CSM Assignment

Group: 1500 words Companys strategy

1. Brief description of the companys background

Aeon Co. (M) Bhd is a retail company which has been incorporated in Malaysia since 15th
September 1984. The company was formerly known as Jaya Jusco Stores Bhd. and changed
its name to AEON CO. (M) BHD. in September 2004. The headquarter is located in Kuala
Lumpur, Malaysia. AEON CO. (M) BHD, and it is a subsidiary of AEON Co., Ltd. The retail
company operates a chain of stores selling from a range of goods including clothing, food,
household goods, and other merchandise. It operates general merchandise stores,
supermarkets, convenience stores, and specialty stores. Furthermore, it also engages in the
development of shopping centres and credit card services. Aeon Co. (M) Bhd is one of the
biggest enterprise in Malaysia consisting of 25 outlets, including 21 general merchandise
stores, 17 shopping centres and 4 Max Value supermarkets. Aeon has been in Malaysia
for 28 years and successfully established a strong trusted brand. Aeon has
positioned itself as a benchmark in excellent customer service such as high
worker's discipline and maintain a high standard level of hygiene in their food as
well environment.
https://www.ukessays.com/essays/marketing/porters-national-competitive-advantagemarketing-essay.php

AEON CO. (M) BHD. (AEON) is a retailing company. Aeon is the largest retailer in Asia, it is
the holding company of Aeon group. It was incorporated on 15 September 1984. The
company operates in two segments; retailing and property management services. It
headquarters office is located at Kuala Lumpur. It is formerly known as Jusco
Supermarket. Aeon retail store sells assorted goods such as clothing, food, household
goods among others (Retailbusinessreview, 2014)
The AEON Group of Companies consists of AEON Co., Ltd. and about 200 consolidated
subsidiaries and afliated companies. In addition to its core GMS plus its supermarket
and convenience store operations, AEON is also active in specialty store operations and
shopping centre development, operations, credit card business and services. The AEON

Group of Companies is an integrated Japanese retailer and is active not only in Japan but
also throughout Southeast Asia and China. At all times, in every market, AEONs activities
are guided by its unchanging Customer First philosophy. Its aim is to surpass
expectations by combining excellent products with unique personal services that
enhance the shopping experience to make customers smile every time they shop
(Annualreport2012-aeonco.m, 2012).
There are three basic principles applied by AEON which are Peace, People and
Community. In term of Peace, AEON is a corporate group whose operations are dedicated
to the pursuit of peace through prosperity; in term of People, AEON is a corporate group
that respects human dignity and values personal relationships; in term of Community,
AEON is a corporate group rooted in local community life and dedicated to make a
continuing contribution to the community (Annualreport2012-aeonco.m, 2012).

https://allaboutecons.wordpress.com/2014/01/08/aeon-co-m/

Source: Market Publisher

2. Current business plan including its location, sourcing and

distribution strategies
AEONs stores are mostly situated in suburban residential areas, catering to Malaysias vast
low to middle income group. Distribution strategy is about how effectively a firm gets its product
to consumers and end users. The organisation must distribute the product to the user at the right place
at the right time. Efficient and effective distribution is important if the organisation is to meet its
overall marketing objectives.

To speed up the sales and delivery, the two main strategies has been figured out
as below:
Selling Direct to Customer
The products are sold directly in the outlets or through the website. Delivery will
be done by post within three days.

Selling Through Agents

In order to speed up the delivery process and to increase the sales, the products
will be distributed nationally by agents. Awards and commissions over sales will
be given. By using this strategy, it can give rise to the presence rate of the
company in local market.
https://www.ukessays.com/essays/marketing/the-largest-aeon-jusco-shopping-mall-inmalaysia-marketing-essay.php

3. Analysis of the current Information Systems architecture

and describe how it may have contributed to the
organisations business strategy.
http://tescoinformastionsystem.weebly.com/blog/tescoinformation-system
4. Provide an analysis and critical report on the companys
above current business and IT strategies.

