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Business project on engen

Engen La Lucia is a petrol station that I feel is in a very convenient and busy area. The reasons being are that it is in a high income area, it is near a shopping centre (The La Lucia Mall), it is opposite a taxi rank, it is near office blocks and it is right next to a highway offramp. This Engen Garage in particular has strategic alliances with more than one brand which I feel is a major strength as it can attract many customers. The companies that this Engen has strategic alliances with include Steers, Woolworths, Krispy Kreme and The Corner Bakery.

SWOT Analysis

Strengths :

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A strength of this Engen garage in particular is the fact that it is in a high income, residential area and near a shopping centre as well as office blocks. This is a strength because the area is busy and therefore many customers will drive past the garage often and will more than likely fill up their cars with fuel due to the fact that most customers will go to the closest petrol station when they are in need of fuel.

Another strength of the Engen is that it has strategic alliances with Woolworths, which is associated with quality, steers and corner bakery as well as having a Krispy Kreme stand in their store. By having so many strategic alliances it offers a large variety of choice which may attract many customers.

When consulting the manager at this Engen garage we spoke about how customers are able to use their Woolworths cards to pay for the products that they purchase at the store and it’s outlets (including Krispy Kreme!). This is a huge strength as Woolworths has many customers that would then use Engine as their preferred petrol station.

Another major strength that the manager mentioned was the fact that they have many walk by customers as a result of having the taxi rank opposite their petrol station. These customers can stop to buy drinks or snacks for their taxi trip as well as being able to draw money at the ATM to pay their taxi fare – all at any time of the day. Weaknesses :

A weakness to the Engen Garage La Lucia is that their Woolworths store often has products on their shelves that are already past their sell by date and if they have not already past their sell buy date, then they are very close to it. This is a weakness because customers do not want to buy products that are not going to last long – for example if milk expires in a day or two then a customer is more than likely not going to buy it as they want their milk to last more than a day or two. A strategy that Engen could use to fix this problem could be a backwards integration strategy whereby Engen joins with their supplier or becomes their own supplier in order to ensure prompt delivery and good quality of goods.

The fact that this Engen has a taxi rank opposite it can also be considered a weakness to some due to the fact that it creates a lot more traffic which could frustrate impatient customers and lead them to going to another petrol station nearby that may be less busy.

Opportunities :

An opportunity for this Engen would be to provide a car wash. This is an opportunity for Engen because competitors such as Caltex in Mackeurton Avenue offer an area for customers to get their cars washed and benches for them to sit on while their cars are being washed. Engen has a Steers , Woolworths and Corner Bakery that customers can get food or a drink from while their car is being washed.

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Another opportunity for Engen would be to provide a charging point for electronic cars. The world is evolving very quickly technologically and Engen needs to keep up with these changes or they will fall behind. Engen must also do what they can to help the environment and by providing a charging point to charge electronic cars they are promoting being environmentally friendly.

Threats :

A threat present to Engen is the weak currency of our country, the Rand. This is a threat because of the fact that Engen imports their fuel from overseas. The higher the cost of fuel, the higher the selling price and this affects how many customers the petrol station bas. A strategy that Engen can use to help with this problem could be a low cost strategy whereby Engen cuts down on unnecessary costs without affecting the quality of their products or service. This could involve finding a cheaper supplier.

When speaking to the manager he said that their biggest threat is the risk of a fire or explosion due to the obvious reason that fuel is highly flammable. They have various precautionary measures in place to prevent this from happening such as their employees uniforms being made from material that is not highly flammable as well as making their garage a smoke free area to prevent cigarettes from causing fires. Engen has also got fire extinguishers as well as trained employees for in case a fire does occur as well as a system that shuts off the flow of fuel from underground to the pumps in the case of a fire.Level of rivalry in the market :

The level of rivalry in the market for Engen is very high because they have many competitors selling the same / very similar products for the same / very similar prices. This means that Engen needs to ensure that their service is fast and efficient and that their staff are friendly as well as having good quality products in order to ensure that customers choose their petrol station over that of their competitors. Engen can do this by offering loyalty programs such as offering R50 off at their Woolworths store after filling up with fuel 10 times at their petrol station. This is something that will benefit Engen and their strategic alliance, Woolworths. When consulting the manager he told me about the app that they have which allows customers to order products from the Woolworths, Corner Bakery, Steers, Krispy Kreme or the General Engen store and get them delivered to their front door – with free delivery within a 5km radius of this Engen. This is a very clever strategy of Engen as it is something that their competitors do not yet offer and is a major strength to the business.

