Premiumly Situated on Armstrong Avenue, leading onto and off the busy M4, behind the popular La Lucia Mall, on the doorstep of a high income residential area, being La Lucia Ridge, the petrol station that I’ve chosen to analyse is the Engen Petroleum - better known by its shortened name of Engen - petrol station in La Lucia. Within the forecourt area of this Engen Garage, in accordance with the strategic alliance between Engen and the respective businesses, there is multinational retail-chain, Woolworths (food); acclaimed American doughnut company, Krispy Kreme; South African Bakery Franchise, Corner Bakery and flame-grilled burger restaurant, Steers, all of whom, offer some of their associating products , for the added convenience of the valued customers. Keeping with convenience and efficiency, for the added benefit of the customer, there also is a single Standard Bank Atm in the shop, so as to afford customers the opportunity to withdraw cash if needed, whether it be to purchase something from the wide variety of associating outlets, to pay for fuel or to be able to make other cash payments throughout the day, further exemplifying quality customer-centric services being offered by this petrol station, as is the underlying intention of all petrol stations - and businesses - so as to ensure customer retention, Sustainable Profit making and a viable business. A SWOT Analysis, Porter's Six Forces Analysis and Extended PESTLE Analysis are all tools that can be used by the businesses management to analyze the petrol stations overall performance, assessing the internal and external influences that affect or contribute towards providing quality service and generating increased Revenue.
A S.W.O.T. Analysis is a tool the business can use to analyze both the internal Strengths and weaknesses of the business, as well as possible external Opportunities and Weaknesses that may face the enterprise.
A strength is an area the business excels in. Engen La Lucia posses many strengths. One such strength are their very friendly employees, who provide quality customer service, as is the consistency with many Engen petrol stations. This claim is supported by a recent online survey I conducted, involving both current and future motorists, whereby, when asked which local fuel provider they perceived to offer the best customer service, 73",5% of respondents stated that they perceived Engen to offer the best customer service.
This in turn is a major Strength, as if customers perceive your business to offer the best customer service, when compared to all your other competitors, this will ensure major customer retention, a larger market share and may lead to an increase in profits.
Another major strength of Engen La Lucia is the wide variety of retail outlets attached to it. This in turn is a strength, as by offering such a wide variety of retail outlets, you provide your customers with an even wider array of choices and are able to meet more of their needs which in turn, may lead to an increase in profits generated. As, for example, if you are running late to work, and need to grab a quick coffee and maybe a muffin, Corner Bakery is an option for you, which Engen La Lucia poses. Similarly, If you forget your Wedding Anniversary and remember on your way home from work, the Woolworths at Engen La Lucia, offers flowers, cards and an array of chocolates which can save you time ( and your marriage), making it more efficient and convenient for the customer, through the wide variety of retail outlets attached to the Engen La Lucia, thus making it a strength.
Furthermore, The location of Engen La Lucia is another strength possessed by this petrol station. Not only is it located near the exit/entrance off or onto the busy M4, which allows for a steady flow of potential customers (motorists) and income generating opportunities; but it is also located behind the busy La Lucia Mall, which in turn also provides a steady flow of potential customers (motorists) due to its convenient distance from the mall, for those customers. Additionally, being that the Engen La Lucia is located near La Lucia Ridge, which is a predominantly high income residential area, the customers that may potentially be coming through to use the businesses services may be affluent motorists, with more disposable income available, than you average motorists, which these customers may spend on fuel or at the attached retail outlets, enabling the business to generate more revenue, further exemplifying the strength of the location of Engen La Lucia.
A weakness is an area the business underperforms in. A weakness I have identified in my analysis of Engen La Lucia, is the timing of the Petrol reloading from suppliers, which I have frequently witnessed occuring in the day time. This is a weakness of the business, as during the day time there will be more customers looking to fill-up their engines with fuel, as opposed to the night. Therefore to have petrol being reloaded into the petrol station by suppliers, during the day, results in customers not being able to get their cars filled, in turn resulting in motorists opting to go to competitors ( alternative petrol stations ) so as to fill up their cars with fuel, which in turn leads to decreased customer satisfaction and retention, which in the long run will negatively affect the profits generated by the petrol station.
Another weakness of Engen La Lucia is the lack of a car wash. This is a weakness for the petrol station, as this decreases the convenience offered to the motorist, who may want to fill up and clean up their motor vehicle, all in one stop, and so this may prompt them to opt for a garage that offers both these services, thus prompting them to not use the services of Engen La Lucia, as there is no Car Wash. This in turn may pose an external threat to the petrol station, as a few other petrol stations within a close proximity of Engen La Lucia do offer a car wash, such as Shell Durban North, Caltex Glenashley and even the Engen in Glen Hills on Rinaldo Road, which may in turn give those petrol stations a competitive advantage in luring customers away from Engen La Lucia. This however may also poses an opportunity for the business to generate more income and obtain a greater competitive advantage over its competitors, by including a car wash, for the added convenience of the customer.