Individual: 1000 each Environmental analysis

Raabiah: P5F
Rustam: SWOT

1. Carry out an environment and industry analysis for their product or services using
any business tools of your choice. Clearly show the threats facing the company and
the opportunities that it may be able to exploit in the future.
Supplier Power

Nowadays there are many vendors in the retailing industry. However, it should not be an
issue for AEON Malaysia to negotiate product prices with it suppliers since the company is
one of the biggest retailers in Malaysia. Negotiating perishable and non perishable products
are completely different, as non perishable products have a longer life span. Perishable food
prices tend to fluctuate due to seasonal factors. Perishables would require more attentive
management given their limited shelf lives. If the company did not absorb the price hike of
perishables, consumers would often opt for other substitutions.
Original
There are many vendors in the retailing industry. Due to the group size, it should not be an
issue for Aeon to negotiate an excellent price from its broad variety of vendors on the nonperishable products (e.g. electronic device, furniture, etc.) which tend to have long-life spam.
On the contrary, it would be an entirely different story for perishable foods (e.g. fruit,
vegetable, etc.) which its price tends to fluctuate due to seasonal factors or nature disasters.
Perishables would require more attentive management given their limited shelf lives. If the
company did not absorb the price hike of perishables, consumers would often opt for other
substitutions.
-

Number of suppliers
Size of suppliers
Uniqueness of service
Your ability to substitute
Cost of changing

Buyer Power

There are numerous retailers selling similar products, and the prices are variable. Therefore,
customers love to shop around, by all means, to compare and contrast the price or feature
differences to make the best decision. Moreover, there is a philosophy where the lower prices
are a constant looming temptation for customers. In short, buyers have more bargaining
power.
Pricing strategy is the primary key to preventing its customers from diluting away. Perhaps
the company would require an efficiency inventory management system to gauge, and a
comparative price research needs to be conducted on a regular basis against its competitors.
Those would be in line with its effort to continue to growth its legacy in the future generation.

AEON retail store is an example of oligopoly market structure. There are only a few main
rm in the market, for example, Tesco, Giant Hypermarket or The Store Supermarket.
Therefore, there are only a few of competitor in the market for AEON retail store. So when
the price of the product sells between the supermarkets have difference, the demand
also will have a big different. For example, when a product of AEON retail store is cheaper
than Tesco, the customers will prefer bought the goods from AEON retail store because
they may buy the goods with a cheaper price.

An oligopoly is a market condition that exists when there are at least two rms are
controlling the market (Investopedia, 2009). When a market is shared between a few
rms, it is said to be highly concentrated (Economicsonline.co.uk, 2014). In a result, they
can greatly influence price and other market factors (Dictionary.com, 2014).

https://allaboutecons.wordpress.com/2014/01/08/aeon-co-m/

Number of customers
Size of each other
Differences between competitors
Price sensitivity
Ability to substitute
Cost of Changing
Competitive Rivalry

The threat of competition in the retailing industry is fierce. There are many firms of different
sizes competing in this industry environment. Despite the fact that there are many small
retailers all around the Malaysia, but it is very demanding for them to compete with the big
players like Aeon, Tesco, Econsave, Giants, Mydin, etc., in particularly for a price war due to
lower bargaining power.
Aeons greatest and most longstanding rival is Tesco Plc, the U.K.s largest grocer, where
both companies have a similar customer base. Currently, there are over 30 Aeon stores and
more than 40 Tesco stores in operation in Malaysia.
-

Number of competitors

Quality differences

Other differences

Switching costs

Customer loyalty

Threat of Substitution

An increasing trend of online shopping is what retailers worried the most. Technology today
has changed a great deal over the past decade, as we are now at a point where businesses can
make a serious profit through the internet. The brick-and-mortar businesses can find it
difficult to compete with web-based businesses (e.g. Lazada, TaoBao, Amazon, etc.) because
the latter usually have lower operating costs and greater flexibility. Nowadays, most of the
consumers would prefer online shopping rather than retail shopping due to the convenience
where the products will be delivered to them without a step out from their houses, and the
price is often lower. Some consumers would choose online shopping due to geographical
issues, where the specific products are not available in the country or region the consumer
lives.
In November 2015, Aeon had commenced its online presence, which called Shoppu, to
prevent customers from shifting away. Ultimately, it will incur additional cost for marketing
and maintenance, which indirectly erode companys profit if the online sale results were
underperformance.
-

Substitute performance

Cost of change

Threat of New Entry

The threat of new entrant to the industry that could seriously threaten Aeons competitiveness
is relatively small. The primarily stem due to two factors: the extremely high cost of
establishing a company within the industry and the additional cost of developing brand name
recognition. Any new entrant to the industry needs to have a massive amount of capital to
spend on inventory, as buy more pay less to suppliers, thus, a higher gross profit margin.
But, what if the company plans to operate the retail stores in a Franchising Business Model
(e.g. McD, Secret Recipe,etc. who sell franchise licence) rather than Traditional Business

Model (e.g. Aeon, Tesco, etc. who owned the whole business)? As a recent news was
published where QL Resources Berhad, Malaysias leading poultry producer, intends to
expand into the convenience store business by becoming a master franchisee of FamilyMart,
the worlds second-largest convenience store chain after 7-Eleven, reported by The Star-Biz,
on 17th April 2016. In this sense, Aeon faces a moderately high risk.
-

Time and cost of entry

Specialist Knowledge

Economies of scale

Cost Advantages

Technology protection

Barriers to entry

https://www.linkedin.com/pulse/porters-five-forces-analysis-aeon-co-m-ltd-ace-lim

2. Recommend changes, developments and additions to the companys business

strategy that could result from your above analysis.

