

Social factors are influences that affect and define lifestyle, elements such as family,
community, socio-economic status and religion. For a retail business, it's a perspective that goes
beyond demographics, because it helps identify not only the people who comprise your client base,
but also how they live, and how these factors may influence your relationship with them.

A thorough understanding of the customers, their lifestyle, level of education and beliefs
in a society, or segment of society, would help design both the products and marketing messages
that would lead to a venture becoming a success.

 Nature of Social Contract between Government & Society – Before entering into a market
Eleven 7 needs to understand the nature of social contract between government and society. For
example it has been extremely difficult for US companies to enter UK health market as UK
health system is a nationalized system and everything goes through contracts at national level.
 Demographic Trend – The demographic trend is one of the key factors in demand forecasting of
an economy. For example as the population of USA and EU is growing old the demand for
products mostly catering to this segment will grow. Eleven 7 should consider demographic trends
before new product developments and integrate features that cater to this segment. As population
is ageing it will require less tech intensive products.
 Attitude towards Health & Safety – The attitude towards health and safety is often reflected in
the quality of the products and cost structures of manufacturing processes. Eleven 7 has stringent
norms for health and safety norms so in emerging economies it may have to compete with players
who do not have high cost structures that of Eleven 7.
 Attitude towards Leisure – Eleven 7 should conduct an ethnographic research to understand both
attitude towards leisure activities and choice of leisure activities. Experience economy is one of
the fastest growing segments both among millennials and among baby-boomers.
 Societal Norms and Hierarchy – What sort of hierarchy and norms are acceptable in society also
influence the types and level of consumption in a society. In highly hierarchical societies the
power of decision making often reside at the top
 Attitude towards Savings – The culture of saving in US and China is totally different where
savings rate in China is around 30%, it is well below 15% in United States. This culture of
consumption and savings impact both type of consumption and magnitude of consumption.
 Gender Composition in Labor Market Eleven 7 can use gender composition of labor market to
understand the level of liberal nature of the society, women rights, and women’s say in matter
of societal issues and consumption decisions. The gender composition of labor market is a good
indicator of disposal income of household, priorities of the households, and related needs.

Technological Factors

Technology can rapidly affect the structure and competitive landscape of 7-Eleven in
today's time. It becomes extremely important to constantly and consistently innovate not only to
maximize the profit but also to prevent future problems.

Technological Factors that Impact 7-Eleven are the following:

 Technology transfer and licensing issues for 7Eleven – laws and culture of licensing of IPR and
other digital assets should be analyzed carefully so that 7 Eleven can avoid shakedowns and IPR
thefts.
 Acceptance of Mobile Payments and Fintech Services – One of the areas where US are lacking
behind China is Mobile Payments. 7Eleven should assess what are preferred choice of mobile
payments in local economy and chose the business model based on it.
 Transparency & Digital Drive – 7Eleven can use digitalization of various processes to overcome
corruption in the local economy.
 Integration of Technology into Society & Business Processes – 7 Eleven should build a strategy
that can integrate societal values, infrastructure, and a business model.
 Preparedness for 5G Related Infrastructure – Countries across the world are trying to prepare
themselves to install 5G infrastructure. 7Eleven should assess to what level the local market is
prepared to roll out the 5G connectivity.
 Intellectual Property Rights and Patents Protection – Before entering new market 7Eleven should
focus on the environment for intellectual property rights.
 Cost of Production and Trends – 7Eleven should assess - the trends that depends on their
customers’ preferences to be more aware of how they will manage manufacturing process and
control the cost of production because in the near future it will be part of technological
innovation.
 Empowerment of Supply Chain Partners – 7Eleven should analyse areas where technology can
empower supply chain partners. This can help 7Eleven to bring in more transparency and make
supply chain more flexible.

Legal Factors

Legal Factors that Impact 7 Eleven Often 7 Eleven policies on their own are not enough to
efficiently protect itself and its workers, making 7Eleven appear as an undesirable place of
employment that may repel skilled, talented workers. The legal factors that deserve consideration
include the following:

