Case Study: Ministop Philippines

By: Group 1

Members:
Del Rosario, Kenneth
Ignacio, Camille Jeune
Lomerio, Camille
Sanchez, Christine Anne
 Ministop Philippines carry a wide assortment of merchandise ready to serve customers any time
of the day. Affordable yet with an uncompromising focus on quality, the 24-hour convenience stores are
also equipped with an in-house kitchen facility to serve freshly prepared meals every day and served hot
to the hungry customer. With favorites such as the Uncle John’s Fried Chicken, Toppers, Kariman,
MySundae and Chillz, the ready-to-eat category is distinctly developed for the Filipino palate. Originally
from Japan, Ministop has become one of the best known and beloved convenience stores among urban
communities and business districts in Metro Manila, areas in Luzon and Visayas.

Out of the 50 managed stores, only half are making money, with the other half either breaking
even or losing money. Contract pre-termination is very common among losing franchisees. Losing
franchisees have complained about Ministop’s low level support for their stores. Late, incomplete and no-
deliveries are rampant. Head office people they complained were also non-responsive to some of their
requests. In 2008, net income dipped to record low; Ministop President responded by stating that
increased operational expenses brought about by the changing dynamics of store operations and
escalating utility rates, has deeply affected the previously forecasted payback period of the MInistop
investment.

Ministop is losing money and has not earned a decent net income since it started its operations.
While it has achieved its target of becoming the fastest growing convenience store in the country, adding
by an average of 37 stores per year in 10 years, it has never reached its target in terms of return on
investment. What should Ministop do to overcome this trial they are into?

The Case Analysis

I. PROBLEM

a. Ministop is losing money. Given its current condition, should the business continue its
operation? What strategies can it apply to improve its own profitability and that of its
franchisees?

II. OBJECTIVE (Must, Wants)

a. Must
i. To increase its profit and have a decent net income
ii. To continue its business operations

b. Wants
i. Sustain their franchisees
ii. Build a new strategic plan that will improve their profit
III. AREAS OF CONSIDERATION

a. Strengths

i. Varied Products
- Product Kariman. A lot of people buy their product in different branches,
mainly because it is cheap. Also because of it tastes good. It is also easy to
eat. A customer may buy one and carry it around for consumptions with ease.

ii. Convenient Location

- There are a lot of Ministop branches established around the Philippines
which makes their product easy to reach.

iii. Home-style warmth and comfort

- Customer-focused management gives in a competitive advantage among
other convenience stores. A warm, friendly place where people can relax.

iv. Affordable Price

- Budget-friendly products

b. Weakness

i. Franchisees
- Running a large team of franchisees removes some element of direct control
of the day-to-day operation of each outlet and passes it to the franchisee. The
business also lacks support in other franchisees.

ii. Lack of manpower

- Lack of employees like guards, tellers, and assistants. The business does not
have enough people in the Central Distribution Center

iii. Lack of Space

- Some stores of Ministop does not have enough space, unavailability of
parking lot.

iv. Poor operational system

- Since Ministop is home-style based, they are more likely prone to danger.

v. Poor in adjusting/adapting to a new market environment.

c. Opportunities

i. Fastest growing convenience store

 - Ministop is the fastest growing convenience store in the Philippines because
of its continuous growing population of franchisees. This title given to the
business must be maximized as they can reach wide audience of consumers.

ii. Competition
- Competition can be seen as an opportunity. There are a lot of convenience
store more popular than Ministop, this environment of competition must
serve as a motivation for the business to reach new heights and plans.

iii. Numbers of franchisees

- Franchisees are the one that contributes to the growing population of the
store, if handled appropriately franchisees can be a great opportunity for the
store to become not just the fastest growing convenience store but also one of
the trusted established stores in the country.

d. Threats

i. Competition
- Competitive environment; convenience stores moving to/having 24/7
schedule; stores offering the same products as what Ministop sells; and the
continuous growing population of convenience in the country.

ii. Opinions of unsatisfied customers against Ministop

- Some discontented customers spread fake news against the products and
services that Ministop offers.

iii. Falling economy

- People loses their jobs and the normal customer number of Ministop will
slowly decrease as well due to lack of income from the people.