AEON needs to understand the economic environment and analyse the impact
on its performance so that it will be able to continue with its strategies to
continuously grow its business.
As unemployment rate decrease, customers will be willing to spend more, the
disposable income of customers increase and hence will indirectly affect
company's revenue and could help in achieve its financial objective.

3. Produce an outline design for the companys future Information Systems Strategy
including the software requirements, hardware requirements and Disaster Recovery
Plan based on your above business strategy.

AEON BIG is currently managing and operating 27 stores which comprise of

hypermarkets and supermarkets in Malaysia.
Aeon Big also operates Jusco stores, which has the largest high-end department store
chain nationwide in Malaysia. They carry the widest selection of products from Japan and
the products are mainly targeting at middle to high-income shoppers.

AEON's stores are catering to Malaysia's vast middle income group and are
mostly situated in suburban residential areas. Its economic entity has two main
reportable segments namely retailing and property management services.
AEON's fundamental principle is its 'Customer Centered Approach'. AEON's
mission is and always will be to contribute to the customers.
Government plays an important role which could affect the growth of the entities
within the industry. The emergence of AEON in Malaysia was initially due to the
invitation by Malaysia's government for the purpose of modernizing the retailing
industry in Malaysia.

This model is used to identify the strengths and weaknesses of the business
which are considered as internal factors that retailer can control over; and also
external factors of opportunities and threats, which are positive and negative
situations that retailers continuously face.
Besides, the Member card system that Aeon implemented has become strength
over its competitors. These discount cards are a source of customer profile and a
useful database to track its customer spending behavior. It also provides a way
for businesses to build customer loyalty and promoting their organization. The
loyalty card could also help to attract the shoppers and enhanced tenants
businesses.
Aeon has provided a wide range and variety of products from food to clothing to
furniture and etc. Their all-under-one roof concepts allow their customers to
spend more hours to shop in the mall and hence boost up theirs sales by
encouraging more customer spending. Also, Aeon able to offers a wide range of
Japanese style goods on its products shelf at a competitive price as compared to
others small Japanese goods retailer shop. This could satisfy shoppers various
preference and keep the shopping centre up to trend.

Apart from its retailing business, Aeon also diversifies into property management
of shopping center that is consistently profitable. This could further improve its
financial performance that is favorable to shareholder wealth maximization.
AEON which practicing EDI in its supply chain management will gain competitive
advantage over its competitors who did not apply this technology. By offering EDI,
AEON could serve its customers better and gain the customers loyalty. This is in
line with the company's principle that is to be a customer-centered organization.
It also provide cost competitiveness and speedy response and to enhance the
customer service. It also reduces the use of paper which results in green ecology
(13) and this is in line with AEON's practice of good corporate social
responsibility- Go Green.
AEON need to adapt with the fast changing environment by upgrading
themselves to exploit the opportunities to expand their sales through online
trading but not only through direct trading. AEON will need to upgrade
themselves as to achieve their goal of operate as an "international-scale retailing
group". However, the performance of property management service would be
affected due to the trend of online trading and worsened the tenant mix. This
would affect AEON's goal where customers' satisfaction level would decrease
and hence lead to less competitive in global level.
Exploiting and implementation of the new technologies in the supply chain has
increase efficiency in stock management as well enhanced the relationship with
the supplier. The establishing of communication network with supplier such as
EDI indirectly has reduced the operating cost so to be performed better than the
competitors if the competitors do not implemented the information system.
The growing internet shopping trends could become an opportunities for Aeon if
the management has realize the important movement of the trends and hence
expanding its distribution channel via the e-commerce. However, this opportunity
could be turn into threat if the management has no response to this trend
because online market could be the substitute of physical retail stores and the
property service business will be affected too.
Customer perspective are examines those factors related to the company's
customer such as customer satisfaction, their loyalty and customer retention.
AEON enhanced philosophy "Customer First" to improve it relationship with their
potential customers. The company also proly vides an unique personal services

to their customers in order to obtain highly satisfaction. The feedback form as

well as the number of complaints are the best method for AEON to determine
their customer's satisfaction regarding to the company's product and services.
Moreover, Customer retention is essential for AEON to survive in the long run.
Therefore, AEON provides well quality products and services to their potential
customers to encourage them to repeat purchase at their shop. Besides, AEON
has provide a range of loyalty card (AEON member) to retain customer as they
can collect point when they purchase goods in AEON outlets. The company can
measure the customer retention based on the number of registration or renewal
of member card over the year.
The main objective for AEON regarding the innovation and learning perspective
are improve staff capabilities in various areas ,such as technical, leadership,
operational and management disciplines and etc. AEON has introduce a bonus
schemes to their workers. This mean that the best performance of workers for the
month will be rewarded. This would effectively motivated their workers.