 Before entering into new market 7 Eleven has to assess what are the business laws and how they
are different from home market
 The introduction of new accounting standards or tax systems or changes thereof, which the
Group cannot predict, could affect its business performance and financial condition.
 The Group is subject to a variety of environment-related laws and regulations such as those
relating to food recycling, containers and packaging recycling, waste management and climate
change countermeasures. In addition, tighter regulations could lead to changes in the cost of
energy such as electricity, water or gas, resulting in higher expenses for store operations, which
could affect the Group’s financial condition.
 In the normal course of business, such as in financial services, the Group holds confidential
information about customers regarding privacy, creditworthiness and other information,
including personal information, as well as confidential information about companies and other
third parties. Such information could be leaked inadvertently or deliberately, and any material
leakage of confidential information could produce damage liability claims and/or damage
society’s trust in the group.
 Discrimination laws are placed by the government to protect the employees and ensure that
everyone in 7Eleven is treated fairly and given the same opportunities, regardless of gender, age,
disability, ethnicity, religion or sexual orientation.
 Health and safety laws were created after witnessing the horrible conditions that employees were
forced to work in during and directly after the industrial revolution. Implementing the proper
regulations may be expensive, but 7 Eleven has to engage in it, not only due to the law but also
out of 7 Eleven's personal feeling of ethical and social responsibility to other human beings.
 Laws are also placed to ensure a certain level of quality or reasonable price for certain products
to keep the customers safe. The industries this applies to often find their costs elevated.

Environmental Factors

7-Eleven have been putting efforts to reduce their impact on the environment. As they grow
through the years, their strategy is to limit their effect on the planet. They ensure to reduce waste
and increase efficiency in consuming their resources. In fact, two of their measurable goals are to
reduce their energy footprint in stores and offices by 20% by 2025 and to reduce their packaging
footprint by 20% by 2025.

•Focus on energy conservation and efficiency- 7-Eleven stores have installed LED lights which
are more energy efficient, and are compliant of the local regulations in reducing light pollution.
They also have energy management systems that serves as a remote control for heating, ventilation,
and air conditioning (HVAC), and refrigerant equipments. The systems monitor, control and
optimize the performance of those equipments, and gives a real-time information for optimization
in order to reduce energy consumption. In addition, 7-Eleven also participates during "Earth Hour"
where they turn off their signage lights for an hour.

•Engaging people in climate change- In 2017 on their national conference, 7-Eleven gave
knowledge about climate change to their employees. They organized a "Steps for Good" contest
wherein for every 500 steps a participant take, 7-Eleven will donate $1 to help the environment. It
was given to Conservation International (CI), an American non-profit organization that support
efforts to educate people on ways to improve and stabilize the climate.

•Committed in continually looking for ways to improve product packaging- most of their solutions
are paper-based which are derived from sustainable resources and whenever possible, they reduce
their packaging materials without compromising product quality or safety. For instance in 2017,
their breakfast sandwich package which was a quilted hand wrap was replaced with a window bag,
which reduced the material by 25%.

•Paper bags and biodegradable plastics- 7-Eleven now used these as containers for the items
purchased by their customers in order to also help the environment

•Encourages proper waste segregation- 7-Eleven stores provide labelled trash bins that can help
consumers identify which of their garbage are biodegradable, non-biodegradable, and recyclable.

•Regular cleaning- whenever there are no customers, 7-Eleven employees ensures to manage their
time efficiently so that they could clean inside and outside the store during their shifts. For instance
in Japan, they clean the counters, display shelves, floors, restrooms, and machines. They also
regularly pick up receipts, bags, cigarette butts and other trash scattered outside their stores to keep
their area clean. In addition, they sweep the floor, sprinkle water in the parking area, wipe the
windows, and clean the trash bins while waiting for customers.

SUGGESTIONS

Political Dimension

1. The company should avoid any act of disobedience in the government and not participate on it.
Be aware on the surroundings and create a plan.
2. The company should be updated in the policies and regulations being implemented by the local
government to avoid conflicts.
3. Democratic institutions should be strengthened further.

Economic Dimension

1. Improve and Develop Team Building and Other Non-work-Related Activities A good and
competent worker can be of great help in the growth of the company. Trainings and seminars,
not only the ones related to improving the work itself but also the camaraderie and relationships
among the employees. This will root to a better performance in work and this means that it will
produce a better quality of work. It relates to the economic growth in terms of the employment
of workers and work force productivity that will result to skilled work force.
2. Development of Marketing Strategies the 7 Eleven newly franchised stores can develop grand
opening packages like big sales to attract customers and since they have the customer card called
Cliqq, they can give it for free if the purchase reach a certain amount of product bought. They
can also develop product combos that is mass-friendly like meals and coffee combos. These new
marketing strategies could attract more customers since they are selling everyday-needed
products of even a typical citizen

Social Dimension

1. Invest in Fitness and Organic food - Due to people's changing attitude towards health and diet,
businesses like 7/11 are suggested to deal with the society’s concern about lack of exercise in
people, most specially children. In this way, they can promote living in a healthy way while
earning money from their goods.
2. The demographics of the population, meaning their respective ages and genders, vastly impact
whether or not a certain product may be marketed to them. Makeup is mostly catered to women,
so targeting a majority male population would be less population than targeting a population that
is mostly female.
3. 7 Eleven would be unable to promote a premium product to the general public if the majority of
the population was a lower class; rather, they would have to rely on very niche marketing.

