CP All is a public limited company based in Thailand. It was established in the year 1988. It is a retail chain that operates within Thailand. The founder of the company is Charoen Pokphand Group. In total, there are 9,542 stores of the company. The organization has 44 percent f stores, 48 percent franchise are franchise stores and 8 percent are sub area license stores. Additional 705 new outlets were open. CP All works under 7-eleven name that to other retailers that operate in Thailand. The activities of company include bill payment, e-commerce, logistic, information system design, insurance brokerage, consulting, merchandise, marketing, frozen food, cash and carry services and bakery products. Other operations of the retail includes distribution of commercial cards and tickets and equipment that are used for retailing and software development, it trades non products. The company also provides services in education, research and development. Headquarter of the company is located in Bangkok, Thailand. The chairperson of the company is Dhanin Chearavanont and Korsak Chairasmisak is the Chaiman of the Executive Committee (Cpall.co.th, 2017).
Corporate philosophy of the company
- The company desires to see their customers by the efforts of happy employees.
- The vision of the company is to serve convenience of all the communities.
- The mission of the company is creation of customer engagement through innovative products and services so that they can build a healthy relation with the community and society.
Financial performance of the company
In the year 2015, the net sales and services income of the company was 357,766 Baht. In 2015 the net sales and services income of the company increased to 391,817 Baht. In the year 2016 the figures further increased to 434, 712 million Baht. The total revenue of the company in 2014 was 371,301. In 2015, the total revenue of the company was 405,893 million Baht and in the year 2016 the total revenue of the company was 451, 939 million Baht. The profit the company made was 10,200 million Baht in 2014. The net profit of the company in the year 2015 has increased to 13,682. The net profit of the company in the year 2016 was 16,677 million Baht (Cpall.co.th 2017).
SWOT analysis of the company
Strengths- The internal capabilities of the company are strong and it contributes a lot in making the company strong. The company is a well established company as t has been operating for 29 years. They have 10,000 stores that is a huge figure for generating income. The employees strength of the company is also pretty strong with 35,557 employees. The company is committed to developing the capabilities. The financial performance of the company is also strong. The profit and sales of the company is growing continuously. Having so many allied business and subsidiaries is another advantage the company has. The operation of the company is limited to Thailand, which makes it easier for the company to make strategies. The brand awareness of the company is very high. The company has an online store as well. The company has total 5,790 convenience stores across Thailand under the name of 7-eleven trademark which is the third largest number of stores worldwide after US and Japan.
Weakness- CPP All Company is limited to Thailand, which might be easier for the company to operate, and this is the reason that it does not face much loss. The company does not take expansion of its business outside Thailand. Having so many subsidiaries sometimes becomes difficult to manage. The operating cost of the company is very high. The model of business of CPP All is very common and can be imitated easily. One of the weaknesses that have been observed by the customers is that the quality discrepancies from one store to another.
The company has an excellent scope for growth with the business operations of their 7-eleven convenience stores throughout Thailand and other emerging economies. The company has a scope to expand their business in outside Thailand. They have a scope for strategic alliances. With the help of their line of private brands, they can promote their business. The rise in the middle class provides an excellent opportunity to the company for sales and growth.
One of the biggest threat, the company can face is common to all other business all around the world. Since the business model of the company can be imitated, the company can face serious threat from new entrants. Existing players in this field also pose a serious threat to the company. The major competitors of the company are Lawson and Family Mart (Pecotich and Shultz 2016). Change in the technology trends might affect the business of the convenience stores.
Political – CP All does not serve in other countries so the chance of the company being affected by the political scenario of other countries is very rare. Still some of the products of the international brands are available at the stores of CP All. The political instability within the country might affect the business. Whenever the Government changes there are certain changes in the policies and regulations occur that affect the business (Eden and Ackermann 2013)
Concentrated to a single country might not always be favorable because there might be situation when the company faces loss.
Economic- Thailand is considered as the second largest economy in Southeast Asia. The GDP of Thailand in the year 2017 was 432.90 US dollars. The unemployment rate of the country as on 2017 was 0.7 percent. This shows that the people of Thailand have source of income to buy products sold in the convenience stores of CP All (Eden and Ackermann 2013). The rising middle class because of the increase in the income level of the people have acted as catalyst for increase in sales.
Social- The purchasing capacity of the middle class has increased. The lifestyle of the people has changed and they prefer buying from convenient stores. Some of the customers also prefer buying from online stores is also contributing to the business of the organization. Customers with the mentality to look for further places from where they can buy cheaper products prefer other stores (Wheelen and Hunger 2017).
Technological- Online stores are increasing which has made the customers who have less time to go to the stores buy from online stores.
Environmental-The stores of CP All and the company itself take initiatives to reduce its carbon footprints. They see that they consume less energy. They do not use open freezers, which contributes a lot to CFC emissions. Other stores using large open freezers contribute to environmental pollution (Chen et al. 2014).
