“FIRM ANALYSIS ON 7-ELEVEN”

Polytechnic University of the Philippines San Juan Campus

By:

Muñoz, Kathleen
Peñamante, Julius Miguel
Policarpio, Ghieann
Tedra, Maureen

BSBA FM 2-1
I. The Firm

History and Background

7-Eleven is a retailer, it is the largest operator and licenser of convenience stores

with more than 21,000 units worldwide and is the nation’s largest independent gasoline
retailer. It focuses on the convenience of its consumers.

In the year 1927, a world best competitive convenience store was founded. Located
in Dallas Texas United States. 7- Eleven was called “Totem store” by its founder Joe C.
Thompson. A very simple play on words – the shoppers would “tote” away from their shop
with their items. 7-Eleven has a large franchises and Independent stores battling for the
title of “most convenient”. An average convenience store offers a thousand products, from
fast food and canned products to energy drinks and microwavable meals.

Along the street in a major American City, 7-Eleven made it spot one store in particular a
green, red, white, orange flashing sign pave way for them to be known as world best
convenience store. They were able to promote 7-eleven across the globe. They grow into a
global success which operates along 16 different countries including Philippines.

Joe C. Thompson was the founding directors of Southland Ice Company. He theorized that
selling products such as bread and milk in convenience stores would reduce the need for
their customer to travel long distances for the basic items. Mr. Thompson eventually came
up buying the Southland Ice Company and turned it into Southland Corporation.

In 1928, Ms. Jenna Lira brought totem poles as souvenir from Alaska. They place
it in front of the stores which serve as marketing tool for the company. The executives
decided to put totem poles for every stores. In the same year, totem stores was able to
construct gas stations in some of Dallas. Joe C. Thompson provide training for the staff so
that they are able to provide same quality and service. This becomes major factor for the
company’s success as a retail convenience store. The great depression affect the company
due to bankruptcy. Company continued its operation. They were able to do reorganization
and receivership. W.W Overdon, a Dallas banker help the company to revive when it comes
in their finances. They sell its bonds for seven cents in dollar currency. This brought
company’s ownership under the management and control of Board of Directors.
The franchise name was changed as 7- eleven due to new store hour’s operation (from 7
am to 11 pm) which were unfamiliar at the time. 1963, they conduct experiment with 24
hours schedule in Austin Texas.

After an Austin store stayed open all night, they were able to satisfy the demand of the
customer. By that, Fort Worth, Dallas, Texas, Las Vegas and Nevada came up opening
their stores for 24 hours.

In the Philippines, 7-eleven began in February 29, 1984. It was run by Philippine Seven
Corporation (PSC). Its first store was located in Quezon City.

In 2000, PCSC of Taiwan also a licensee of 7-eleven, purchased the majority of shares and
able to formed strategic Alliance for the convenience industry along the area. In 2015,
stores reached 1,602 and as of the present there are 2,285 7-Eleven stores in the country of
the Philippines.

According to the 7-Eleven Philippines website:

Vision

 Our vision is to be the best retailer of convenience for emerging markets.

Mission

 To make daily life easier by providing modern convenience.

Goals

 “Reduce its energy footprint in stores and offices by 20 percent by 2025”

7-Eleven is not just focused in providing the needs of the people but they
also care for the environment. They wanted to reduce some of their consumption in
support to the sustainability programs when it comes in conserving our natural
resources.

 “Reduce its packaging footprint by 20 percent by 2025”

 7-eleven creates a friendly packaging to improve their products. They came
up with paper based packaging as a solution in reducing the use of plastics. They
work hard to reduce packaging materials without compromising product quality
and safety.

 “Increase corporate giving to 1 percent of operating net income annually,

beginning in 2017”.

As youth plays vital role in the society, 7-eleven would like to impart a percent of
their net income to support the youth who continued to patronize their products.

7- Eleven considers the community as part of their success as they become a

globally competitive convenience store.

II. SWOT and PEST Analysis

SWOT Analysis focuses on both the internal and external factors that affects the business.

Strengths

- 7-Eleven has a lot of outlets that can be found almost anywhere, these
locations are convenient for consumers in need.
- 7-Eleven is already a known convenience store, so there are a lot of loyal
customers.
- They have individual branded products like their slurpee, hotdogs, sisig, and
siopao, by which consumers may choose to seek since these particular goods
may only be found here.
- There is Diversity of Income, because of the overall chains of 7-Eleven there
are many streams of income depending on the profit of each outlet.
Weaknesses

- Since 7-Eleven outlets are usually placed in convenient places for consumers,
there are high rental costs.
- There would be high staff costs in connection to the high operating cost since
most 7-Eleven outlets operate 24/7.
- Retailed goods are more expensive, so consumer may buy less or opt to buy
to another store.

