Strategic Management

Case 19: 7-Eleven in Taiwan: Adaptation of Convenience Stores to New

Market Environments
By : Mohamad Hafiz Arsan Haq

EXECUTIVE SUMMARY

7-Eleven was one of the most popular convenience store in the world. The company also offers
business franchise and license for potential investor who wants to establish a promising business
industry. Founded in 1927, Totem stores, the first 7-Eleven, was started selling ice blocks to society and
then they continue to expand the market in providing convenience products. The company determines
that the operation time will be started at 7.00 AM until 11.00 PM, thus, thats why they change the stores
name to 7-Eleven. Generally the concept is to provide the consumers with high-quality products at
reasonable prices and also creates convenient stores environment.
From time to time, 7-Eleven expand its market scope by using three distinctive features. The
construction site distance is located dispersed from one another in the entire United States and operated
at where a lot of people gathered, such as gas station. Furthermore, most of the store is positioned in
rural area that has low-density of population. Floor plan management allows the company to create an
ambience shopping environment to the consumers.
Then, in 1969, 7-Eleven finally opened its first international store in Canada. Many franchisees
are looking the company in order to obtaining the license. The global expansion generated four times the
number of stores within the United States. In 1980, the company for the first time launched a new store
in Taiwan through franchise deal with President Chain Store Corp. (PCSC), the distribution arm of UniPresident Enterprises Corporation Group (UPEC). However, many obstacles encountered 7-Eleven
when they try to penetrate Taiwan market. Since 1980, three distinct phases are conducted to gain
market competitiveness.
Phase number one is imitation. This process required a decade, from 1980 until 1990, to identify
the implemented of U.S. model to Taiwans consumer reaction. At the beginning, different land-use
policy and culture hampered the adjustment process, such as smaller store area, targeted housewives,
and possessed high renting cost. Next, the second strategy is localization. PCSC try to resolve the
undone established system such as ownership, location, and merchandising issues. They are more focus
on creating an efficient operation to gain growth for long term sustainability. Attracting to a new
franchisee that interest on opening a new store in city centers is selected to expand its market sector.
Moreover, PCSC added local flavor products to the stores. The last step is innovation when the

Strategic Management
Case 19: 7-Eleven in Taiwan: Adaptation of Convenience Stores to New
Market Environments
By : Mohamad Hafiz Arsan Haq
globalization forced each business entity to utilize sophisticated technology within the operational
process. Taiwanese 7- Eleven used ibon, an e-commerce kiosk connected to a cloud server, which allow
the company on becoming digitalized distribution channel provider to do many internet transactions.
Ticket reservation, licensing renewal, personal taxes payment, and other services are several of the
benefits 7-Eleven could give to the consumers.

ANALYSIS AND RECCOMENDATION

In examining a company international competitive advantage, an author tries to elaborate our
understanding towards previous issue by using Porters Diamond of National Competitive Advantage.
1. Related and Supporting Industries
7-Eleven collaborated with many related industries to enhance its performance competed to other
rivals. The company associated with Uni-President to provide telecommunication service to consumers
and to compete with Chunghwa Telecom, a big telecommunication company. PSCS also collaborated
with EasyCard Corp to develop the touch-and-go integrated circuit (IC) card usage for consumers who
want to purchase public interest, such as metro and bus services. Cooperated with Social Affairs Bureau
of the Taiwanese government, 7-Eleven integrated taxi call service offered to customer.
2. Firm Strategy, Structure, and Rivalry
7-Eleven collaborates with PCSC whose considers as a pioneer in Taiwans convenience stores
industry to ease the adaptation process in a new environment. Besides that, PCSC has abundant of
information regarding the culture, habit, and behavior of Taiwanese that is dissimilar to U.S. model.
Thus, they can adjust and transform recent policies to be accepted by the consumers. In addition, 7eleven was also being part of a conglomerate, UPEC, to leverage internal connection.
3. Locating Value Chain Activities Advantageously
7-Eleven conducted many alternative options to minimize operational cost as efficient as possible.
They choose Taiwan as the first Asian segment because of low-cost offshore destination, lower inflation
rates, and liberalized government. Through franchising program, they allowed to reduce capital outflow
and monitoring time, gain more growth and generate higher profit. Moreover, PCSC imposed new

Strategic Management
Case 19: 7-Eleven in Taiwan: Adaptation of Convenience Stores to New
Market Environments
By : Mohamad Hafiz Arsan Haq
policy to 7 eleven that the inventory distribution process should be held by internal logistic sector. The
sharing resources will produce an effective and efficient supply chain. PCSC already used Computer
Aided Planning and Scheduling to manage the delivery process. The entire vehicle was franchised to
suppress operational cost.
4. The Impact of Government Policies and Economic Conditions in Host Countries
Taiwanese Government had critical impact why 7-Eleven select the country to start a first new
business in Asia. Taiwan imposed liberal paradigm to control market competition. They were able to
hold down the price reducing consumers concerned towards instability of economic condition.
Government has critical role on intervening the market, hence, national company protect their position.
However, the economic condition in Taiwan tends to be stable with low inflation rates thus the prospect
can be calculated and anticipated.
Transnational Strategy
As we known, there were 3 phases conducted by Taiwanese 7-Eleven in establishing and adjusting
standard operating system to a new environment. In the end of the localization phase, PSCS started to
provide a local flavor in its stores. After successfully imposed and adjusted the U.S. model to society,
the company continuously updating the stores with innovative idea and sophisticated technology to
enhance its core competencies. Traditional Taiwan foods are created and distributed to satisfy society
demand to hygiene and healthy products, such as baozi, luwei, fantuan, and biandang. The concept was
to sell fresh food that can be consumed immediately as possible. To
Through licensing and franchising program allow 7-Eleven to protect its right, authority, and
policy to minimize counterfeiting and other criminal action that can jeopardize the companys existence.
In the future, PCSC had secured the license from 7-Eleven Japan for full franchise rights in Shanghai.