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The Establishment of a convenience store and other delivery services at ABZ gas station Research Paper

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Updated: Nov 25th, 2019

Executive Summary

The ABZ gas station has been in operation for ten years. Due to the increasing market opportunities and the threats by the existing competitors, the company has indentified new products and services that it can invest in. The new services and products encompass: the establishment of a convenience store, a car wash, a service station and delivery services.

These services are expected to add value to the fuel refilling station and customers will be able to get most of the products and services at one place. The services are expected to increase the competitive advantages of the station, result to diversifications of products and services and increase the sales and profit margin. The man weaknesses that the business faces are lack of enough employees, need to manage the supply chain due to increased services and the need to buy new equipments for the extra services.

Introduction

The ABZ gas station was established 10 years ago and has been in the business of selling fuel to the local residents for the whole period. The station is situated along a highway and receives approximately 3000 cars every day. The location of the stations is near a residential area which is served by four other gas stations.

Due to its location, most of the people fueling cars visit the station before going home and also early in the morning when going to work. The station specializes in the sale of diesel, fuels and other petroleum products. Despite the high success that the business has achieved over the ten year period, their sales are constantly stagnating and the management feels that they need to increase their sales and profits. The competition for the target market is very high.

Product and Service Description

The ABZ gas station has been selling petroleum to customers. All range of petroleum products are offered at the station. In addition to these conventional services and products, the ABZ gas station wants to establish the following new services and products:

  1. Convenience store: the station wants to establish an ultramodern convenience store selling consumer products and fast foods. Customers driving home can buy foodstuffs, cosmetics, drinks and other personal effects.
  2. Delivery services: the company also wants to establish delivery services. Because of the vicinity that the company is to the residential area, they can be able to deliver fast food and other items as ordered by the customers.
  3. Car wash and repair center: the station also wants to establish service stations where minor repairs, car wash, vehicle checkup and other diagnostic tests can be done. Small checkup such as level of oil, engine health, wheel alignment services, greasing and other minor maintenance services will be carried out.

Competitive Advantages of the New Products and Services

All the new products and services will have superior advantages and uniqueness (David 23). The major competitive advantages are:

Convenience stores: it has been shown that customers would like to have everything under one roof. One of the most compulsory services to a driver is fueling a car which he must do frequently. During the fueling process, the driver and the car occupants can buy other products elegantly displayed on the shop floor so as to appeal the consumers (Govindarajan and Trimble 23). Introducing efficiencies in the distribution network as well as diversification are accepted to give the station competitive advantages. The services will also be economical to the customers (Slavin 20).

Delivery services: The Company will deliver products such as quick food to the customer at a very cost effective price. This efficiency is an added advantage as products can be supplied to consumers at any time and place.

Service station and car wash: By introducing the service station and car wash, minor vehicle repairs, vehicle cleaning and diagnostic services can be done at one station. This is convenient, cost effective, uses less time and is advantageous to the gas station customers.

Target Market

The company target market is in the residential area surrounding the station. The market has approximately 1.2 million people who live in the residential areas surrounding the station. This market is currently served by five gas stations. The ABZ Company has the largest market share as it serves 65% of the total market. The market for this business is segmented based on individuals and corporate clients (Cadle, Debra and Turner 112). Using this segmentation, there are three groups, namely:

  1. Individuals: these are people who fuel their cars at the stations. They form 75 % of the total market size.
  2. Companies: these are corporate and business clients who fuel their company cars at the station.
  3. Retailers: the station also sells fuel in large scale to other small gas stations.

Corporate and retail clientele are sold fuel at a lower price as compared to the individuals who buy the fuel at a retail price.

Strategic Analysis

The strategic analysis of the company was carried out using SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis matrix (Lawrence 26). This matrix is shown in figure 1 below

Positive forces Negative forces
Strength Weaknesses
  1. The business location has large number of customers
  2. The company has a lot of experience in the oil sector
  3. The company has enough employees and can be able to hire more
  4. Diversification through provision of more services as outlined in this business plan
  5. Good corporate culture
  6. Brand loyalty (customers in the area know and like our station)
  7. The use of high tech fuel dispensing machines and other equipments
  8. Economies of scale(large purchases attract discounts)
  9. Introduction of delivery services will boost the sales
  10. New services will result to more products and services under one station
  1. Employees are not well trained in the new products and services to be started
  2. There is need for proper management of the new supply chain
  3. There are no established buildings that can be used by the company
Opportunities Threats
  1. Large market size of about 1.2 million people
  2. There is possibility of expanding to other markets
  3. New services are required by consumers
  4. The locations of the business is strategic
  1. Environmental challenges and pollution caused by fossil fuels
  2. Threat by the existing competitors who may introduce such services
  3. Threat of new entrants to the market

From the SWOT analysis, the main weaknesses need to be reduced by training workers, proper management of the supply chain and buying of equipments. The company has many opportunities and strengths which forms it competitive advantage (Porter 43). The threat can be reduced by product and service diversification as well as establishing stations in other regions.

Works Cited

Cadle, James, Debra Paul and Turner Paul. Business Analysis Techniques: 72 Essential Tools for Success, London: British Computer Society, 2010. Print.

David, Aaker. Developing Business Strategies, 5th edition, New York: Wiley, 1998. Print.

Govindarajan, Vijay, and C.Trimble. Ten Rules for Strategic Innovators: From Idea to Execution, Harvard: Harvard Business Review Press, 2005. Print.

Lawrence, Fine. The SWOT Analysis: Using your Strength to overcome Weaknesses, Using Opportunities to overcome Threats, Seattle, Washington: CreateSpace Independent Publishing Platform, 2009. Print.

Porter, Jim. How to Perform Your Own SWOT Analysis (Entrepreneurs Brief Guide), Harvard: Harvard Business Review Press, 2010. Print.

Slavin, Stephen. Economics, 10th Edition, New York: McGraw-Hill/Irwin, 2011. Print.

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"The Establishment of a convenience store and other delivery services at ABZ gas station." IvyPanda, 25 Nov. 2019, ivypanda.com/essays/the-establishment-of-a-convenience-store-and-other-delivery-services-at-abz-gas-station/.

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IvyPanda. "The Establishment of a convenience store and other delivery services at ABZ gas station." November 25, 2019. https://ivypanda.com/essays/the-establishment-of-a-convenience-store-and-other-delivery-services-at-abz-gas-station/.

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IvyPanda. 2019. "The Establishment of a convenience store and other delivery services at ABZ gas station." November 25, 2019. https://ivypanda.com/essays/the-establishment-of-a-convenience-store-and-other-delivery-services-at-abz-gas-station/.

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IvyPanda. (2019) 'The Establishment of a convenience store and other delivery services at ABZ gas station'. 25 November.

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