Strategic Management

Retailer 2 : The business level strategy of McDonald’s Background In December 1980, Golden Arches Restaurants Sdn. Bhd. Won the license to operate McDonald’s in Malaysia. The first McDonald’s restaurant subsequently opened its doors at Jalan Bukit Bintang on 29 April 1982. To date, McDonald's Malaysia employs more than 12,000 local people. The company was named as AON-Hewitt Best Employers in Malaysia in 2009 and 2011, as well as AON-Hewitt Best Employers in Asia Pacific in 2011. (McDonald’s)

Strategy formulation McDonald’s uses demographic segmentation strategy with age as the parameter. The main target segment are children into consideration, children are more attracted towards toys and delicious meals including today’s youth prefer such places for their entertainment and urban families select McDonald’s on various occasions like birthday party, treat for their children. (McDonald’s) Following example, mission McDonald’s are to be customer’s favourite place and way to eat with inspired people who delight each customer with unmatched quality, service, cleanliness and value every time. The external environment can be divided into several sectors. There are two important parts; competitors, social concept (healthy problem) and uncertainty situation, which can greatly influence McDonald’s strategies. The following core values guide actions as we strive to achieve the mission. There are customers are the reason for our existence. McDonald’s demonstrate our appreciation by providing with high quality food and superior service, in a clean, welcome environment, at great value for each customer every time. McDonalds’ committed to people and provide opportunity, recognize talent, and develop leaders and believes that a diverse team of well trained individuals working together in an environment that fosters respect and drives a high level of engagement essential to continued success.

1 | Page

Strategy implementation McDonald’s using few growth strategies of the product like as Market Growth Matrix defined by Ansoff. Market penetration occurs when a company enters a market with the current product. The is the best way to achieve gains competitor’s customers. In business McDonald’s always within the fast-food industry, but frequently markets new burgers. McDonald’s are always enhancing their existing product along with it; they also try to introduce new and new product they can easily survive in the market. Another way includes attracting non user of the product or convincing current clients to use more of a product or service. Market penetration occurs when the product and market already exists in the market. McDonalds is one most popular brand in fast food in the entire world. Every manager user these four groups to give more focus to the market segment decision e.g. existing customers, competitor customer, non buying in the current segment, new segments. McDonalds is currently following above mentioned strategy, to focus on market segments. For serving synonymously to the existing customers McDonalds coming up with different menus as per change in taste and preference of their customer e.g. Happy price menu, beverages including float ice-cream. Supply Chain The company’s recognition as having one of the best supply chains in the world speaks for itself in terms of the strengths of the company in the area. The company has its unrelenting focus on speed, with Just-in-Time Delivery (Small Business) and the economies of scale that it reaps on account of its global presence exerting considerable influence on suppliers, serving as its strength.

Strategy Evaluation With the economic development, people’s living standards have increased dramatically these years. People are becoming more concerned about their health issues. It cannot be denied that McDonald’s has attempted to make it more convenience for the people. However, people also 2 | Page

believe that such kinds of fast food are not good for their health. The world health organization‘s report presented that those foods not only can cause the obesity of children, but also is part of the reason of causing cancer. Health issues became the biggest stumbling block to the development of McDonald’s. Customers were switching to healthier offering, such as Subway’s sandwiches, or KFC’s mashed potato instead of fried potato. McDonald’s has responded to this healthy trend. In order to compete, McDonald’s has added salads and other lighter options in their menu. If a mother comes in, she is not only buying the happy meal for her children, she will also be likely to buy herself a meal too. The lighter options also encourage existing customers to come back more often, because there is a greater variety of choices. Following competitor analysis McDonald’s has been a leading fast-food outlet. But the understudy has another competitor eating away into its market share. In addition to its traditional rival like being KFC. Dominos, Pizza Hut. The firm encounters new challenges. McValue Lunch and McVAlue Dinner compete using a back-to-basic approach of quickly serving up burgers for time-pressed consumers. On the higher end, the KFC has become a potent competitor in the quick service field, taking away customers from McDonald’s. Perhaps in a new environment, fast, convenient service is no longer enough to distinguish firm, at this time, a new critical success factor may be emerging; the need to create a rich, satisfying experience for consumers. This brings McDonald’s more experience based competition which McDonald’s can use for competitive advantages against Kids’ Zone and provided WI-Fi enabled the outlet to cater to the student community. 793 Words

