CSM Assignment Group: 1500 words – Company’s strategy
1. Brief description of the company’s background
Aeon Co. (M) Bhd is a retail company which has been incorporated in Malaysia since 15 th September 1984. he company was !ormerly "nown as #aya #$sco Stores Bhd. and chan%ed its name to A&' C'. (M) B*. in September +,,4. he head-$arter is located in $ala /$mp$r0 Malaysia. A&' A&' C'. (M) B*0 and it is a s$bsidiary s$bsidiar y o! A&' Co.0 /td. he retail company operates a chain o! stores sellin% se llin% !rom a ran%e o! %oods incl$din% clothin%0 !ood0 ho$sehold %oods0 and other merchandise. t operates %eneral merchandise stores0 s$permar"ets0 con2enience stores0 and specialty stores. 3$rthermore0 it also en%a%es in the de2elopment o! shoppin% centres and credit card ser2ices. Aeon Co. (M) Bhd is one o! the bi%%est enterprise in Malaysia consistin% o! +5 o$tlets0 incl$din% +1 %eneral merchandise merchandise stores0 1 shoppin% centres and 4 Ma 6al$e 6al$e s$permar"ets. Aeon has been in Malaysia
for 28 years and successfully established a strong s trong trusted brand. Aeon Aeon has positioned itself as a benchmark in excellent customer service such as high worker's discipline and maintain a high standard level of hygiene in their food as well environment. https7www.$"essays.comessaysmar"etin%portersnationalcompetiti2ead2anta%e mar"etin%essay.php
AEON CO. M! "#$. AEON! is a retai%ing &ompany &ompany.. Aeon is t'e %argest retai%er in Asia( it is t'e 'o%ding &ompany o) Aeon group. *t was in&orporated on 15 Septem+er 1,-. /'e &ompany operates in two segments retai%ing and property management seri&es. *t 'ead2uarters’ o3&e is %o&ated at 4ua%a umpur. umpur. *t is )ormer%y 6nown as 7us&o Supermar6et.. Aeon retai% store se%%s assorted goods su&' as &%ot'ing( )ood( 'ouse'o%d Supermar6et goods among ot'ers 8etai%+usinessreiew( 8etai%+usinessreiew( 901!
/'e AEON Group o) Companies Companies &onsists o) o) AEON Co.( td. and a+out 900 &onso%idated &onso%idated su+sidiaries and a)%iated &ompanies. *n addition to its &ore GMS p%us its supermar6et and &onenien&e store operations( AEON is a%so a&tie in spe&ia%ty store operations and s'opping &entre dee%opment( operations( &redit &ard +usiness and seri&es. /'e AEON
Group o) Companies is an integrated 7apanese retai%er and is a&tie not on%y in 7apan +ut a%so t'roug'out Sout'east Asia and C'ina. At a%% times( in eery mar6et( AEON’s a&tiities are guided +y its un&'anging ;Customer aeon&o.m( 9019!.
/'ere are t'ree +asi& prin&ip%es app%ied +y AEON w'i&' are ?ea&e( ?eop%e and Community. *n term o) ?ea&e( AEON is a &orporate group w'ose operations are dedi&ated to t'e pursuit o) pea&e t'roug' prosperity in term o) ?eop%e( AEON is a &orporate group t'at respe&ts 'uman dignity and a%ues persona% re%ations'ips in term o) Community( AEON is a &orporate group rooted in %o&a% &ommunity %i)e and dedi&ated to ma6e a &ontinuing &ontri+ution to t'e &ommunity Annua%report9019>aeon&o.m( 9019!.
https7allabo$tecons.wordpress.com+,14,1,8aeoncom
So$rce7 Mar"et :$blisher
2. Current business plan including its location, sourcing and
distribution strategies
A&';s stores are mostly sit$ated in s$b$rban residential areas0 caterin% to Malaysia;s 2ast low to middle income %ro$p. *istrib$tion strate%y is abo$t how e!!ecti2ely a !irm %ets its prod$ct to cons$mers and end $sers. he or%anisation m$st distrib$te the prod$ct to the $ser at the ri%ht place at the ri%ht time. &!!icient and e!!ecti2e distrib$tion is important i! the or%anisation is to meet its o2erall mar"etin% ob
To speed up the sales and delivery the two main strategies has been figured out as below! "elling #irect to $ustomer The products are sold directly in the outlets or through the website. #elivery will be done by post within three days.
