366SAM Critical Issues in Globalisation
You should enter your name and complete all other details on a coursework
cover sheet (word file) and also ensure that your student ID number and the module number are on the front page of the coursework itself. Submission without a word coursework cover will not be marked.
Coursework must be submitted both electronically via MOODLE on the
module web AND a hard copy to the SHAPE Office.
This coursework aims to assess the following learning outcomes:
Identify and employ appropriate strategic frameworks to evaluate the
structures of global trade and international business.
The report must comprise 1750 words and be fully referenced in Coventry
University Harvard style. Any penalties for not complying with word limits will be in accordance with University and faculty policy.
Assignment Reminders
Assignment should be more than descriptive collations of library material
and should illustrate relevant aspects of theory and practice, and
demonstrate thoughtful and critical analysis of issues. Marks will be
awarded for particular evidence of analytical rigour, demonstration of
understanding of relevant concepts, integrity and practical insight.
University regulations on copying and plagiarism apply.
Assignments should be word-processed and spell checked. Hand written
work will not be accepted.
The report must be fully referenced in Coventry University Harvard referencing style.
Students MUST keep copies (electronic or photocopies) of all coursework
submitted on this module.
PLAGIARISM WARNING! – Assignments should not be copied in part or in
whole from any other source, except for any marked up quotations, that
clearly distinguish what has been quoted from your own work. All references used must be given, and the specific page number used should also be given for any direct quotations, which should be in inverted commas. Students found copying from the internet or other sources will get zero marks and may be excluded from the university.
Note:
Please make sure that your ID number and the module number appear on the actual coursework assignment as well as on the cover sheet that you attach to it.
Coursework “Case Study: 7-Eleven in Taiwan”
7-Eleven in Taiwan
7-Eleven Inc. was founded in 1927 in Dallas, Texas. It was the world’s largest
operator, franchisor, and licensor of convenience stores, with annual sales of more than $62 billion. The company had pioneered the concept of
convenience stores in the United States, where it had 7,200 stores. This
concept was also extended to several countries in North America, Europe,
and Asia, including more than 36,400 franchises outside the United States,
the largest proportion of which were located in Asia. Beyond the borders of
the United States, Japan had the single largest number of stores in the 7-
Eleven chain, followed by Thailand, Taiwan, and South Korea.
The stores used to open from 7 a.m. to 11 p.m. daily until 1962, when it
became open for 24 hours daily. The concept of convenience stores,
developed by 7-Eleven, was “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.”
7-Eleven’s first international expansion was in Canada in 1969. Thereafter it
entered a new country every two to three years, by using the franchising route. The franchisees worldwide had consistency in the colour separations of its signage, the presentation of the corporate logo and the arrangement of the store interiors, while leaving to the franchisee the choice of the location.
The global expansion of 7-Eleven was progressing so rapidly that the number of stores outside the United States was soon nearly four times the number of stores within the United States. The chain had begun its foray into the Asian region by entering Japan in 1974. In 1980, it opened the first store in Taiwan, through a franchise deal, with President Chain Store Corp. (PCSC), the distribution arm of a Taiwanese foods conglomerate, Uni-President Enterprises Corporation Group (UPEC).
Taiwan has one of the highest population densities in the world. Taipei, the
capital, was Taiwan’s most crowded metropolis with 9,737 persons per square kilometre. The country has both a democracy and a capitalist economy. It was known as one of Asia’s economic tigers. The government’s steady liberalisation of the economy had increased local competition, which, in turn, had helped to hold down prices. Food prices comprised a large proportion of the consumer price index basket in Taiwan, and trends in international and domestic food prices had a considerable impact on the overall rate of inflation.
Retail trade in Taiwan was valued at $116.85 billion in 2010 and formed about 14 percent of the country’s GDP. Almost every major global retailer had its presence in Taiwan, including hypermarket chain Carrefour, restaurant chain Pizza Hut and coffee chain Starbucks. Retail sales were an important metric of private consumption, which the government tracked monthly.
Taiwan’s high population density was a natural platform for growth of not only retailing in general, but also the convenience store industry in particular. The concept of convenience stores had been pioneered by PCSC, a few years before it launched the first franchised store under the 7-Eleven logo in Taiwan in 1980. PCSC had first got into the business of convenience stores in May 1979, when it launched 14 President Chain stores island-wide.
Some characteristics of Taiwanese society were central to the evolution of the convenience stores industry in Taiwan. In the United States and Canada,
property zoning was horizontal, marked by a clear segregation of offices,
residential buildings, commercial centres, and shopping malls across
geographical spaces known as blocks. In Taiwan, the zoning was vertical,
characterised by individual high-rise buildings that accommodated offices,
apartments, stores, service centres, convenience stores and even workshops.
