7-Eleven Indonesia Innovating in Emerging Markets SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of 7-Eleven Indonesia Innovating in Emerging Markets
The global convenience store brand 7-Eleven entered Indonesia in 2009, with local player PT Modern International as the master franchisor. To differentiate the stores from other convenience stores and to cater to emerging market customers in Indonesia, the CEO combined the idea of a restaurant and a convenience store in his new 7-Eleven outlets. The 7-Eleven stores provided an affordable and convenient location for youth to hang out and have a quick bite to eat. They also offered wireless Internet and a range of services and products like fresh food and beverages. The case requires students to outline the innovative elements that explain 7-Eleven's success in Indonesia, reflect on its scalability and sustainability, and also to advise the CEO on further strategies to strengthen 7-Eleven in Indonesia. Marleen Dieleman is affiliated with National University of Singapore. Ishtiaq Mahmood is affiliated with National University of Singapore. Peter Darmawan is affiliated with National University of Singapore.
Authors :: Marleen Dieleman, Ishtiaq Mahmood, Peter Darmawan
Swot Analysis of "7-Eleven Indonesia Innovating in Emerging Markets" written by Marleen Dieleman, Ishtiaq Mahmood, Peter Darmawan includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Eleven 7 facing as an external strategic factors. Some of the topics covered in 7-Eleven Indonesia Innovating in Emerging Markets case study are - Strategic Management Strategies, Emerging markets and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the 7-Eleven Indonesia Innovating in Emerging Markets casestudy better are - – increasing commodity prices, increasing household debt because of falling income levels, central banks are concerned over increasing inflation, geopolitical disruptions, increasing transportation and logistics costs, digital marketing is dominated by two big players Facebook and Google, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing government debt because of Covid-19 spendings, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of 7-Eleven Indonesia Innovating in Emerging Markets
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in 7-Eleven Indonesia Innovating in Emerging Markets case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Eleven 7, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Eleven 7 operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of 7-Eleven Indonesia Innovating in Emerging Markets can be done for the following purposes –
1. Strategic planning using facts provided in 7-Eleven Indonesia Innovating in Emerging Markets case study
2. Improving business portfolio management of Eleven 7
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Eleven 7
Strengths 7-Eleven Indonesia Innovating in Emerging Markets | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Eleven 7 in 7-Eleven Indonesia Innovating in Emerging Markets Harvard Business Review case study are -
Innovation driven organization
– Eleven 7 is one of the most innovative firm in sector. Manager in 7-Eleven Indonesia Innovating in Emerging Markets Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High switching costs
– The high switching costs that Eleven 7 has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Eleven 7 has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study 7-Eleven Indonesia Innovating in Emerging Markets - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Eleven 7 is one of the leading recruiters in the industry. Managers in the 7-Eleven Indonesia Innovating in Emerging Markets are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
High brand equity
– Eleven 7 has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Eleven 7 to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Eleven 7 in the sector have low bargaining power. 7-Eleven Indonesia Innovating in Emerging Markets has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Eleven 7 to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Eleven 7 has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in 7-Eleven Indonesia Innovating in Emerging Markets HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Leadership & Managing People industry
– 7-Eleven Indonesia Innovating in Emerging Markets firm has clearly differentiated products in the market place. This has enabled Eleven 7 to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Eleven 7 to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Eleven 7 in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Learning organization
- Eleven 7 is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Eleven 7 is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in 7-Eleven Indonesia Innovating in Emerging Markets Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Successful track record of launching new products
– Eleven 7 has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Eleven 7 has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Training and development
– Eleven 7 has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in 7-Eleven Indonesia Innovating in Emerging Markets Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses 7-Eleven Indonesia Innovating in Emerging Markets | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of 7-Eleven Indonesia Innovating in Emerging Markets are -
Need for greater diversity
– Eleven 7 has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study 7-Eleven Indonesia Innovating in Emerging Markets, in the dynamic environment Eleven 7 has struggled to respond to the nimble upstart competition. Eleven 7 has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study 7-Eleven Indonesia Innovating in Emerging Markets, is just above the industry average. Eleven 7 needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
High bargaining power of channel partners
– Because of the regulatory requirements, Marleen Dieleman, Ishtiaq Mahmood, Peter Darmawan suggests that, Eleven 7 is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the 7-Eleven Indonesia Innovating in Emerging Markets HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Eleven 7 has relatively successful track record of launching new products.
