7-Eleven in Taiwan: Adaptation of Convenience Stores to New Market
7-Eleven is a convenience store chain founded in Dallas, Texas, in 1927. It started off as Southland Ice Company that sold ice blocks used to refrigerate foods in the homes. Over the years, through highly effective strategic decisions and moves, it experienced tremendous growth, whereby it expanded globally and became the world’s largest operator, franchisor and licensor of convenience store, with annual sales of more than $62 billion. It operated 7,200 stores in the United States and 36,400 franchises outside the United States, out of which the majority were in Asia. 7-Eleven’s development was centered around the concept of customer convenience, and it articulated its mission as “Meeting the needs of convenience-oriented customers by providing a broad selection of fresh, high-quality products and services at everyday fair prices, speedy transactions and a clean, friendly shopping environment.” By 2011, the highest number of store locations worldwide was situated in Japan with 13,500 store locations, followed by Thailand and Taiwan. So well did they thrive in Taiwan that even Taiwanese themselves came to identify 7-Eleven as a Taiwanese store chain.
Home Country Advantages of 7-Eleven
Competing in international markets across several geographical boundaries is inherently more complex for a number of reasons. Firstly, different countries have different home-country advantages in different industries (Thompson, Peteraf, Gamble & Strickland, 2014). Four sets of factors contribute to home-country advantages as analyzed using Porter’s Diamond Framework of National Competitive Advantage. The U.S. market, as the home-base market of 7-Eleven, presented several advantages as opposed to the Taiwan market that it eventually entered. These factors provided the opportunity and direction for the company to thrive in the U.S.:
a. Demand Conditions
The shift in the American work routines in the 1960s in which late-night or early morning schedules became common created a demand for a convenient place to shop during what at that time was considered as odd hours. Albeit by accident in its initial discovery by a 7-Eleven store owner in Austin, Texas, the store began experimenting with a 24 hour-opening time, which turned out to be a highly effective strategy with the emergence of several categories of American workers who were staying up later and getting up earlier, and required a place to shop. The U.S. population of 307.7 million people and a vast land area of almost 10 million square kilometers also shaped the development of 7-Eleven. In fact, 3 distinctive aspects in 7-Eleven’s development gravitated toward location-related factors. Firstly, due to the vast geographical landscape, the stores were located sparsely from one another. Secondly, store locations were at strategic points where people congregated, and thirdly, stores were located in rural areas. During its period of development in the U.S. these landscape and demographical factors created a demand that shaped 7-Eleven business approach and location strategies to be the way they were.
b. Factor Conditions
Availability, quality and cost of raw materials proved to be plentiful in the U.S. market, where it saw no difficulties in acquiring raw materials and other inputs.
c. Related and Supporting Industries
Industries in which factory operations was involved actually served as supporting industries at the time, as their full shifts working schedules created a market segment for 7-Eleven that offered 24/7 service, availability, and convenience for the workers seeking for a place to meet their odd-hours buying needs.
d. Firm Strategy, Structure, and Rivalry
Competition for the 7-Eleven business model came from the more conventional supermarkets that were more suited to the American shopping habit at the time where they tend to shop in bulk for their weekly or monthly supplies. In this setting, convenience stores served only as supplementary shopping for daily items that had run out. In its development, this prompted 7-Eleven to figure out ways in which it can gain top-of-mind recall among the American consumers. It did so effectively by focusing on increasing and intensifying customer convenience and localizing its product range to the needs of each of its store locations.
As all four of the above factors were favorable for 7-Eleven in its convenience store industry, the company was able to grow competitively and expand accordingly.
International Expansion to Taiwan
Cost-country