3 | Page

Retailer 3 : The business level strategies for Tesco Store Malaysia Sdn Bhd. Tesco Stores (Malaysia) Sdn. Bhd. Was started on 29 November 2001, as a strategic alliance between Tesco PLC UK and local conglomerate, Sime Darby Berhad of which the latter holds 30% of the total shares. Tesco opened its first store in Malaysia in February 2002 with the opening of its first hypermarket in Puchong, Selangor. Strategy Formulation In 2004, TescoMalaysia launched its own house brand, Tesco Choice. In December 2006, Tesco also acquired Makro Cash & Carry in Malaysia, a local wholesaler which was rebranded to Tesco Extra and provides products for small local retailers. In 2007, Tesco launched ‘Club Card’ for a loyal and way to say thank you to customers by giving back their money to them. Club card has received an overwhelming response from customers with nearly 2 million household members signed up to date. As of January 2009, Tesco has rewarded nearly RM10 million worth of Club card Cash Vouchers to the customers. Later in the year 2008, Tesco introduces Green Club card and Green bags making Tesco Malaysia to be the first Tesco International business to introduce the Green Club card scheme. As part of its global commitment, Tesco Malaysia is a market leading on tackling climate change in techniques of energy saving, launching Green Club card Points to incentivise customers shopping with their own bags, introduce degradable carrier bags, promote positive behaviour among staff though Energy League competition intra stores and a recycling centre to facilitate customers to do their part for the environment. Apart from that, Tesco has launched new promotional campaign to the consumers, 50 basic needs guaranteed not beaten on price. (Faisal, 2011)

4 | Page

Strategy Implementation Tesco currently the focus of a lot of business development and change, provides insight into the small medium business. The stated strategy from elements of flexibility, local operations including customers, cultures, supply chains and regulations, focus on a few loose items, multiformat offerings in order to meet the needs of the local market, capability in people, processes and systems, and brand-building to create lasting customer relationships. The name, Fresh and Easy, was intended to take advantage of the local culture and values. Their product offerings within the store, with a strong emphasis on fresh fruits and vegetables, natural and organic foods, were intended to not only appeal to the tastes of the local culture but also to fill a gap in the current supermarket offerings within the region. Tesco has a strong own brand value which is becoming known throughout Malaysia due to the existing expansion program. Second strength is competitive Pricing Strategy for example the targeted price cuts enabled Tesco to attract more shoppers from competitors and capture the volume that supported the lower prices. Tesco has extended its low price positioning in core groceries across non-foods lines to undercut competition which actually Tesco selling with low price but provide high volume. Third are customer loyalty/relationship e.g. Tesco gained customer loyalty or relationship by launching a Club Card scheme. Customers like the Club card program mainly due to the personalized treatment they receive and the relevance of rewards. Tesco acquires Makro and convert it to Tesco Extra. What Tesco does is they operate it similar to Makro, but more flexible. For example, Makro do not allow customers to buy in small quantity, but Tesco Extra allow but charge higher than those buys in bulk. By doing so, Tesco could earn profit from those Small Medium Enterprise as well, besides individual customers or family type customers. Last one is the strong hypermarket format, for example develop a new store by adding space to existing locations has contributed to the growth of a Tesco supermarket. Besides that, Tesco runs two types of hypermarket format which Tesco Hypermarket and Tesco Extra Hypermarket

Strategy evaluation 5 | Page

Tesco aim is to buy and sell products responsibly, so that customers know that everything they buy is produced under decent conditions, and everyone involved is treated fairly. They believe firmly in the benefits of trade. For customers, they use trading to put products within the reach of ordinary people, and ensure economic growth. For suppliers, they have a wide influence on the way they treat their workforce. They want the right values in supply chain, decent prices and conditions for suppliers. At the same time, they also need to provide good value products to customers. Tesco also uses various methods like, Marketing Communication Tools which includes print pamphlets, retail advertising and short send message (SMS) via phone. Free parking are some of the lures used by Tesco seems to work in their favour. Tesco is very good at using design across their own label, especially strategically. Tesco is often used as one of the best examples of own brand label in the retail industry. The majority of consumers buys the basic Tesco brand as it is cheap and good value for money. Tesco also use of HALAL logo is consistent in each of the product design. Today, an Every Day Low Pricing (EDLP) strategy of Tesco is more popular with shoppers than one driven purely by promotions. But a combination of the two is the best means of keeping shoppers happy. Pricing was a key strategy and selling point for Tesco. Low prices were adopted to maximize sales. Tesco's value-added products at low prices attracted many customers. After the launch of 'unbeatable value' campaign, Tesco went in for massive price reductions. The company adopted the strategy of EDLP, while continuing its other promotional activities. The EDLP program aimed to regularize low prices for Tesco customers. 938 Words