Opportunities

- Through the continuous increase of the number of outlets of 7-Eleven, there

will be a continued market development.
- Through increased product offering, there would be a greater selection of both
physical products, as well as services.
- 7-Eleven has managed to form strong bonds with key manufacturers that have
strong brands, such as Gatorade, where certain flavors are only offered in 7-
Eleven, thus would attract consumers who seek this certain flavor as to their
taste and preference.

Threats

- Since 7-Eleven is a convenience store that handles cash in which is usually

open 24/7 basis, they are likely to be a target of theft and armed hold-up.
- Because of lack of security, such as guards, they are also prone to shoplifters
from time to time.

PEST Analysis focuses on the external environmental factors that affects the
business.

Political Factors

- The degree of corruption and violence in the host country, causes continuous
disruptions in the market economy, in which 7-Eleven most likely will be
affected in terms of
 - Foreign import policies, which is good for 7-Eleven, since they are retailers,
they can offer imported goods that is to the liking of many consumers.
- Every business abides with the policies of the government, a consumers
policy RA 7394, states to protect the consumer against hazards to health and
safety. This policy helps 7-eleven in ensuring the customers protection when
it comes to the products that can purchase in their store.

Economic Factors

- If there are fluctuations in the market, like inflation, less consumers may buy
at
7-Eleven with the fact that prices there are already increased, and if inflation
occurs the prices would be expected to increase.
- Increase in Labor Cost which may result in
higher expenses compared to revenue. Unless you decrease
other expenses or increase your selling prices to increase your revenue, your
profit will decrease.

Social Factors

- If previous consumer’s standards did not go well with what 7-Eleven offers,
there is a possibility to lose those consumers, and if they tell their friends and
families about it, the possibility of new consumers may decline as well.
- Because of the increased prices, consumers who seeks cheaper prices may not
buy at 7-Eleven.

Technological Factors

- With the use of apps on smart phones like google maps it is easier to locate
nearby outlets of 7-Eleven.
 - With advertisements in the internet, consumers would have knowledge of
what new products to expect in 7-Eleven, and it may also attract consumers.
- Since consumers’ wants easy transactions, 7-eleven improved their service in
the use of technology, “CLIQQ” is a new way of helping their customers earn
points using their mobile in purchasing products. With an affordable price,
they can afford to have this faster service.
-

III. Market Structure

7-Eleven is considered as a Monopolistic Competition since there are many sellers

in the industry acting independently, like Ministop and Family Mart, they sell differentiated
products, it is relatively easy for new firms with own brands to enter the market, and
existing firms can exit if their products become unprofitable, and they are price dictators.

5P’s of 7-Eleven:

Product

 7-Eleven offers a variety of goods whether consumable goods which come from
their trusted Brands, such as Gatorade, Selecta, and many more, and non-
consumable, like shampoos and batteries, basically those goods that are essentially
useful to consumers.

 They also have their own products such as slurpee, hotdogs, sisig, siopao, and even
meals.
 They also offer Gasoline, a charging station, and Cliqq.
 Figure 1.1

Price

 The prices in 7-Eleven are a little expensive especially the retailed goods which is
quite an increase compared to its suggested retail price.
 Convenience stores deal in low volume, meaning convenience store's fixed costs
are spread over fewer transactions, so they can get away with charging higher
prices because they are offering greater “convenience”.
 But despite the pricing, 7-Eleven outlets are usually open 24/7 meaning that it
serves as a convenient and competitive market since not all store are open late at
night.

Place

 7-Eleven has outlets worldwide, it is located almost anywhere that would be a

convenient location for many possible consumers.
 It is easy to locate the outlets through the use of google maps.
Promotion

 7-Eleven uses social media such as Facebook, Instagram, twitter, and then posters
to attract possible consumers, or make the previous consumers to return.

People

 The staffs in 7-Eleven are accommodating and is fast at the counter.

 They are presentable and mostly polite.

