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7 eleven japan final
- 1. Presented By: Lalit Kolte 2818716 Mukesh Kulal 2818510 John Cullen 8005781 “Oh Thank Heaven” Unit: International Marketing
- 2. Questions • Identify & discuss those external and internal factors accounting for Seven-Eleven’s success in Japan. And evaluate the company’s foreign market entry into the Japanese market and its market expansion in Japan. • Discuss whether or not Seven- Eleven can extend/ introduce the variety of its new services (included in Japan) to Thailand, China and the US markets. If not, why not? • Discuss the reasons that led Seven-Eleven Japan to enter Hong Kong through an international licensing agreement instead of opening their wholly owned store.
- 3. Agenda • Introduction • About Seven-Eleven Japan • Foreign Market Entry – Japan • Factors for Success in Japan – SWOT Analysis • Foreign Market Expansion – Japan – Thailand – China – USA • New Services Introduction / Extension • Reasons for International licensing agreement in Hong Kong • Conclusions • References
- 4. About Seven Eleven Japan • Initially it was Southland Ice company and got an idea of selling Bread, milk and eggs to people in 1927. • 7-Eleven® store name introduced because the stores were convenient and open from 7 a.m. until 11 p.m. in 1946 • 1963 First 24-hour operation introduced (Austin, TX and Las Vegas) • 1974 first store opened in Japan after licensing agreement with Ito-Yokado • Highly successful after that opening in Japanese market • The Southland Corporation changes name to 7-Eleven, Inc. when it became Japanese owned • 1982 – Seven Eleven became the first company to introduce a point-of-sales(POS) system. • Seven-Eleven Japan- Largest chain in the convenience retailing industry. • Globally, 7-Eleven operates, franchises or licenses around 35000 stores in 15 countries Source: Seven-Eleven Japan Co. Ltd.. ([no date]). Company Milestones. Available: http://www.7-eleven.com/AboutUs/Milestones/tabid/76/Default.aspx. Last accessed 28 February 2010. Leigh Sparks. ([no date]). Seven-Eleven Japan and The Southland Corporation: a marriage of convenience?. Available: http://www.emeraldinsight.com/Insight/ViewContentServlet;jsessionid=76430CF81BA2ECCCDB00F36FBD1AA513?Filename=Published/EmeraldFull TextArticle/Pdf/0360170406.pdf. Last accessed 28 February 2010.
- 5. Worldwide stores Source: Seven-Eleven Japan Co. Ltd.. ([no date]). Total Store Sales and Total No. of Stores. Available: http://www.sej.co.jp/english/company/g_stores.html. Last accessed 01 March 2010.
- 6. Stores in japan Source: Seven-Eleven Japan Co. Ltd.. ([no date]). Total Store Sales and Total No. of Stores. Available: http://www.sej.co.jp/english/company/n_stores.html. Last accessed 01 March 2010.
- 7. Need for Convenience Who need Convenience? • Working Individuals • Students living alone • Old Citizens Why there is need for Convenience? • Time • Distance • Availability
- 8. Convenience Store – Konbini(1) • A convenience store is a small store or shop that sells items such as candy, ice-cream, soft drinks, lottery tickets, cigarettes and other tobacco products, newspapers and magazines, along with a selection of processed food and perhaps some groceries. Source: Wikipedia. ([no date]). Convenience store. Available: http://en.wikipedia.org/wiki/Convenience_store. Last accessed 28 February 20
- 9. Convenience Store – Konbini(2) • Convenience stores rely heavily on the point of sale • Customers' ages, gender, as well as tomorrow's weather forecast, are important data. • Stores place all orders on-line. • As their store sizes are limited, they have to be very careful in choosing what brands to sell • Since products are delivered as needed, stores do not need large stock areas. • Most items available in larger supermarkets can be found in Japanese convenience stores Source: Wikipedia. ([no date]). Convenience store. Available: http://en.wikipedia.org/wiki/Convenience_store. Last accessed 28 February 20
- 10. POS • The first POS system in Japan in 1982 for storeowners(POS) • Used ISDN in 1991 to collect and analyze daily POS data on every single item.(EPOS)
- 11. Usage of POS • To identify customer trends and enhance product differentiation • To increase productivity and reliability of cashier operations • To collect sales data used to improve merchandising and the item-by-item control process. • Information from POS system was used for consumer trend analysis Source: Wikipedia. ([no date]). Convenience store. Available: http://en.wikipedia.org/wiki/Convenience_store. Last accessed 28 February 2005.