Assignment 1; Question 2 Porter's Five Forces Model in the Automobile Industry 6 | Page

This analysis focuses on the automotive industry, specifically, large-scale manufacturers of automobiles. The automotive industry is inherently interesting: it is massive, it is competitive, and it is expected to undergo major restructuring in the near future due to globalization and decreasing oil reserves. Porter's Five Forces, is a way of examining the attractiveness of an industry. It does so by looking at five forces which act in that industry. These forces are determinants of that industry's profitability. There are the threat of new entrants, the bargaining power of buyers/customers, the threat of substitute products, the amount of bargaining power suppliers and the intensity of the competitive rivalry. 1. The threat of new entrants In the auto manufacturing industry, this is generally a very low threat. Factors to examine for this threat include all barriers to entry such as upfront capital requirements e.g. It costs a lot to set up a car manufacturing facility, brand equity e.g. A new firm may have none, legislation and government policy e.g. Safety and emissions, the ability to distribute the product, Perodua has been out of the since the early 90s largely due to the inability to re-establish a dealer network. These reasons are all tied to the concept of barriers to entry; namely, the obstacles and hindrances that make it difficult to enter the market and restrict competition. Multiple barriers to entry exist, which makes it difficult for any new automobile manufacturer to come into the industry and have success. One of the greatest barriers to entry in the automobile industry is the extremely high amount of capital that is required to purchase physical manufacturing plants, raw materials, as well as to hire and train employees. It takes a great amount of capital, not only for the manufacturing process, but also to keep up with the latest innovations in order to compete with the industry leaders. Research and development is an integral part of automobile manufacturing. New technologies are constantly being discovered that improve the quality of automobiles on the market as well as reduce costs throughout the manufacturing process. Given the nature of the industry, manufacturers must be able to achieve economies of scale. Therefore, manufacturing companies must also have the ability to mass-produce so that can make cars affordable to customers. This can be a significant barrier for a prospective automobile manufacturer and is often a major deterrent. Another barrier to entry is the access of distribution channels. It can sometimes be difficult for a new company in the industry to find an adequate means of distribution because space within a dealership lot is limited. It is important to note that, while the 7 | Page

average individual does not have the means to come along and start an automobile manufacturing company, foreign competitors such as Toyota have been able to enter the local market to compete with such companies as Proton Sdn Bhd and Produa Sdn. Bhd. Many foreign companies are already well established in their own countries and have achieved a certain level of success and customer loyalty. Many foreign automakers have the capital, managerial skills, and required technologies that are necessary to be a strong competitor. (Patterson, 2011) 2. The threat of substitute products If buyers can look at the competition or other comparable products, and switch easily (they have low switching costs) there may be a high threat of this force. With new cars, the switching cost is high because can't sell a brand new car for the same price you paid for it. A Porter’s Five Forces Model analysis of the car industry covers the new market, not used or second-hand. Base my on my opinion need to know whether the market you are analysing has many good alternatives to new cars. A vibrant used car market perhaps? Used cars threaten the new market. The product differentiation is important too. In the car industry, typically there are many cars that are similar look at any mid-range Toyota and you can easily find a very similar Nissan, Honda, or Peugeot. In some cities such as Kuala Lumpur, Johor or Penang , a car is not as necessary example. In cities such as those, the subway, bus, riding a bike or walking is the most effective means of transportation. This reduces the cost of paying for parking, not paying high gas prices and dealing with traffic within a larger city atmosphere, resulting in more free money and time on hand for the consumer. Taking the plane across the Malaysia has even proven to be cheaper in some situations. However, most individuals in today's society that has the ability and means to own a vehicle, along with living in a geographic location with the necessary means to travel (roads and filling stations), will do so.