Considering that we are in an Election year, which can came with an increased possibility for political and economic development and stability, there is always the possibility for the strengthening of our ever-fluctuating currency. A strengthening Rand bodes well for petrol stations, such as Engen La Lucia, as this in turn allows or provides petrol stations with the opportunity to offer diesel at even lower prices ( as it is not regulated by government ) due to a stronger currency, offering fuel providers greater buying power. This in turn may enable customers to purchase more diesel from petrol stations such as Engen La Lucia, thus providing the opportunity for an increase in sales and revenue generation.
Announced in late 2009, the partnership with Engen and FNB, allowing motorists to use their eBucks ( virtual reward points offered by FNB) to fill up on fuel, has been a huge success, offering customers more savings and convenience, in turn prompting them to want to use Engen as their choice of fuel providers. This sentiment, with regards to the quality of this rewards programme, is also shared by customers, supported by the below results from my online survey.
The success of the eBucks rewards programme benefits at Engen, provides Engen with the opportunity to add yet another rewards programme, as there is evidently positive sentiment from the market towards Engen and their current rewards programme, so as to offer motorists more benefits when filling up and in turn encourage them to use your businesses service offerings, as opposed to your competitors, leading to increased profits. An example of another such rewards programme may be to join with Ster-kinekor or Nu-Metro to offer movie benefits to customers, with regards to the number of litres you fill up. This may be highly beneficial, as kids and parents alike will be aware of the benefits of filling up with Engen, which in turn will increase positive associations with Engen for both parents and children as they may be able obtain free popcorn, or discounted movie tickets for their next movie visit. Positive market sentiment is great for Engen as this will lead to customers wanting to spend more of their money at the petrol station, leading to greater income generation. This in turn illustrates the opportunity available to Engen as a enterprise, which would financially benefit Engen La Lucia.
Two other opportunities for Engen La Lucia with regards to gaining a competitive advantage over its competitors in the market that were mentioned by HR manager of Engen La Lucia, Keith Laban, during my interview of him, was that they were in the plans of closing down the Corner Bakery and opening up or replacing the stand with Famous Brands subsidiaries: Debonairs (pizza takeaway restaurant) and a Fishaways (seafood takeaway restaurant) , and that they are considering adding a medicine dispensary within the shop, so as to improve Engen La Lucia’s already diverse offering for the customer and in turn create more convenience for the customer. An increase in convenience or the perception that customers are being offered a more convenient or quality service will lead to an increase in customer satisfaction and retention, in turn, positively affecting the income generated by the business.
A major threat facing Engen La Lucia may be the lack of incorporation of technological systems into their operations. Considering the digital and technological age we presently reside in and the massive change towards digital businesses, It is advised that businesses adapt to these technological changes so as to stay relevant and competitive in the ever-changing and developing environment, that is business. With other petrol stations in the area (such as Shell Cornubia) beginning to incorporate technology more into their services, with the use of tablets by employees and digital screens showing the petrol being filled in, and the global shift towards use of digital devices in business, the business is faced with the threat of being unable to stay competitive in the future, due to their lack of digital developments. This lack of technological advancement or incorporation , may lead to customers being lost to more efficient and technologically proficient competitors, which will result in a loss in market share and profits generated.
Another threat facing Engen La Lucia is the increase in criminal activities being conducted at petrol stations, in the country. This poses a threat to the business, as if criminal activities such as robberies or hijackings, possibly leading to shootings and murders, occur at the businesses facilities, this may place fear and apprehensiveness in the hearts of the customers, preventing them, from wanting to use the businesses services, out of fear of criminal activity, negatively affecting the businesses financials. This in turn requires the business to develop and implement strategies to counteract these criminal developments, through methods such as employing armed security who roam the Engen La Lucia property ( HR Manager Keith Laban indicated that Engen La Lucia does have the services of Marshall Security with regards to protection from and response to criminal activity ) implementing more cameras, or even only allowing for card payments, so as to eliminate the presence of cash on the businesses premises. That last solution may; however, be problematic as not all motorists have cards, with some carrying cash and so to disallow cash payments, in turn may lead to a decrease in the revenue being generated by the business and negatively affecting the financials of the enterprise.