"elling Through Agents %n order to speed up the delivery process and to increase the sales the products will be distributed nationally by agents. Awards and commissions over sales will be given. &y using this strategy it can give rise to the presence rate of the company in local market. https7www.$"essays.comessaysmar"etin%thelar%estaeon<$scoshoppin%mallin malaysiamar"etin%essay.php
3. Analysis of the current Information ystems architecture and describe ho! it may ha"e contributed to the organisations business strategy. http#$$tescoinformastionsystem.!eebly.com$blog$tesco% information%system &. 'ro"ide an analysis and critical report on the company’s abo"e current business and I( strategies.
*ndiidua%: 1000 ea&' – Enironmenta% ana%ysis
8aa+ia': ?5< 8ustam: S@O/
1. Carry out an environment and industry analysis for their product or services using any business tools of your choice. Clearly show the threats facing the company and the opportunities that it may be able to exploit in the future. Supplier Power
owadays there are many 2endors in the retailin% ind$stry. owe2er0 it sho$ld not be an iss$e !or A&' Malaysia to ne%otiate prod$ct prices with it s$ppliers since the company is one o! the bi%%est retailers in Malaysia. e%otiatin% perishable and non perishable prod$cts are completely di!!erent0 as non perishable prod$cts ha2e a lon%er li!e span. :erishable !ood prices tend to !l$ct$ate d$e to seasonal !actors. :erishables wo$ld re-$ire more attenti2e mana%ement %i2en their limited shel! li2es. ! the company did not absorb the price hi"e o! perishables0 cons$mers wo$ld o!ten opt !or other s$bstit$tions. 'ri%inal here are many 2endors in the retailin% ind$stry. *$e to the %ro$p si=e0 it sho$ld not be an iss$e !or Aeon to ne%otiate an ecellent price !rom its broad 2ariety o! 2endors on the non perishable prod$cts (e.%. electronic de2ice0 !$rnit$re0 etc.) which tend to ha2e lon%li!e spam. 'n the contrary0 it wo$ld be an entirely di!!erent story !or perishable !oods (e.%. !r$it0 2e%etable0 etc.) which its price tends to !l$ct$ate d$e to seasonal !actors or nat$re disasters. :erishables wo$ld re-$ire more attenti2e mana%ement %i2en their limited shel! li2es. ! the company did not absorb the price hi"e o! perishables0 cons$mers wo$ld o!ten opt !or other s$bstit$tions.
$mber o! s$ppliers Si=e o! s$ppliers >ni-$eness o! ser2ice ?o$r ability to s$bstit$te Cost o! chan%in%
Buyer Power
here are n$mero$s retailers sellin% similar prod$cts0 and the prices are 2ariable. here!ore0 c$stomers lo2e to shop aro$nd0 by all means0 to compare and contrast the price or !eat$re di!!erences to ma"e the best decision. Moreo2er0 there is a philosophy where the lower prices are a constant loomin% temptation !or c$stomers. n short0 b$yers ha2e more bar%ainin% power. :ricin% strate%y is the primary "ey to pre2entin% its c$stomers !rom dil$tin% away. :erhaps the company wo$ld re-$ire an e!!iciency in2entory mana%ement system to %a$%e0 and a comparati2e price research needs to be cond$cted on a re%$lar basis a%ainst its competitors. hose wo$ld be in line with its e!!ort to contin$e to %rowth its le%acy in the !$t$re %eneration.
AEON retai% store is an e=amp%e o) o%igopo%y mar6et stru&ture. /'ere are on%y a )ew main rm in t'e mar6et( )or e=amp%e( /es&o( Giant #ypermar6et or /'e Store Supermar6et. /'ere)ore( t'ere are on%y a )ew o) &ompetitor in t'e mar6et )or AEON retai% store. So w'en t'e pri&e o) t'e produ&t se%%s +etween t'e supermar6ets 'ae dieren&e( t'e demand a%so wi%% 'ae a +ig dierent.