The strategic problem with the company is that it is limited to Thailand. The business of company needs to be expanded beyond the Thailand in other Southeast Asian countries. The major competitors of the company are not limited to one country. Lawson is also operating in this industry but it is not limited to its home country, Japan. The business of Lawson is in Japan, Thailand, Philippines, Indonesia, United States and China. Another competitor of the company is Family mart that is operational in Japan, Taiwan, China, Philippines, Thailand, Vietnam, Indonesia, Malaysia and Korea (Timsina et al. 2016). Both the major competitors of the company are operating in almost entire Southeast Asia. The company is undoubtedly making profit and growing in the industry but CP All is not as competitive as its rivalries. Gaining competitive advantage in the industry is very important as it ensures sustainability. To sustain in the market companies need to have a competitive advantage. Competitive advantage can only be gained if CP All beats its competitors by doing something unique (Chatterji 2016).
Although the company is not facing financial crisis still it needs to grow further. For suggesting a turnaround strategy analysis of the retail industry is very important.
Porter’s Five Forces
Impact on CP All
Threat of new entrant
The model of the business is very common and can be imitated. New entrants’ threat is very. The barrier to enter this industry is not much companies can and they do enter the industry easily. There is not much brand loyalty. It can be concluded that the company is facing significant threat from the new entrants (Laudon and Traver 2013).
Threat of substitution
The substitute of retail stores are online stores. The CP All has online stores as well but chances are that customers might switch to another brand that offers similar products at cheaper rate. Therefore, it can be said that there is a high threat of the substitutes (Hill and Jones 2013).
power of suppliers
The suppliers of the retail are both domestic and international. The domestic suppliers do not create much threat but it is the international suppliers who tend to threaten, as in case of political or economic crisis there is significant amount of risk. The suppliers often charge high price from the companies (Bresler and Lubbe 2014).
power of buyers
The buyers compel the companies to offer discount. The discounts and offer given to the customers affect the operating cost of the company and hence affects the business as well. Because of too much completion in order to retain their customers the companies ultimately end up giving discounts (Hollensen 2015). Retail is one industry where it is a major challenge.
Since there are not much barriers to enter this industry the number of competitors is also high. The competitors include the big supermarkets as well as small retail shops. The two major competitors of CP All are Lawson and Family mart both the companies have competitive advantage as they operate in other countries of South East Asia like, Japan, Malaysia, Indonesia and Philippines (Foxall 2014)
One of the limitations of the CP All is that although the company is on constant profit but there is no significant increase in the profit levels. The main reason behind the less profit margin of the company is the strategies taken by the company. CP All is trying to play safe in the industry. The secret behind getting success is innovation and taking risk. The more the companies take risk or create differentiation the better the chances of them getting profit in the market. Due to harsh competition none of the companies can be termed as the market leaders in Thailand (Aguirregabiria and Suzuki 2015).
The strategy that would be suggestive for CP All is that it should not lower its prices rather it should focus on the quality. Lawson, Family mart and other convenient stores are already operating in other countries so they have more sources of revenue. CP All has just one country, its home country. Other retails can offer lower prices in Thailand but CP All should charge higher price and try to create value for the price which can be done by quality improvement or product development (Jooste and Strydom 2014). It should promote more of its own products and less of international brands. If they promote their brand then they will have scope for strategic alliance with other retail or convenient stores to whom they can sell their own brand products. This will help them expansion of their business within Thailand.
Growth strategies are very important for nay business. It is not possible or beneficial for any company to be in the same position in the market. It has to grow, its customer base, market share and financially. The objective of any business is to grow.
The following model shows the strategies any company is needed to take for growth of its business. For current markets and current products, the best strategy suggestive is market penetration strategy. In this strategy, the company needs to penetrate into particular market segment with their existing products. Market penetration can be done by offering slightly lower price in the target market segment in which the business is planning to enter. For current market and new product, the best strategy is product development. Any business can grow in current market by developing new products. Companies can grow by entering into new markets as. For their existing products in the new market, the best strategy is market development strategy. For new market and new products, the best strategy is market diversification.
The best strategy for CP All would be diversification strategy. The company needs to diversify its business in other countries just like Lawson and Family mart. Entering the foreign market is the most appropriate strategy for growth of its business. There are many ways for market entry.
- Joint ventures
- Turnkey projects
- Exporting (Chernev 2014)
Franchising can be one of the best strategies that CP All can consider for entering into a foreign market through this strategy. This process helps in rapid expansion it is best for those companies that have repeatable business model like supermarkets or convenient stores.
Partnering Another strategy suggestive for the company is collaborating or strategic alliances with any other companies in another country would help the business of the company to grow.
Licensing Another strategy that CP All can consider for growth of its business in other countries and expanding their business would be by licensing their business.
Joint ventures- Collaborating with the different retail stores or FMCG product companies will help in expansion of business and hence CP All can enter into a foreign market.
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