IV. ALTERNATIVE COURSES OF ACTION

1. Ministop can use a Transaction processing system (TPS), a system that will help lessen
the slow service of employees.

a. Justification
It can support routine day-to-day operation and includes performance, reliability,
and consistency. As the fastest growing convenience store the business must innovate
and follow advancements.

b. Disadvantage
It would take a lot of money and budget because this alternative recommendation
requires advance technology.
2. Maintained cleanliness. Improve and multiply the utilities and facilities such as air-
conditioning units, lights, tables, and chairs; the store is seen as dirty, and unimproved
due to broken air-conditioning most of the time, and bad lightings.

a. Justification
Improving utilities and facilities will help the business’ image to consumers.

b. Disadvantage
Maintaining cleanliness is difficult because of lack of manpower.

3. In the central distribution center, the manpower must develop and increase by reasons of
lack of manpower creates delays that affect the revenue of the business.

a. Justification
Not enough hired employees also contributes to the dirty and inconvenient
environment the stores are experiencing that compromised their home-styled based
convenience store.

b. Disadvantage
Increasing manpower will take a lot of money in the budget that will contribute
to the loss of income.

4. Provide sufficient supplies to every variety of goods. Improve or innovate new

ingredients for the sandwiches, beverages (chillz), and meals that will create a brand to
the minds of the consumer; create combo meals that is healthier and closer to the
business’ style which is ‘home’; and lessen the processed foods.

a. Justification
These improvements will help the store in the competitive environment they are
into.

b. Disadvantage
Improving the products and meals is a risk and Ministop do not have a decent
profit.

5. Being the fastest growing convenience store created a problem for the business owing to
the fact that the business cannot handle the franchisees; the business must take a step
backward, and slow things down in order for the business to re-evaluate their vision as a
convenience store.

a. Justification
Re-evaluation will help the business to meditate and to breath as the environment
they are into is destructing their operations.
 b. Disadvantage
This means going back to zero to create a new concept or strategic area, it will be
a major risk for an established business like Ministop.

6. Create promotion especially to the loyal customers like creating a card “suki card” to gain
points that can be used to avail discounts, with this solution the consumers will be
attracted to the business’ services.

a. Justification

Consumers will get attracted to the promotion so the number of consumers

will increase.

b. Disadvantage
Since Ministop is losing the game creating promos will make a risk of still not
having enough income.

7. Build a good communication and long-lasting relationship with the franchisees. Based on
the study, franchisees contribute a lot with the loss of income that the store is
experiencing, it was seen that the business lacks care and appreciation with regards to the
business’ franchisees.

a. Justification
Building relationship and good communication will help the business and the
franchisees to have a systematic plan and action.

b. Disadvantage
The group does not see any disadvantage with regards to this course of action.

8. Maximize the business’ brand or style. ‘Home’ is the style of Ministop, but the utilities
and products seem like the opposite.

a. Justification
Ministop must live with the business’ brand and advertise it like that, it would be
a great help establishing their name or brand to the Filipinos on the grounds that
Filipinos are family-oriented and love the ambience of comfort at home.

b. Disadvantagae
Maximizing the business’ brand that they own and establish will not create any
disadvantage because it was Ministop’s brand in the beginning it is just that they did
not maximize it.
 V. RECOMMENDATION

The main problem of Ministop is loss of income or money that caused half of their stores
to shut down because it cannot compete anymore with other convenience stores. Loss of
franchisees is the greatest factor that contributes to the trial the business is into. The proposed
recommendation of the group, Ministop must build a good communication and long-lasting
relationship with the franchisees and everything will follow like cleanliness, varied products, and
enough supplies; because these underlying problems was caused by the lack of operational
system caused by the business’ lack of care and appreciation to their franchisees.

If the business cannot comply to the relationship, they need to have with their
franchisees; the business must slow down and make a new different pace. Based on the study,
Ministop is the fastest growing convenience store in the country and that greatly impacted their
relationship with their franchisees; the business cannot handle properly the amount of franchisees
they are getting every year and that caused low income and return of investment. Ministop cannot
compete with other convenience stores if their number one competition is themselves.

If the business wants to continue their business operations, they should re-evaluate
themselves regarding the relationship with their franchisees. A good relationship will create a
better business for the convenience store and that will help them with the problems and dilemmas
they are experiencing. Remember that good communication and established relationship within
the organization is important as that with the relationship build with the consumers.

References:
Ministop | Retail Formats | Robinsons Retail Holdings, Inc.

Ministop | Retail Formats | Robinsons Retail Holdings, Inc. (2020). Retrieved 12 December 2020, from
https://www.robinsonsretailholdings.com.ph/retail/ministop

BA291-1 Ministop Case Study | Franchising | Retail

BA291-1 Ministop Case Study | Franchising | Retail. (2020). Retrieved 12 December 2020, from
https://www.scribd.com/doc/62480651/BA291-1-Ministop-Case-Study