An o%igopo%y is a mar6et &ondition t'at e=ists w'en t'ere are at %east two rms are &ontro%%ing t'e mar6et *nestopedia( 900,!. @'en a mar6et is s'ared +etween a )ew rms( it is said to +e 'ig'%y &on&entrated E&onomi&son%ine.&o.u6( 901!. *n a resu%t( t'ey &an great%y inBuen&e pri&e and ot'er mar6et )a&tors $i&tionary.&om( 901!.
https7allabo$tecons.wordpress.com+,14,1,8aeoncom
-
$mber o! c$stomers Si=e o! each other *i!!erences between competitors :rice sensiti2ity Ability to s$bstit$te Cost o! Chan%in%
Competitive Rivalry
he threat o! competition in the retailin% ind$stry is !ierce. here are many !irms o! di!!erent si=es competin% in this ind$stry en2ironment. *espite the !act that there are many small retailers all aro$nd the Malaysia0 b$t it is 2ery demandin% !or them to compete with the bi% players li"e Aeon0 esco0 &consa2e0 @iants0 Mydin0 etc.0 in partic$larly !or a price war d$e to lower bar%ainin% power. Aeon;s %reatest and most lon%standin% ri2al is esco :lc0 the >..;s lar%est %rocer0 where both companies ha2e a similar c$stomer base. C$rrently0 there are o2er , Aeon stores and more than 4, esco stores in operation in Malaysia.
$mber o! competitors
$ality di!!erences
'ther di!!erences
Switchin% costs
C$stomer loyalty
hreat of Substitution
An increasin% trend o! online shoppin% is what retailers worried the most. echnolo%y today has chan%ed a %reat deal o2er the past decade0 as we are now at a point where b$sinesses can ma"e a serio$s pro!it thro$%h the internet. he bric"andmortar b$sinesses can !ind it di!!ic$lt to compete with webbased b$sinesses (e.%. /a=ada0 aoBao0 Ama=on0 etc.) beca$se the latter $s$ally ha2e lower operatin% costs and %reater !leibility. owadays0 most o! the cons$mers wo$ld pre!er online shoppin% rather than retail shoppin% d$e to the con2enience where the prod$cts will be deli2ered to them witho$t a step o$t !rom their ho$ses0 and the price is o!ten lower. Some cons$mers wo$ld choose online shoppin% d$e to %eo%raphical iss$es0 where the speci!ic prod$cts are not a2ailable in the co$ntry or re%ion the cons$mer li2es. n o2ember +,150 Aeon had commenced its online presence0 which called Shopp$D0 to pre2ent c$stomers !rom shi!tin% away. >ltimately0 it will inc$r additional cost !or mar"etin% and maintenance0 which indirectly erode company;s pro!it i! the online sale res$lts were $nderper!ormance.
S$bstit$te per!ormance
Cost o! chan%e
hreat of !ew "ntry
he threat o! new entrant to the ind$stry that co$ld serio$sly threaten Aeon;s competiti2eness is relati2ely small. he primarily stem d$e to two !actors7 the etremely hi%h cost o! establishin% a company within the ind$stry and the additional cost o! de2elopin% brand name reco%nition. Any new entrant to the ind$stry needs to ha2e a massi2e amo$nt o! capital to spend on in2entory0 as b$y more pay less to s$ppliers0 th$s0 a hi%her %ross pro!it mar%in. B$t0 what i! the company plans to operate the retail stores in a 3ranchisin% B$siness Model (e.%. Mc*0 Secret Eecipe0etc. who sell !ranchise licence) rather than raditional B$siness
Model (e.%. Aeon0 esco0 etc. who owned the whole b$siness)F As a recent news was p$blished where / Eeso$rces Berhad0 Malaysia;s leadin% po$ltry prod$cer0 intends to epand into the con2enience store b$siness by becomin% a master !ranchisee o! 3amilyMart0 the world;s secondlar%est con2enience store chain a!ter &le2en0 reported by he StarBi=0 on 1th April +,1G. n this sense0 Aeon !aces a moderatel y hi%h ris".
ime and cost o! entry
Specialist nowled%e
&conomies o! scale
Cost Ad2anta%es
echnolo%y protection
Barriers to entry
https7www.lin"edin.comp$lseporters!i2e!orcesanalysisaeoncomltdacelim
#. Recommend changes$ developments and additions to the company%s business
strategy that could result from your above analysis.
A() needs to understand the economic environment and analyse the impact on its performance so that it will be able to continue with its strategies to continuously grow its business. As unemployment rate decrease customers will be willing to spend more the disposable income of customers increase and hence will indirectly affect company's revenue and could help in achieve its financial ob*ective.