Another threat facing Engen La Lucia is that the area in which Engen La Lucia is situated in is saturated with different petrol stations within a close proximity of itself ( a Glenashley Engen 1.7 km’s away ; a Caltex petrol station 2.5 km’s away and a Sunningdale B.P. 2.6 km’s away, but to name a few ). This then becomes a threat to the business as there are many other businesses competing in the same market, offering the same product, being fuel meaning the level of rivalry is high and the power is most definitely with the buyer, being the motorist.
Porter’s Six Force Analysis
A Porter’s Six Force Analysis is a tool Management can use to analyse the Market environment (any place where goods and services are bought and sold) in which the business operates. It analyses different components of the Market environment, so as to give a holistic understanding of the market environment, in which the business operates in.
Level of Rivalry in the Market
The Level of Rivalry in the market in which Engen La Lucia operates, is very high. It is such do to the area in which it operates being highly saturated with competitors who, in turn can lure motorists away from Engen La Lucia, and with them, diminish Engen La Lucia’s competitive advantage and gain control of a greater market share. Rivals, include competing fuel providers such as BP, Total, Caltex, Shell and Sasol, amongst others. The business would in turn have to develop strategies, which it can, in turn implement so as to gain a competitive advantage over competitors in a market, that has a high level of rivalry. Example of such a strategies can be to offer a rewards programme that in turn lures or entices customers away from competitors, to our business, like the ebucks reward programme, made possible through the strategic alliance of Engen with FNB, enabling customers to use their eBucks earned from FNB at Engen petrol stations to pay for fuel. This offers the customer more, and prompts them to use our services as opposed to those of competitors. Another such strategy may be to adopt a strong marketing or advertising campaign, so as to make customers aware of the business and the services it offers, so as to promote the business and prompt customers to use our services. Engen has a very strong marketing campaign, which in turn helps it maintain a good position in the mind of the customer, prompting them to think of Engen, when faced with choosing a petrol station to fill up at, when there is a wide variety to choose from. This sentiment is supported by the below information obtained from my online survey.
Availability of Substitute Products
A substitute product is a different product that satisfies the same need. In the context of petrol stations and Engen La Lucia, with fuel being the main product that they supply, there aren’t really any direct substitute products for fuel, as there is nothing that can drive a fuel based car, besides fuel. However, products such as electric charging ports can be considered , as they fulfil the same need, which is to fill up or recharge the car with the product that helps the vehicle move and function, as does petrol, although one can not use electricity to power a fuel car, as one would to power an electric car. With regards to the associating retail outlets, using Steers as an example, which sells delicious flame grilled burgers and fries , a business such as Kauai, which offers healthier wraps and salads, would offer a substitute product, as it is different but is still meeting the same need, which is food. It is important that a business, like Steers develop strategies so as to outperform competitors supplying substitute products, as the presence of a successful substitute product will undermine the success of the businesses products and the overall enterprise, leading to a potential loss in customers and profits. A strategy that Steers can implement is a Product Development strategy (intensive strategy) whereby their are specials for products to prompt customers to buy the businesses products, as opposed to those of competitors, eg. Wacky Wednesday Specials at Steers. This encourages customers to purchase our products as opposed to the substitute products of competitors, leading to market share and revenue growth.
Threat of New Entrant
Considering the saturation of petrol stations, within the area in which Engen La Lucia operates, and in South Africa as a whole, it may not seem like a new entrant may appear, however this threat is always possible. A strategy that Engen La Lucia and indeed Engen itself can adopt so as to safeguard against the effects of a new entrant in the market, can be to send new employees on a training courses, so as to teach them proper etiquette to be followed, when delivering services to customers. If employees provide motorists with quality customer service, this will prompt them to want to use the businesses services more and encourage customer loyalty from customers. This in turn may lead to customers opting to stay and use the businesses services, even when a new entrant enters the market, due to the quality service they receive. The quality service not only counteracts the possible effects of a new entrant but it may lead to customer retention, market share growth and an increase in revenue generation. Furthermore, with regards to sending new employees on a training course to learn proper etiquette and conduct with regards to the values of Engen, HR Manager, Keith Laban, of Engen La Lucia, mentioned in our interview, that there is a tablet on site at Engen La Lucia that has different modules with regards to the values of Engen as well as discussing social-economic issues that may be facing employees. Employees have to do at least 4 modules a month and all employees have to do the modules, whether you’ve been working at Engen La Lucia for 2 days or 25 years. This further highlights how teaching employees proper conduct, in accordance with the businesses values, can lead to quality customer service being provided, as they know what is required of them, which in turn will lead to customer retention and potentially safeguard Engen La Lucia against the effects of a new entrant in the market.