Products dominated business model
– Even though Eleven 7 has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - 7-Eleven Indonesia Innovating in Emerging Markets should strive to include more intangible value offerings along with its core products and services.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study 7-Eleven Indonesia Innovating in Emerging Markets, it seems that the employees of Eleven 7 don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study 7-Eleven Indonesia Innovating in Emerging Markets that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case 7-Eleven Indonesia Innovating in Emerging Markets can leverage the sales team experience to cultivate customer relationships as Eleven 7 is planning to shift buying processes online.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Eleven 7 supply chain. Even after few cautionary changes mentioned in the HBR case study - 7-Eleven Indonesia Innovating in Emerging Markets, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Eleven 7 vulnerable to further global disruptions in South East Asia.
High operating costs
– Compare to the competitors, firm in the HBR case study 7-Eleven Indonesia Innovating in Emerging Markets has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Eleven 7 's lucrative customers.
Increasing silos among functional specialists
– The organizational structure of Eleven 7 is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Eleven 7 needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Eleven 7 to focus more on services rather than just following the product oriented approach.
Opportunities 7-Eleven Indonesia Innovating in Emerging Markets | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study 7-Eleven Indonesia Innovating in Emerging Markets are -
Building a culture of innovation
– managers at Eleven 7 can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Eleven 7 is facing challenges because of the dominance of functional experts in the organization. 7-Eleven Indonesia Innovating in Emerging Markets case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– Eleven 7 can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Loyalty marketing
– Eleven 7 has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Eleven 7 in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Low interest rates
– Even though inflation is raising its head in most developed economies, Eleven 7 can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Better consumer reach
– The expansion of the 5G network will help Eleven 7 to increase its market reach. Eleven 7 will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Eleven 7 in the consumer business. Now Eleven 7 can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Eleven 7 can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Eleven 7 can use these opportunities to build new business models that can help the communities that Eleven 7 operates in. Secondly it can use opportunities from government spending in Leadership & Managing People sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Eleven 7 can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, 7-Eleven Indonesia Innovating in Emerging Markets, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Eleven 7 to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Eleven 7 to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Eleven 7 has opened avenues for new revenue streams for the organization in the industry. This can help Eleven 7 to build a more holistic ecosystem as suggested in the 7-Eleven Indonesia Innovating in Emerging Markets case study. Eleven 7 can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats 7-Eleven Indonesia Innovating in Emerging Markets External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study 7-Eleven Indonesia Innovating in Emerging Markets are -
Technology acceleration in Forth Industrial Revolution
– Eleven 7 has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Eleven 7 needs to keep up with the evolution of technology in the Leadership & Managing People sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Eleven 7 with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Eleven 7 business can come under increasing regulations regarding data privacy, data security, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Eleven 7.
Consumer confidence and its impact on Eleven 7 demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study 7-Eleven Indonesia Innovating in Emerging Markets, Eleven 7 may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Shortening product life cycle
– it is one of the major threat that Eleven 7 is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Eleven 7 needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Eleven 7 can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Eleven 7 can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Eleven 7 in the Leadership & Managing People sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Eleven 7 needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Eleven 7 will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Weighted SWOT Analysis of 7-Eleven Indonesia Innovating in Emerging Markets Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study 7-Eleven Indonesia Innovating in Emerging Markets needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study 7-Eleven Indonesia Innovating in Emerging Markets is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study 7-Eleven Indonesia Innovating in Emerging Markets is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of 7-Eleven Indonesia Innovating in Emerging Markets is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Eleven 7 needs to make to build a sustainable competitive advantage.