&. Produce an outline design for the company%s future 'nformation Systems Strategy including the software re(uirements$ hardware re(uirements and )isaster Recovery Plan based on your above business strategy.
•
•
A&' B@ is c$rrently mana%in% and operatin% + stores which comprise o! hypermar"ets and s$permar"ets in Malaysia. Aeon Bi% also operates #$sco stores0 which has the lar%est hi%hend department store chain nationwide in Malaysia. hey carry the widest selection o! prod$cts !rom #apan and the prod$cts are mainly tar%etin% at middle to hi%hincome shoppers.
A()'s stores are catering to Malaysia's vast middle income group and are mostly situated in suburban residential areas. %ts economic entity has two main reportable segments namely retailing and property management services. A()'s fundamental principle is its '$ustomer $entered Approach'. A()'s mission is and always will be to contribute to the customers. +overnment plays an important role which could affect the growth of the entities within the industry. The emergence of A() in Malaysia was initially due to the invitation by Malaysia's government for the purpose of moderni,ing the retailing industry in Malaysia.
This model is used to identify the strengths and weaknesses of the business which are considered as internal factors that retailer can control over- and also external factors of opportunities and threats which are positive and negative situations that retailers continuously face. &esides the Member card system that Aeon implemented has become strength over its competitors. These discount cards are a source of customer profile and a useful database to track its customer spending behavior. %t also provides a way for businesses to build customer loyalty and promoting their organi,ation. The loyalty card could also help to attract the shoppers and enhanced tenants businesses. Aeon has provided a wide range and variety of products from food to clothing to furniture and etc. Their allunderone roof concepts allow their customers to spend more hours to shop in the mall and hence boost up theirs sales by encouraging more customer spending. Also Aeon able to offers a wide range of /apanese style goods on its products shelf at a competitive price as compared to others small /apanese goods retailer shop. This could satisfy shoppers various preference and keep the shopping centre up to trend.
Apart from its retailing business Aeon also diversifies into property management of shopping center that is consistently profitable. This could further improve its financial performance that is favorable to shareholder wealth maximi,ation. A() which practicing #% in its supply chain management will gain competitive advantage over its competitors who did not apply this technology. &y offering #% A() could serve its customers better and gain the customers loyalty. This is in line with the company's principle that is to be a customercentered organi,ation. %t also provide cost competitiveness and speedy response and to enhance the customer service. %t also reduces the use of paper which results in green ecology 013 and this is in line with A()'s practice of good corporate social responsibility +o +reen. A() need to adapt with the fast changing environment by upgrading themselves to exploit the opportunities to expand their sales through online trading but not only through direct trading. A() will need to upgrade themselves as to achieve their goal of operate as an 4internationalscale retailing group4. 5owever the performance of property management service would be affected due to the trend of online trading and worsened the tenant mix. This would affect A()'s goal where customers' satisfaction level would decrease and hence lead to less competitive in global level. xploiting and implementation of the new technologies in the supply chain has increase efficiency in stock management as well enhanced the relationship with the supplier. The establishing of communication network with s upplier such as #% indirectly has reduced the operating cost so to be performed better than the competitors if the competitors do not implemented the information s ystem. The growing internet shopping trends could become an opportunities for Aeon if the management has reali,e the important movement of the trends and hence expanding its distribution channel via the ecommerce. 5owever this opportunity could be turn into threat if the management has no response to this trend because online market could be the substitute of physical retail stores and the property service business will be affected too. $ustomer perspective are examines those factors related to the company's customer such as customer satisfaction their loyalty and customer retention. A() enhanced philosophy 4$ustomer 6irst4 to improve it relationship with their potential customers. The company also proly vides an uni7ue personal services
to their customers in order to obtain highly satisfaction. The feedback form as well as the number of complaints are the best method for A() to determine their customer's satisfaction regarding to the company's product and services. Moreover $ustomer retention is essential for A() to survive in the long run. Therefore A() provides well 7uality products and services to their potential customers to encourage them to repeat purchase at their shop. &esides A() has provide a range of loyalty card 0A() member3 to retain cust omer as they can collect point when they purchase goods in A() outlets. The company can measure the customer retention based on the number of registration or renewal of member card over the year. The main ob*ective for A() regarding the innovation and learning perspective are improve staff capabilities in various areas such as technical leadership operational and management disciplines and etc. A() has i ntroduce a bonus schemes to their workers. This mean that the best performance of workers for the month will be rewarded. This would effectively motivated their workers.