The availability of substitute products :

This is when there is a product which satisfies the same need as another product. It doesn’t necessarily refer to a different brand and therefore it is important for Engen to understand what their customers preferences are and why. The why factors include things such as cost, health issues, convenience of the goods as well as the availability. An example of a substitute product to Engen La Lucia is a ready cooked meal from the Woolworths or a fast food meal from Steers. One option is healthier whereas the other option is cheaper. Having a Steers and a Woolworths at this Engen is a huge strength as it allows customers for both of these options.

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Threat of new entrants into the market :

This includes current competitors which may take Engen La Lucia’s customers as well as new business which may see a gap in the market and use this as an opportunity to enter the market. Any potential new entrants to Engen’s market is a threat to their profit and market share. There are strategies that Engen can put in place to prevent these new entrants from affecting them on a large scale or from selling a similar product to them. This involves things such as registering a patent to stop potential entrants from selling a similar product to them. Policies that are set by the government such as BBBEE requirements as well as huge capital outlays which present themselves when buying and building a petrol station prevents lots of new entrants from entering this particular market.

The power of the supplier :

The power of the supplier in the fuel industry is of great importance due to the fact that if a supplier doesn’t deliver products at the right time, or place or of the right quality it can lead to customers becoming frustrated and even moving to other petrol stations to get fuel and other goods. It is very important that Engen maintains a good relationship with their supplier by paying them on time and being transparent and open with them. If Engen treats their suppliers well, they will treat Engen well in return but delivering on time, good quality goods.Political factors :

Political factors which may affect Engen could be the president of our country saying something or making a decision that leads investors to pull out of investing in our country which in turn weakens the rand. The stability of the government is very important to investors because if they do not feel that their money is safe in a country, then they will not invest their money in it.

Physical factors :

This talks about the physical location of a business. Engine La Lucia is in a very good position physically as they are opposite a taxi rank, in a high income area, near a shopping centre and near office blocks. These are all major strengths to Engine La Lucia as it is in a very busy area with their target market being right on their doorstep.

Economic factors :

A recession is an economic issue that could affect Engen as it results in customers having less disposable income which leads to them turning to cheaper product options. This could affect the Woolworths due to the fact that with a lot of products, Woolworths charges more than that of Pick n Pay for example. It could also affect the amount of Krispy Kreme donuts sold due to the fact that donuts are something that is a want and not a need.

Another economic factor is the exchange rate. This may affect Engen because if the rand is weak, it will cost more for Engine to import fuel which ups the selling price of the fuel – this has a ripple affect because if the price of due is increased then so is the price of everything else as suppliers of products are going to charge more for delivery.

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Social factors :

A social factor that Engen may have to deal with could be their employees being infected with HIV/AIDS as this could lead to them not being able to work to the best of their ability which can in turn hamper the productivity of the business.

It is important that Engen gets involved in social responsibility programs in order to help their employees and those in their community that are less fortunate – they can do this by donating food, blankets and clothes to the poor as an example or offering counselling free of charge to their employees (to decrease depression and mental illness rates).

Technological factors :

The world is changing at a rapid rate technologically and Engine must keep up with these changes or they will fall behind and this could lead to their competitors gaining a competitive advantage.

Engine La Lucia has an app on which a customer can order anything from their Woolworths, Steers, Corner Bakery, Krispy Kreme or general store and get it delivered to their door (free of charge within a 5km radius of the station). This is a huge strength to this Engine as it is something that their competitors have not yet done and it is a very convenient service for their customers.

Legal factors :

It is very important that Engen abides by all laws in order to avoid fines and problems later down the line. This includes fair labour practices, abiding by BBBEE implications, treating their employees fairly such as not making them work overtime unless they are being paid more and have agreed to do so, paying them the right amount at the right time etc.

The labour laws pay an important role in how Engen’s employees are treated. An example of a labour law is the Skills Development Act whereby employees are trained to perform certain asks or learn new skills. When speaking to the manager he said to me that one of their employees was there on a learner ship programme. This is when the business employs someone that is still studying so that they can learn skills and gain work experience in order to obtain a qualification.

Environmental factors :

Engen needs to make sure that they look after the environment in order to create a good brand image. As well as it creating a good brand image, it will also impress many customers. A lot of customers will support a brand as a result of them being environmentally friendly.

Engine can do this in many ways : they can offer paper straws in their store instead of plastic straws as well as paper bags instead of plastic bags.

Ethical factors :

Engen La Lucia needs to ensure that the business decisions that they make are all the right thing to do. This includes paying their employees AT LEAST the minimum wage and on time, not supporting suppliers which could use child labour, not selling products which will not benefit the customer, do not false advertise, and many others. It is the responsibility of Engen to make the right decision.

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