3. The bargaining power of buyers/customers Traditionally, suppliers of companies within the auto industry have had very little bargaining power. For example, if one supplier were to perform below an automotive company’s standard, several other options existed and the supplier could be easily replaced. Recently, auto 8 | Page

manufacturers and suppliers have moved to a tier based system, where the auto manufacturer would contract with a limited amount of suppliers who would then contract items further upstream. Proton, in particular, is having trouble with this system due to the current state of the economy. This shift has led to an increase in the power of suppliers than in the former market environment. However, the shift in the market environment has not been a profitable one for suppliers. Given the volatility of current automotive production schedules due to the reduction of consumer demand, suppliers have very limited power over auto manufacturers in this respect. Suppliers’ production and overall success are dictated not only by the market conditions, but also by the way in which auto manufacturers choose to respond to those conditions. Following the power of buyer many components used in vehicles is available only from a single supplier and cannot be quickly or inexpensively re-sourced to another supplier due to long lead times and new contractual commitments that may be required by another supplier in order to provide the components or materials. This means that a few key suppliers will retain some power. However as the average Malaysian consumer became dissatisfied with the products offered by Japan automakers, they began seeking alternatives; namely foreign auto makers. As the foreign auto companies entered the Malaysia market, the competition became more intense, adding power to the buyer. The foreign auto companies were producing with lower operating and material costs than the Malaysia automakers. Therefore, foreign competitors have been able to offer the Malaysia consumer a high quality product at a lower cost than its domestic competition. Given that today’s auto industry is filled with a wide range of car brands, large amount of capacity, and zero switching costs between brands, consumers have a large amount of bargaining power. Within the current economic environment, consumers are holding back their purchases of new products. In fact, many consumers have opted to maintain and repair their current vehicles rather than purchasing new ones. 4. The amount of bargaining power suppliers. In the car industry this refers to all the suppliers of parts, tires, components, electronics, and even the assembly line workers e.g. Unions. I founded in the Malaysia the automotive unions are tremendously powerful. But also know that some suppliers are small firms who rely on the carmakers, and may only have one carmaker as a client. So this force can be tricky to evaluate. The more powerful a seller is relative to the buyer, the more influence the seller has. This 9 | Page

influence can be used to reduce the profits of the buyer through more advantageous pricing, limiting the quality of the product or service, or shifting some costs onto the buyer (e.g. Shipping costs). Suppliers are powerful if suppliers are concentrated or differentiated. If there are only a few suppliers in the market, the suppliers will have more leverage because of the lack of available alternatives. Significant costs involved in switching suppliers. Customers are less likely to switch suppliers if there are large costs associated with switching. For example, In 2002, PROTON cancelled its agreement with Mitsubishi and its sales dropped in the following years. In 2007, PROTON was struggling to manage without an alliance with foreign firms. (Akifumi Kuchiki, 2007) According to Proton’s 2007 annual report, the company intended to improve the quality of manufacturing by investment in new R&D and through partnership with foreign companies. However, according to research conducted by JAMA, the production capability is still low in Malaysia. (Wanrswee Fuangkajonsak, 2006) 5. The intensity of the competitive rivalry While a Porter’s Five analysis applies to all companies competing in one industry the same, what differs is that those firms' profitability will vary between them. This is because of their own competitive advantages and varying business models. So just because all firms in one industry and market are subject to the same forces doesn't mean they perform equally. A Porter’s Five analysis should always be done in conjunction with other assessments, and should not be regarded as being absolute. It should only serve as an indicator, not absolute fact or even necessarily accurate. There are many critical assumptions that should be made and explained in one's Porter’s Five analyses. The market must be described, the competition must be explained, and the products must be defined. For example, a Porter’s Five analysis of the car industry in the Malaysia would not necessarily apply in China. The markets are totally different, and the product life cycle is not even close to being the same. Another example is the type of the automotive industry. A Porter’s Five analysis of the electric car industry would be entirely different than one of the conventional car industry However, with an increase in globalization, domestic markets must now compete with foreign competition. As foreign companies have gained accessibility into the local market over the past decade, domestic car manufacturers have found it increasingly harder to compete. Most foreign 10 | P a g e

competitors have been able to obtain lower raw material and production costs while maintaining equal, if not better, quality of their product. The current market has been fuelled by an attraction to Japan automakers and car models. There has been new consumer interest in fuel efficiency, which has created a void in the demand for larger gas-guzzlers like trucks and SUVs and an increase in demand for fuel technology. This opened the market for alternative power sources for vehicles for a new market of green-sensitive consumers and gas-pump weary ones. These types of consumers flocked to Toyota with the advent of the highly successful Prius and Insight for Honda Motor. 1785 Words

References Question 1

The Business Level Strategy of Seven-Eleven Company Factsheet. (n.d.). Retrieved Jan 05, 2013, from 7eleven: hytp://www.7eleven.com.my/html/default.aspx?ID=2&PID=12 11 | P a g e

Johnson, G., Scholes, K., Whittington, R., (2005) Exploring Corporate Strategy Text and Cases, 7th Edition, FT Prentice Hall M.E. Porter(1985) Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, (2010, 10). 7eleven Case Study. StudyMode.com. Retrieved Jun 10, 2010, from http: //www. studymode. Com /essays/7Eleven-Case-Study-452097.html