Technological Dimension

1. The management should be more aware of the cultures and law of their designated branches to
avoid any conflicts regarding IPR, profits information and other digital platforms.
2. The used of social media platforms like Facebook, Instagram and Twitter helps them to easily
communicate with the customers and a simple way to interact with them to know their
suggestions and feedbacks
3. 7-Eleven Mobile Application that can be downloaded through phone enables the customer to
easily access their available products, promos, advisories and other information regarding the
store so it should be updated based on the trend and preferences of the customer.
4. Encourage more the individuals to lessen the manpower in the stores by becoming aware of the
idea of self-service system through the help of machines that are user-friendly to lessen.
Legal Dimension

1. There should be a legal policy that will protect the company from other outside danger that may
leak the company's information. * The company should have Employment Law, also known as
labor law, dictates how companies’ employees should be treated equally, which will protect the
employees’ rights.
2. The tax being used by the company should be updated, according to the country's tax.
3. Promoting specific environmental friendly goods, healthy products.

Environmental Dimension

7-Eleven CSR efforts are a big help to the environment. However, it will better if they continue
to develop these efforts so that they could help the surroundings better.
1. Elimination of plastics- plastic is one of the main problems of the environment so it will be
better if 7-Eleven can entirely eliminate all plastics in their stores even the one they use for their
take out foods. Though, it is impossible to avoid it in the products of other brands which they offer
in their stores, they can use this opportunity to encourage some recycling activities in their stores
like participating in the making of eco bricks in the Philippines which can be used to build reusable
blocks. Eco brick is a great project to participate into since it is created with solid non-
biodegradable wastes which are stuffed in a plastic bottle.
2. More activities to raise awareness regarding climate change- it had been 3 years since they’ve
done the “Steps for Good” contest so it will be great if 7-Eleven can organize another one or create
a new project with the same agenda. They can also sponsor some seminars about climate change
to support campaigns that aims to spread information about the effects of climate change and how
people can help in solving it.
3. Reusable cups for their drinks- Slurpee and Gulp are 7-Eleven popular drinks. Although, their
cups have always been paper-based and they already made it more environment friendly by
reducing its footprint, it is also better if they can just create a recyclable one which people can
repeatedly use in their everyday lives so that they will not just put the packaging into trash after
using it.
 INPUTS

The First 7 Years

On October 26, 1982, Philippine Seven Corp. (PSC) acquired the license agreement to
use the 7-Eleven Convenience Store system in the entire Philippines from Southland Corporation
of Dallas, Texas. After a month, PSC was registered with SEC on 29 November 1982. The
incorporators were Jose T. Pardo, Vicente T. Paterno and Francisco R. Sibal. The company’s
chief mission was to introduce an entirely new retailing concept to the Filipino consumers, i.e.
operating a chain of 24-hours convenience stores. The first corporate office was located at the
ninth floor of the Century Tower building in Salcedo Village, Makati City.

In order to apply Southland technology in all phases of managing a 7-Eleven convenience

store, PSC sent five of its employees to various Southland installations in the US. The so-called
Five-Man Team was consisted by Francisco R. Sibal, Executive Vice President; Ramon de Jesus,
General Manager; Jose Blanch, Merchandising Manager; Wilfredo Villanueva, Accounting
Manager; and Teodoro Wenceslao, Store Operations Manager. They left on February 15, 1983 to
undergo a five-week in-depth training in their respective fields. Upon their return to the country,
the Five-Man Team immediately set out to practice what they’ve learned from the functional
training: site selection, design and construction of the first 7-Eleven store, negotiation with
suppliers, ordering of equipments, recruitment and training of first batch of employees.

The assassination of Ninoy Aquino at the Manila International Airport on August 21,
1983 triggered the steady deterioration of the economic and political situation in the country. In
spite of the bleak state of the market, PSC decided to proceed with the 7-Eleven project. On this
account, the company needed fresh capital to build its first two stores. The Board of Directors
increased their respective equity contributions in PSC and invited two outstanding businessmen,
Mr. Jorge L. Araneta and Mr. Ernesto B. Rufino Jr., to become new shareholders and directors of
PSC.