In one building, the first floor housed a storefront bank, the second floor was a beauty salon, and the floors above were residential apartments. In another building, the first floor was a car dealer, the second floor housed a clinic plus a pharmacy centre and the rest of the building comprised offices and service centres. In some buildings, the basement would accommodate a restaurant or a supermarket, in addition to a parking lot.
Some unique Taiwanese traits were conducive to the growth of the
convenience stores industry. Taiwanese consumers were obsessed with
immediacy; they did not like to wait, as evidenced by the way they sailed
through the traffic in Taipei. Convenience stores were thus aligned with this
need for instant gratification. Taiwanese entrepreneurs were drawn intuitively toward business models around franchising, which gave them freedom to manage their own destiny. They were also quite friendly and greeting a customer came naturally to a store owner in Taiwan.
Taiwan had many street vendors serving low-cost, delicious but not entirely
hygienic food. These family-managed businesses had succeeded because
they were nimble, focused and carried no frills. They had thrived because of the high density of footfalls in the streets of Taiwan. This situation was an
ideal opportunity for a convenience store seeking a niche as a provider of low cost, delicious and hygienic food.
By May 2010, Taiwan had a total of 9,410 convenience stores, giving it the
highest density of convenience stores in the world. The stores were each a
six-minute walk apart, and each served a community of approximately 2,500 people. Of the total number of stores, 14.3 percent were company-owned, while franchise stores accounted for 85.7 percent of the total.
7-Eleven had the largest number of convenience stores in Taiwan at 4,750.
Family Mart, which had its origins in Japan, owned the second largest number of convenience stores at 2,576. Family Mart made it first acquisition in the Taiwanese convenience store industry in 1997, when it took over 157 Nikomart stores, a competitor at the time. Hi-Life, the third largest chain with 1,247 stores, had opened its first store in 1988. 7-Eleven’s expansion into Taiwan was smooth without major setbacks.
In terms of future developments, PCSC had secured the licence from 7-
Eleven Japan for full franchise rights in Shanghai. China was considered the
next growth frontier for 7-Eleven Taiwan. It had already opened Shanghai’s
first 7-Eleven store in February 2009 and planned to open 300 stores in
China’s largest city within five years. PCSC had chosen Shanghai over Beijing for the launch because, with its small alleys and streets, which encouraged people to walk rather than drive, Shanghai was similar to a Taiwanese city. 7-Eleven also had 6,000 stores in Thailand, half of them in the city of Bangkok. It planned to add another 1,000 stores in Thailand by 2013.
Assignment
Choose ONE of the following questions to prepare a professional report:
Critically evaluate the successful establishment and expansion of 7-
Eleven in Taiwan.
Use the example of 7-Eleven to comment upon the pros and cons of
franchising as a primary mode of internationalisation.
Analyse if 7-Eleven entry to Shanghai as their next target market is
likely to benefit the company.
Suggested Key Frameworks
International business analysis (legal, political, cultural, economic,
PESTEL, etc.)
Strategy (entry strategies discussion)
Guidelines
It should be word-processed and be printed on A4-size paper.
Free from typo. Double line spacing, Times New Roman 12 pt. Insert
student’s name and number as header, and page number at bottom of
each page.
Your work should be in report format. Use complete sentences. Make
use of section headings and subheadings.
You should use the theories and frameworks of International Business as
analytic lens to analyse the case study.
You can use diagrams to explain the concepts in an appendix.
Your report should be clear and logical to show your understanding of the topics.
Do not use direct quotations, you should paraphrase instead. Proper
references should be cited to identify the sources of the information in
Harvard Style.
Learning Outcomes Assessed
Identify and employ appropriate strategic frameworks to evaluate the
structures of global trade and international business.
Marking Scheme
Structure 10%
Content is organised and appropriate; coherent; flow of information,
arguments, and concepts
Knowledge and Understanding 20%
Identifies, explains, draws on appropriate theories, models, literature to
demonstrate depth and breadth of reading to address the question
Application 30%
Application of theory or practical examples given appropriate to context
Analysis and Recommendations 30%
Evaluation and critical analysis of the topic, synthesis of ideas/concepts,
appropriate conclusions, justified recommendations
Presentation 10%
Spelling, punctuation, grammar, layout, accurate CU Harvard Referencing
style, writing style academic/professional
The above are the breakdown of the marking scheme. For conceptual level
and overall marking, the assessment strategies of the Coventry University
apply. The followings are provided on a conceptual level to differentiate
scores among students.