?orters 5 )or&es Competitie ria%ty > >
Store %o&ation> 9 out%ets a&ross Ma%aysia ?rodu&ts> ?romotes %o&a% produ&ts and import produ&ts made in Dapan
> >
Own +rand> Dus&o se%e&tions( Dus&o 'ome &entre( smart wonder wor%d( agenda( ar&adia( arena( C'i& aenue. Customer %oya%ty> 7 &ard Mem+ers'ip
Introduction In general, retail store operates in a traditional brick-and-mortar stores business model, where the company that deals with its customer face-toface in an office or store that the corporation owns or rents. 1.) % (hreat of *e! +ntrants The threat of new entrant to the industry that could seriously threaten Aeon’s competitiveness is relatively small. The primarily stem due to two factors: the etremely high cost of establishing a company within the industry and the additional cost of developing brand name recognition. Any new entrant to the industry needs to have a massive amount of capital to spend on inventory, as buy more pay less to suppliers, thus, a higher gross profit margin.
!ut, what if the company plans to operate the retail stores in a "ranchising !usiness #odel $e.g. #c%, &ecret 'ecipe,etc. who sell franchise licence( rather than Traditional !usiness #odel $e.g. Aeon, Tesco, etc. who owned the whole business() As a recent news was published where *+ 'esources !erhad, #alaysia’s leading poultry producer, intends to epand into the convenience store business by becoming a master franchisee of "amily#art, the world’s second-largest convenience store chain after leven, reported by The &tar-!i, on /th April 01/2. In this sense, Aeon faces a moderately high risk. 2.) % Industry Competition The threat of competition in the retailing industry is fierce. There are many firms of different sies competing in this industry environment. %espite the fact that there are many small retailers all around the #alaysia, but it is very demanding for them to compete with the big players like Aeon, Tesco, consave, 3iants, #ydin, etc., in particularly for a price war due to lower bargaining power. Aeon’s greatest and most longstanding rival is Tesco 4lc, the 5.6.’s largest grocer, where both companies have a similar customer base. 7urrently, there are over 81 Aeon stores and more than 91 Tesco stores in operation in #alaysia. 3.) % (hreat of ubstitutes An increasing trend of online shopping is what retailers worried the most. Technology today has changed a great deal over the past decade, as we are now at a point where businesses can make a serious profit through the internet. The brick-and-mortar businesses can find it difficult to compete with web-based businesses $e.g. +aada, Tao!ao, Amaon, etc.( because the
latter usually have lower operating costs and greater fleibility. owadays, most of the consumers would prefer online shopping rather than retail shopping due to the convenience where the products will be delivered to them without a step out from their houses, and the price is often lower. &ome consumers would choose online shopping due to geographical issues, where the specific products are not available in the country or region the consumer lives. In ovember 01/;, Aeon had commenced its online presence, which called <&hoppu=, to prevent customers from shifting away. 5ltimately, it will incur additional cost for marketing and maintenance, which indirectly erode company’s profit if the online sale results were underperformance. &.) % Bargaining 'o!er of uppliers There are many vendors in the retailing industry. %ue to the group sie, it should not be an issue for Aeon to negotiate an ecellent price from its broad variety of vendors on the non-perishable products $e.g. electronic device, furniture, etc.( which tend to have long-life spam. >n the contrary, it would be an entirely different story for perishable foods $e.g. fruit, vegetable, etc.( which its price tends to fluctuate due to seasonal factors or nature disasters. 4erishables would re?uire more attentive management given their limited shelf lives. If the company did not absorb the price hike of perishables, consumers would often opt for other substitutions.
.) % Bargaining 'o!er of Buyers There are numerous retailers selling similar products, and the prices are variable. Therefore, customers love to shop around, by all means, to compare and contrast the price or feature differences to make the best
decision. #oreover, there is a philosophy where the lower prices are a constant looming temptation for customers. In short, buyers have more bargaining power. 4ricing strategy is the primary key to preventing its customers from diluting away. 4erhaps the company would re?uire an efficiency inventory management system to gauge, and a comparative price research needs to be conducted on a regular basis against its competitors. Those would be in line with its effort to continue to growth its legacy in the future generation.
'ttps:pd).mar6etpu+%is'ers.&om+a&FswotaeonF&oFma%aysiaF+'dFswotFana%ysis F+a&.pd)