Demand Forecast

In order to project the demand trend through the use of a demand forecast, a sales
forecast using the data acquired from the website of 7-Eleven was made:

GROWTH
TIME SALES RATE SALES FORECAST
2014 19,667,684,690 19,667,684,690
2015 25,874,333,387 31.56 % 24,076,700,017.62
2016 32,531,235,672 25.73 % 29,474,109,071.59
2017 37,007,662,688 13.76 % 36,081,485,624.19
2018 43,900,129,403 18.62 % 44,170,074,884.60
2019 54,071,928,623.77
2020 66,193,536,522.93
2021 81,032,513,337.91
2022 99,198,026,918.90
AGR 1.2242 %

Figure 1.2

With the use of the original sales, a sales forcast was made as of the year 2014 to
2022. It can be seen that at first the projected sales was lower than the actual sales, but then
at year 2017 the gap was closing in, then at 2018 the projected sales was higher than the
actual sales, which is good for 7-Eleven.
Figure 1.3

In this visualization of figure 1.2, it can be seen that the projected sales for the years
of 2018 to 2022 will increase and increase, meaning that there will be a gain, and so if there
is a gain in sales, then the demand can be said to have also increased.

IV. Corporate Social Responsibility

The Philippine Seven Foundation is the corporate social responsibility arm of Philippine
Seven Corporation.

The 7-Eleven is the world’s largest convenience store chain, they are positioned in certain
parts of the world, especially in convenient locations in order to help sustain the
communities around the globe. 7-Eleven’s Corporate Social Responsibility (CSR) strategy
was created to help best leverage their business to do the most good in the world.

According to the website of 7-Eleven, PSC initiated the establishment of Phil Seven
Foundation, Inc. (PFI) in October 2, 2007 to support its corporate social responsibility
programs. PFI was granted a certificate of registration by DSWD on August 6, 2010, after
completing the 2-year operations requirement. BIR issued a certificate of registration to
PFI dated December 21, 2011 recognizing PFI as a donee institution and said certificate of
registration was re-issued by BIR last August 10, 2018. In October 10, 2013, PFI became
a member of the League of Corporate Foundations, Inc. In July 08, 2016, DSWD issued a
Certificate of Registration to PFI allowing it to expand its operations from NCR to
nationwide which is valid for 3 years.

In the upcoming years, PFI will continue to pursue CSR projects prior for the
benefit of communities served by 7-Eleven stores. They intend to continue the priority to
education, health and nutrition for pre-school age students from poorer families.

Initiative Beneficiary

1. “Gulong ng Karunungan” Project, a learning

school on wheels that caters to out of school children Children ages 2 to 17 yrs. old
and youth

Indigent communities preferably

2. “Everyday Play” Project , a Community
with large population and
Playground (Donation of outdoor play equipment
available government owned
for community use)
space

Deserving undergraduate PSC

employees who are financially
3. Scholarship Program
constraint to finish academic
education

Figure 1.4
V.

Summary

7-Eleven is a firm that provides good and quality service to every individual. Their
goal is to meet the convenience of the consumer as they continue to grow in the business
industry. They were able to enhance or improve some of their services in order to be a
globally competitive convenience store.

7-Eleven has a vision to be the best retailer of convenience for emerging markets, and then
a mission of making daily life easier through modern convenience. Their goals are
contributory to people, planet, and products. This goals will not just help their business to
grow but it can also support our sustainability programs.

Through the SWOT and PEST analysis, our group identified the respective internal and
external forces affecting 7-Eleven. There are certain factors that affects the firm positively,
but since not everything goes smooth, some negative factors do affect the firm as well. The
only difference in this analysis is that SWOT analysis focused on the internal and external
forces that affects the firm, while the PEST analysis only focused on the external forces
that affect the firm.

In terms of market structure, since 7-Eleven is a retail store, it is classified as a

Monopolistic competition since there are varieties of convenience stores existing in the
market acting independently.

Then with the use of 5P’s respectively; product, price, place, promotion, people, our group
identified what 7-Eleven can offer to possible consumers, as well as to what it lacks as a
convenience store.

Following is the Demand forecast which was made with the use of the projected sales from
the sales forecast made using the original sales of 7-Eleven from year 2014 to 2016. Among
the projection of sales it was seen in figure 1.3 that the sales forecast was lower at first but
as the year went by, it increased and increased.
And then the Corporate Social Responsibility of 7-Eleven which is the Philippine Seven
Foundation seeks to contribute as per the goals of 7-Eleven, which is to people, planet, and
product. They created certain projects that will help in making their goals to come true.

Conclusion

In conclusion, 7-Eleven is a firm that is capable of providing good service and

products to their customers. One of the factors why do they grow in business industry is
because they give full commitment to their goals as they run the business. They ensure that
they have quality products and services. They are Country’s No. 1 friendly neighborhood
store as their franchise and stores continue to expand. They visualized 7-eleven to be the
best retailer of convenience store for emerging markets. We can see that 7-eleven is just
around us, they even put up their stores near schools, hospitals and markets. In this strategy
is not impossible that they can acquire good outcome when it comes in sales.