- 12. Factors influencing entry modes Wholly owned subsidiary Acquisition Joint Venture License Franchis e Agent Distributor Office Entry Modes Government Policies Country Risks Market Attractivenes s Strategic Capabilities Internal Capabilities Timing Source:Lasserre, P. (2007). The process of globalisation. In: Global Strategic Management. Hampshire: Palgrave Macmillan. p196.
- 13. SWOT Analysis Strengths (internal) • Real estate availability (Holdings) • Low Prices • Convenience • Franchise model allows for faster expansion • 24 hours open Weakness(internal) • Inventory inefficiency • Ineffective Marketing • Low Performance Personnel Opportunities(External) • Widespread the use of internet availability • Brand popularity • Expansion • Increased franchising opportunity Threats(External) • Increasing number of competitors (Lawson Inc, Family Mart ) • Consumer skepticism • Popularity of traditional markets • High Employee Turnover
- 14. Licensing Agreements • Licensing Agreements are contractual agreements by which a company(the licensor) transfers to another company (the licensee) its product and/or process technology with the right to exploit it commercially. Source:Lasserre, P. (2007). The process of globalisation. In: Global Strategic Management. Hampshire: Palgrave Macmillan. p205-206.
- 15. Franchises • Franchises are another form of indirect contractual agreement through which the franchiser grants the franchisee the right to use its name and receive a financial compensation similar to the licensing agreement (fixed plus royalties). • Examples: – Hospitality Industry: Hilton, Accor – Fast Food: McDonalds – Distribution: Bennetton, GAP Source:Lasserre, P. (2007). The process of globalisation. In: Global Strategic Management. Hampshire: Palgrave Macmillan. p205-206.
- 16. Seven eleven Japan Sales Source: Seven-Eleven Japan Co. Ltd.. ([no date]). Total Store Sales and Total No. of Stores. Available: http://www.sej.co.jp/english/company/s_growth.html. Last accessed 01 March 2010.
- 17. Number of Stores opened in Japan Source: Seven-Eleven Japan Co. Ltd.. ([no date]). Total Store Sales and Total No. of Stores. Available: http://www.sej.co.jp/english/company/s_growth.html. Last accessed 01 March 2010.
- 18. DiversificationMarket Development Product Development Ansoff Growth Matrix Product Development Market Development Diversification Existing New New Existing Products Markets Source: Adapted from H. Ansoff, Corporate Strategy, Penguin, 1988, Chapter 6. Market Penetration Consolidation Market Penetration Consolidation
- 19. Services in 7-11 Japan Stores • In store payment of electricity bill • In store payment of Gas bills, insurance premiums, and Telephone bills. • Payments for NHK (National Broadcasting company) • Accepting Installment payments on behalf of Credit Companies. • Reflectors of customers demand. • Prepared rice food products at 20 degrees Centigrade • Customer driven approach for product selection Source: Leigh Sparks. ([no date]). Seven-Eleven Japan and The Southland Corporation: a marriage of convenience?. Available: http://www.emeraldinsight.com/Insight/ViewContentServlet;jsessionid=76430CF81BA2ECCCDB00F36FBD1AA513?Filename=Published/EmeraldFu llTextArticle/Pdf/0360170406.pdf. Last accessed 28 February 2010.
- 20. Extend Services in Thailand, China and USA ? Thailand (Yes) • Majority of Thai people do not have a credit card • China (Yes) USA (No) Thailand (Yes) • Why alter a successful model? • Expansion rather than extension • majority of Thai people do not have a credit card • Although emerging country not a BRIC • Provision of new services must wait until world crisis resolves itself • Technology issues • Internet usage 12.6% of population as opposed to 73.8% in Japan and 74.1% in US China (Yes) • China IS a BRIC and is the number one driver of global growth therefore may be possible to experiment with e.g. financial services (i.e. credit cards) as an indicator of future Far-East expansion plans • Internet usage 12.3% of population US (No?) •Still expanding and actively seeking stores who wish to sell or convert • Expansion of Financial services (depending on current ‘crisis’)
- 21. Hong Kong • Some localisation is required in Hong Kong for running business – Familiarization with culture • There is 65% ceiling on stockholding by foreign companies and that permission for investing in Chinese companies • Chinese government keeps a tab on operations of foreign companies in china
- 23. Conclusion • 7-Eleven has to constantly think of people’s convenience and ways of convenient services to them. • Use of Integration information systems in Seven- Eleven supply chain provides more effective retailing and improved customer se • 7-Eleven has been consistently ranked in Entrepreneur's Franchise 500 service levels.