Despite the aggravating political and economic adversities, PSC gamely opened its first
7-Eleven convenience store, located at the corner of EDSA and Kamias Streets in Kamuning,
Quezon City, on February 29, 1984. This store proved to be a tough one as it weathered all types
of calamities, the EDSA revolution, and coup’d’etats. The second 7-Eleven convenience store
was opened at President Ave., BF Homes, Parañaque, which was adjacent to the entrance of a
posh subdivision, in April 1984. Having been able to open two stores within the same year, PSC
was able to make necessary comparisons in the operations of its stores. It has learned that the
primary customers of 7-Eleven stores came from the middle class: the salaried, busy employee
who preferred a quick fix, while on his/her way home or to the office.

Because PSC steadily lost money during the years of 1984 to 1985, and due to the
outrageous impossibility of securing bank loans, Francis R. Sibal was compelled to sell his share
in the company and relinquish his responsibilities as executive vice president and managing
director. His duties as Managing director was assumed by Mr. Vicente Paterno, while his
responsibility for external affairs was taken over by Mr. Jose T. Pardo.

To infuse additional capital into the company, PSC sought the assistance of a friendly
large Philippine organization who later offered a substantial semi equity term loan. Because of
this, the company had adequate funds to open its third 7-Eleven convenience store at the corner
of Harrison and Libertad Streets in Pasay City in October 1985, and patterned it to the
characteristics of the Kamias branch. Management also came up with a clever leasing scheme
wherein the lender participates in store profit when an individual store achieves higher than
target sales volume. This was an effective way to source out funds for the construction of more
stores. The first 7-Eleven Convenience Store built through this scheme was the branch located in
Nagtahan Rotonda, at Santa Mesa, Manila.

On May 19, 1988, PSC’s sister company, Philippine Seven Properties Corporation
(PSPC) was registered with SEC, and its incorporators were Manuel Agustines, Jorge Araneta,
Jose Pardo, Vicente Paterno, and Alfredo Ramos. PSPC undermined the difficulties posed by the
Constitution, and made it easier for PSC to raise money through acceptance of foreign and
corporate investments. PSPC was able to successfully generate additional funds which were used
by PSC in the construction of six stores in 1988, and five stores in 1989. Indeed, a tremendous
blast of enthusiastic action from PSC Management.

Though still inexperienced in the field of the convenience store industry, PSC showed
remarkable results. In fact, according to Southland’s technical representatives, PSC’s 7-Eleven
stores compared favorably with other 7-Eleven stores anywhere in the world. The stores were
clean, comfortable, and the ambience was very inviting and pleasant.
 GENERALIZATION

Knowing that 7-Eleven operates, franchises, and licenses 68,236 stores in 17 countries as
of June 2019, it shows that the business has no problem regarding the political and legal aspects
of the countries where they operate. It may have been costly to comply with all the laws
implemented in those countries, but seeing how the business grew and grows up to now, the
expenses and adjustments are all worth it. In a technological sense, the higher the technology, it
may be expensive, the higher the return on investment. Since everyone is using gadgets, may it be
smartphones, tablets, PCs, and others, the introduced mobile payments are effective in most of the
markets. In the economic aspect, sales, demand, and, interest and employment rate varies from one
country to another. This can be a strength or a weakness depending on how well the stores are
distributed around the world. It becomes a strength when, even though the number of sales is
dropping in a particular region, there are other stores that can make it to an average while some
can achieve higher. It becomes a weakness when the stores are lumped into a particular region,
then an economic crisis rises. Lastly, 7Eleven still improves their environmental and social
contributions as a business through the innovations of packaging and focus on energy
conservation, and improvement of the quality of products, safe infrastructures, and the
consideration of the gender composition in the labor market.

SOURCES

https://www.7andi.com/en/csr/overseas/us-sei.html
https://www.7-eleven.com.ph/corporate/corporate-governance-head/our-stakeholders/
https://www.sej.co.jp/arbeit/en/work/clean/
https://corp.7-eleven.com/corp/corporate-social-responsibility#responsibility_plane
https://smallbusiness.chron.com/social-factors-affecting-retail-business-71662.html
https://embapro.com/frontpage/pestelcase/19752-eleven-7
https://www.marketingtutor.net/how-social-factors-affect-business-environment/
https://sbr.com.sg/food-beverage/in-focus/cheers-7-eleven-add-premium-meals-and-self-service-
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https://embapro.com/frontpage/pestelcase/19752-eleven-7
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https://www.7-eleven.com.ph/about/the-first-7-years/