Porters 5 forces
Competitive rivalty
-

Store location- 26 outlets across Malaysia

Products- Promotes local products and import products made in japan

Own brand- jusco selections, jusco home centre, smart wonder world,
agenda, arcadia, arena, Chic avenue.
Customer loyalty- J card Membership

Introduction
In general, retail store operates in a traditional brick-and-mortar stores
business model, where the company that deals with its customer face-toface in an office or store that the corporation owns or rents.
1.0 - Threat of New Entrants
The threat of new entrant to the industry that could seriously threaten
Aeons competitiveness is relatively small. The primarily stem due to two
factors: the extremely high cost of establishing a company within the
industry and the additional cost of developing brand name recognition. Any
new entrant to the industry needs to have a massive amount of capital to
spend on inventory, as buy more pay less to suppliers, thus, a higher gross
profit margin.

But, what if the company plans to operate the retail stores in a Franchising
Business Model (e.g. McD, Secret Recipe,etc. who sell franchise licence)
rather than Traditional Business Model (e.g. Aeon, Tesco, etc. who owned
the whole business)? As a recent news was published where QL Resources
Berhad, Malaysias leading poultry producer, intends to expand into the
convenience store business by becoming a master franchisee of
FamilyMart, the worlds second-largest convenience store chain after 7Eleven, reported by The Star-Biz, on 17th April 2016. In this sense, Aeon
faces a moderately high risk.
2.0 - Industry Competition
The threat of competition in the retailing industry is fierce. There are many
firms of different sizes competing in this industry environment. Despite the
fact that there are many small retailers all around the Malaysia, but it is
very demanding for them to compete with the big players like Aeon, Tesco,
Econsave, Giants, Mydin, etc., in particularly for a price war due to lower
bargaining power.
Aeons greatest and most longstanding rival is Tesco Plc, the U.K.s largest
grocer, where both companies have a similar customer base. Currently,
there are over 30 Aeon stores and more than 40 Tesco stores in operation
in Malaysia.
3.0 - Threat of Substitutes
An increasing trend of online shopping is what retailers worried the most.
Technology today has changed a great deal over the past decade, as we are
now at a point where businesses can make a serious profit through the
internet. The brick-and-mortar businesses can find it difficult to compete
with web-based businesses (e.g. Lazada, TaoBao, Amazon, etc.) because the

latter usually have lower operating costs and greater flexibility. Nowadays,
most of the consumers would prefer online shopping rather than retail
shopping due to the convenience where the products will be delivered to
them without a step out from their houses, and the price is often lower.
Some consumers would choose online shopping due to geographical issues,
where the specific products are not available in the country or region the
consumer lives.
In November 2015, Aeon had commenced its online presence, which called
Shoppu, to prevent customers from shifting away. Ultimately, it will incur
additional cost for marketing and maintenance, which indirectly erode
companys profit if the online sale results were underperformance.
4.0 - Bargaining Power of Suppliers
There are many vendors in the retailing industry. Due to the group size, it
should not be an issue for Aeon to negotiate an excellent price from its
broad variety of vendors on the non-perishable products (e.g. electronic
device, furniture, etc.) which tend to have long-life spam. On the contrary,
it would be an entirely different story for perishable foods (e.g. fruit,
vegetable, etc.) which its price tends to fluctuate due to seasonal factors or
nature disasters. Perishables would require more attentive management
given their limited shelf lives. If the company did not absorb the price hike
of perishables, consumers would often opt for other substitutions.

5.0 - Bargaining Power of Buyers

There are numerous retailers selling similar products, and the prices are
variable. Therefore, customers love to shop around, by all means, to
compare and contrast the price or feature differences to make the best

decision. Moreover, there is a philosophy where the lower prices are a

constant looming temptation for customers. In short, buyers have more
bargaining power.
Pricing strategy is the primary key to preventing its customers from
diluting away. Perhaps the company would require an efficiency inventory
management system to gauge, and a comparative price research needs to be
conducted on a regular basis against its competitors. Those would be in line
with its effort to continue to growth its legacy in the future generation.

https://pdf.marketpublishers.com/bac_swot/aeon_co_malaysia_bhd_swot_analysis
_bac.pdf