Grocery Store by Entrance Dissertation

Pages: 30 (10094 words)  ·  Style: Harvard  ·  Bibliography Sources: 30  ·  File: .docx  ·  Level: Master's  ·  Topic: Business

SAMPLE EXCERPT . . .
It will have an affect on the prices that they pay for groceries and the convenience that the local grocers offer. If smaller grocers succumb to larger hypermarkets it will mean a social change for the Thai people. It could be viewed as a form of westernization. As one can see, the study will have a significant impact on stake holders on many different levels. It will examine a problem that affects many people.

Hypothesis

This study will explore three hypotheses that will serve as the foundation of the study. These hypotheses are:

Hypothesis 1: Local grocery/convenience store businesses are negatively affected by the presence of foreign hypermarkets.

Hypothesis 2: Government regulations have not been effective in protecting local businesses.

Hypothesis 3: Local businesses can survive and compete with the help of tactics such as joint ventures and consolidation.

Research Questions

The issues involved in the market changes in Thai grocery stores are complex and have many different layers. The hypotheses to be addressed in this study barely scratch the surface of the issues involved in this complex topic. To add more depth to the information gained, the following research questions will be explored in addition to the hypotheses.

1. Is the business of small grocery store owners in Thailand seriously affected by the entrance of hypermarkets like Tesco?

2. Are there any other factors affecting profits of local businesses, in addition to the invasion, or is it primarily due to foreign invasion of the hypermarket?

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3. How can local business hope to survive and how can they compete with large retailers?

These research questions expand and allow the issues being addressed in the study to be expanded so that they provide a more detailed exploration of the situation being faced by small retail grocery owners in Thailand. There are many issues involved and it is the purpose of this research to examine as many of them as can be identified.

Overview

Dissertation on Grocery Store by Entrance of Assignment

This research project would use a mixed method approach to address the hypotheses and research questions. It will examine relevant literature and we use both quantitative and qualitative methods for data collection and analysis. Quantitative data that will consist of a questionnaire distributed to grocery store owners. The stores chosen will be located close to a Tesco Lotus at 40 different locations in Bangkok. The results of this portion of the study will be analyzed using quantitative methods.

These two research methods will allow for the examination of the issue from both the grocery store owner side and the consumer side. These two research methods will be examined for similarities and differences in order to find a solution that will help small grocery store owners in Thailand regain their competitive advantage and survive into the future.

Chapter 2: Literature Review

As part of the proposal for this study a preliminary literature review was conducted that explored the premise of this study. The purpose of this study is to explore how the rapid expansion of hypermarkets, such as Tesco, affect small local grocery store owners. This topic is interesting from several perspectives. First, many of these larger chains represent foreign investment, rather than domestic investment. Secondly, in 2010, hypermarkets represented nearly 82% of the total revenues in the industry in Thailand (Salsburg & Tuchinda 2010). This means that smaller grocery stores must survive on a shrinking market share.

The potential impact of the hypermarket on small grocery stores in Thailand has many potential effects on the economy. This is not only a local problem that is limited to grocery stores in Thailand. Superstores have entered the market in many other countries. This issue has been studied extensively in regards to the effects that Wal-Mart had on small store owners in the United States. An exploration of data from the United States and its Wal-Mart experience may provide insight into the possible effects of Tesco in Thailand. This problem has the potential to force many long-established smaller grocery stores to cease operations. This would have a significant social impact on the fabric of Thai society and its traditional economy.

The following literature review will explore the issues surrounding the entrance of Tesco and its entrance into the Thai market. Since its entrance in the late 1990s, Tesco has been the target of accusations in many areas. The following literature review goes beyond simple theoretical academic studies. The problem is real and goes beyond theory. The literature review will explore a number of issues through media sources and academic sources as well. The literature review will attempt to gain a well-rounded perspective on the problems that local grocery owners face.

The Tesco Effect

Since its entrance to the local market in Thailand, Tesco and other large hypermarkets have come under attack for undermining the growth and survival of small local businesses in Thailand. Consumer groups and other local business groups have complained that Tesco had an overall negative impact on the economy. The rationale was that when local businesses close, it means a loss of jobs and tax revenues that are not being pumped into the local economy. Many of these criticisms stem from Tesco's attempt to take measures to limit their tax liability (MacKinnon 2008).

When Tesco moves into an area it is often met was severe backlash from local businesses, consumers, and the press. When it was announced that a Tesco would move into Mae Sai, protesters sent a coffin and petition written in blood to company executives (Crispin, 2008). Tesco stores have been the targets of grenades, rockets, and gunfire by local interest groups (Pumas 2007). One can find many such examples of local reactions from various media sources. The question that must be asked in this research study is why such a violent reaction to the entrance of the corporation. It must also ask if these apparent fears by locals are founded on fact or if they are overreacting to the effect that Tesco will have on their community. It is apparent that local protestors find it necessary to "protect" something through their actions. Perhaps the results of this study will shed light as to whether their fears are imagined or whether they are real.

At first glance, it would seem that the protesters have reason to be concerned about their local economy. Siamwalla & Poapongsakorn (2003) found that the traditional grocery stores in Bangkok have been closing at a rate of 8.5% per year since 1997. According to the study, those that remain experienced a 7% decrease in annual revenues. This loss was attributed to the expansion of super chains and hypermarkets. Decreases in were attributed to changes in consumer behavior due to the entrance of the hypermarkets.

Purchasing power is the key advantage that large hypermarkets have over smaller grocery stores. They have the ability to bargain for discount prices from wholesalers. As wholesalers must adjust their prices downward to take advantage of the volume sales and overall revenue generated by the hypermarket, they too share some of the burden with local retailers. Some of this burden includes entrance fees, advertising costs, and limited product placement on shelves. However, these larger hypermarkets also mean increases in revenues due to larger volume of goods that are being moved.

Another effect of the entrance of hypermarkets in an area is difficult to measure. The lower prices of hypermarkets allow some businesses to purchase the goods that they need at lower prices, thus having an impact on increased revenue for them. One could say that from this standpoint the entrance of the hypermarket is bad for some businesses, but good for others. Consumers benefit from greater purchasing power from their money. This greater purchasing power translates into more goods and a wider variety of goods being purchased for the same amount of money. These effects are difficult to measure empirically, as there are many different factors that could have an affect on them.

The smaller grocery store is at a disadvantage in many ways. Their problems are many sided and there many different facets to the issues. Aside from lower purchasing power, smaller grocers must adopt more sophisticated technology in order to compete with larger competitors. With shrinking revenues, raising capital for human resources and new technology is more difficult (Kaibori 2001). Smaller grocers also had difficulty borrowing funds from banks do to pore credit, a lack of experience and knowledge in fund raising, and insufficient collateral for loan backing. The problems facing smaller grocers as compared to their larger retail counterparts can be summarized as follows:

1. They must buy products from suppliers at higher prices because they purchase in smaller quantities.

2. They have to handle all activities in their shops such as buying, selling and accounting, hiring and maintenance. In larger companies, these are handled by experts and skilled workers who are specialized in these functions.

3. They have restrictions where advertising capabilities are concerned and do not have the required funds to advertise through various mass-scale… [END OF PREVIEW] . . . READ MORE

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