Their projected sales help them to have an overview of what they can obtain during the
business run, since convenience stores are great demands across all regions,
neighborhoods, and cities. A value priced retail items are available in their store such as
drinks, and snacks something just about everyone needs. That’s why many franchise of this
store is booming in the market, as they can have owners support. Franchise models give
entrepreneurs several advantages from the start. They can have immediate access to key
resources that can help them grow their business.7-eleven provides franchisees with
tremendous resources, from training to technical support to technology.

We notice that they were totally focused on the growth, According to entrepreneurs.com
site; 7-Eleven is the #2 fastest-growing franchisor in the nation in the year 2018. 7-Eleven
realized that franchisees are the backbone of their company that’s why they promote this
in the market so that people would trust their convenience store.

This proved that 7-eleven grows because they are after on what and how they can provide
for their customers. A good standing company is what they aim to expand great horizon
for their business. 7-eleven is one of the best convenience store that can satisfy the needs
of the community, and environment. They stick in helping the people and nature by
improving some of their services and products to promote sustainable market.

The hardship of Joe C. Thompson helps him to have a successful business around the globe.
He visualized serving people through 7-eleven. This business rendered a good service
that’s why it’s not impossible that they were able to be known as one of the best
convenience store.

Recommendation

“Give the customers what they want, when and where they want it.”
~Joe C. Thompson Jr. | 7-Eleven Founder

 Innovation, alternatives, and technology

As 7-eleven continues to expand, we look forward for new innovations that could
help them acquire more success in the business. 7-Eleven must continue to assess the
needs of the people to support the demand in supply. In this way, they will be the
alternative resource of the people when some of the products are not present in the
market. As 7-eleven improved some of their services through technology. It could help
them to actively engage with their customer by promoting/ advertising their products
through their mobile app. This could help customer to be more aware on how to use
their improve service such as cliqq. Meeting the needs of the customer will always help
business to gain loyalty. Encourage customers to give feedback and suggestions so that
you will be able to know their concerns when it comes in providing them service.

 Sales

It’s better that 7-eleven has less expenses and greater projected sales because it
can be a good sign that the business is running smoothly, upon analyzing the status of
their sales, they must be aware of setting projected sales high because of seasonality.
Sudden changes will clearly affect the performance of sales. It’s a good thing if 7-
eleven would still be able to provide service despite of the sudden changes in season
and situation because if they can meet the demand during those seasonality or changes,
it would create a good outcome for the performance of sales. But if the business will
 not be able to provide service or products in the midst of seasonality or changes it would
create a negative impact in their sales status.

 Environment

One of the goals of 7-eleven is to help the environment conserve natural resources,
with this; 7-eleven must continue to use the paper based packaging so that we can
prevent the usage of plastics. Improving of their packaging will help them promote
ecofriendly materials, such as the use of paper straws and paper bags rather than
plastics.

VI. Appendix

Documentation

Learnings

Peñamante, Julius Miguel

Before getting deeper with the firm analysis, I thought that the facts that I’ve
acquired firsthand was enough since I have been their patron for quite some time now. But
during our firm analysis, I found out that there was a lot more to it than just that.

In the process of collecting data about our firm 7-Eleven, I learned many things that
they didn’t originate in the Philippines, but in Texas, and that it is actually the largest
gasoline retailer, and with the help of the SWOT and PEST analysis, I discovered
fascinating facts, such as if a store has a trusted brand, specific flavor of a commodity that
can’t be found in any other stores will be found here, which is beneficial to 7-Eleven since
it could attract possible potential consumers.

I also learned that 7-Eleven is classified as a Monopolistic Competition since it checks as

many sellers acting independently. Along with the creation of a sales forecast which
informed us of the possible sales in order to know if there was a gain or loss for the next
few years, by which it projected a gain, this sort of projection is indeed helpful to know
what to do for the improvement of the firm’s business. And that the corporate social
responsibility of 7-Eleven or the Philippine Seven Corporation is the Philippine Seven
Foundation which contributes to people, planet, and product, it is like a contributory for
their goals.

Peer Rating

NAME: NAME:
GROUP PRESENTATION 20% GROUP PRESENTATION 20%

RESEARCH CONTRIBUTION 20% RESEARCH CONTRIBUTION 20%

ORAL PRESENTATION 20% ORAL PRESENTATION 20%

CONTEXT 30% CONTEXT 30%

VISUAL AID 10% VISUAL AID 10%

TOTAL: TOTAL:

References

https://www.7-eleven.com.ph/about/vision-mission-core-values/

https://corp.7-eleven.com/corp/corporate-social-responsibility#responsibility_people