The business level strategy of McDonald’s Corporate Info. (n.d.). Retrieved Jun 10, 2013, from McDonad's: http://www.mcdonalds.com.my/abtus/corpinfo/history.asp Han, J. (2008). The Business Strategy of McDonald's. International Journal of Business and Management , 73-73. Vol.3 No 11. Nielsen. (2005). Asians the World's Greatest Fast Food Fans. Retrieved Jun 1, 2013, from http://my.acnielsen.com/news/20050126.shtml Nielsen. (2005). A 360º View of Fast Food and Impulse Habits. Retrieved Jun 1, 2013, from http://asiapacific.acnielsen.com/pubs/2005_q2_ap_fastfood.shtml Schroder, M.J.A., & McEachern. (2005). Fast foods and ethical consumer value: a focus on McDonald's and KFC. British Food Journal Vol. 107 No. Jun 4, 2013 pp. 212-224 Vignali, C. (2001). McDonalds: Think Global Act Local The Marketing Mix. British Food Journal , 97-111. (2009). Corporate Responsibility Report. McDonald'd.

The business level strategies for Tesco Store Malaysia Sdn Bhd. Datamonitor Report (2003) Company Profile: Tesco PLC Analysis, October; De Toni A. and Tonchia S. (2003) Strategic planning and firms’ competencies: Traditional approaches and new perspectives, International Journal of Operations & Production Management, Vol. 23 Issue 9, pp.947-976;

12 | P a g e

Finch P. (2004) Supply chain risk management, Supply Chain Management: An International Journal, Vol. 9 Issue 2, pp.183-196; Flavián C., Haberberg A. and Polo Y. (2002) Food retailing strategies in the European Union. A comparative analysis in the UK and Spain, Journal of Retailing & Consumer Services, Vol. 9 Issue 3, pp.125-138; Ghani, N. (2012). TESCO Strategic Management. Retrieved Jun 19, 2013 , from http://academia.edu/1610879/TESCO_Strategic_Management Ivory. (n.d.). Strategic Management of TESCO supermarket: PESTLE analysis, Critical success factors, SWOT Analysis, VALUE CHAIN analysis, TESCO’S strategic options, Core Competences & Cultural Web. Retrieved Jun 13, 2013, from Ivory Research: Palmer M. (2004) International retail restructuring and divestment: the experience of Tesco, Journal of Marketing Management, November, Vol. 20 Issue 9/10, pp.1075-1101; Retail Markets. (2010, September). Retrieved Jun 7, 2013, from Management Models: http://www.wuwm.org/uploads/docs/3fcd6ead-b9a4-40b8-8273-a978def6e342.pdf; Strategic Management of Tesco supermarket. (n.d.). Retrieved Jun 25, 2013, from http://www.slideshare.net/kumerra/29932770-strategicmanagementoftescosupermarket Thomson, J. (2013, April 18). Why big is no longer beautiful for Teso. Retrieved Jun 12, 2013, from The Independent: http://www.independent.co.uk/news/business/analysis-and-features/whybig-is-no-longer-beautiful-for-tesco-8577557.html Woods, M. (2008). Linking risk management to strategic controls: a case study of Tesco plc. Int. Journal of Risk Assessment & Management , Vol.7.

Assigment 1 : Question 2 Donald Bradley,Morgan Bruns,Adam Fleming,Jay Ling, Lauren Fleming and Felipe Roman. (2005, December 05). Automotive Industry Analysis. Retrieved July 07, 2013, from http://www.srl.gatech.edu/Members/bbradley/me6753.industryanalysis.teamA.pdf Patterson, A. (2011, November 11). Porter's Five Forces. Retrieved Jun 21, 2013, from http://porters-5-forces.blogspot.com/2011/11/porters-5-forces-in-automobile-industry.html 13 | P a g e

Donald Bradley,Morgan Bruns,Adam Fleming,Jay Ling, Lauren Fleming and Felipe Roman. (2005, December 05). Automotive Industry Analysis. Retrieved July 07, 2013, from http://www.srl.gatech.edu/Members/bbradley/me6753.industryanalysis.teamA.pdf Patterson, A. (2011, November 11). Porter's Five Forces. Retrieved Jun 21, 2013, from http://porters-5-forces.blogspot.com/2011/11/porters-5-forces-in-automobile-industry.htm

14 | P a g e