- 24. References • Seven-Eleven Japan Co. Ltd.. ([no date]). Company Milestones. Available: http://www.7- eleven.com/AboutUs/Milestones/tabid/76/Default.aspx. Last accessed 28 February 2010. • Leigh Sparks. ([no date]). Seven-Eleven Japan and The Southland Corporation: a marriage of convenience?. Available: http://www.emeraldinsight.com/Insight/ViewContentServlet;jsessionid=76430CF81BA2ECCCDB00F36 FBD1AA513?Filename=Published/EmeraldFullTextArticle/Pdf/0360170406.pdf. Last accessed 28 February 2010. • Seven-Eleven Japan Co. Ltd.. ([no date]). Total Store Sales and Total No. of Stores. Available: http://www.sej.co.jp/english/company/g_stores.html. Last accessed 01 March 2010. • Seven-Eleven Japan Co. Ltd.. ([no date]). Total Store Sales and Total No. of Stores. Available: http://www.sej.co.jp/english/company/n_stores.html. Last accessed 01 March 2010. • Wikipedia. ([no date]). Convenience store. Available: http://en.wikipedia.org/wiki/Convenience_store. Last accessed 28 February 2005. • Wikipedia. ([no date]). Convenience store. Available: http://en.wikipedia.org/wiki/Convenience_store. Last accessed 28 February 2005. • Lasserre, P. (2007). The process of globalisation. In: Global Strategic Management. Hampshire: Palgrave Macmillan. • Seven-Eleven Japan Co. Ltd.. ([no date]). Total Store Sales and Total No. of Stores. Available: http://www.sej.co.jp/english/company/s_growth.html. Last accessed 01 March 2010. • Seven-Eleven Japan Co. Ltd.. ([no date]). Total Store Sales and Total No. of Stores. Available: http://www.sej.co.jp/english/company/s_growth.html. Last accessed 01 March 2010.
Editor's Notes
- The company has its origins in 1927 in Dallas, Texas, USA, when an employee of Southland Ice Company, Joe C. Thompson, started selling milk, eggs and bread from an ice dock along with storing Gasoline.[ Initially, these stores were open from 7 a.m. to 11 p.m., hours unprecedented in their length, hence the name. The company began to use the 7-Eleven name in 1946. The Japanese company gained a controlling share of 7-Eleven in 1991,[8] during the Japanese asset bubble of the early 1990s. Ito-Yokado formed Seven & I Holdings Co. and 7-Eleven became its subsidiary in 2005
- Convenience stores sell a wide range of imported goods, whereas minimarts and provision shops sell local products with a limited range of non-Asian products. Convenience stores are situated within housing estates thus reducing consumers’ traveling time. Since both the husband and wife are working, there is greater need for convenience in shopping for daily necessities. 24 hour opening policy allows convenience stores to reach out to a larger group of consumers. Firstly, the policy caters to the shopping needs of consumers who work shifts or have irregular working hours. Secondly, the policy caters to the increasing number of Singaporeans who are keeping late nights. convenience stores in Taiwan provide services on behalf of financial institutions or government agencies such as collection of city parking fees, utility bills, traffic violation fines, and credit card payments. Neighborhood grocery stores not big enough to be considered a supermarket often compete with convenience stores Because they stock fresh fruit and fresh meat and carry upwards of 5000 items, they have a lot in common with the supermarket. Due to the relatively small store size, customers can get in and out conveniently, or have purchases delivered.
- Konbini culture hits Asia: impressed by the Japanese-style convenience stores
- Strengths Majority of the goods that 7-Eleven Store are low prices sue to low cost of operations. Also, 7-Eleven is more convenient to customers. Consumers could avoid the long checkout lines, crowded parking lots, and traffic. There are many choices of shopping methods; browsing the aisles, using product search, and choosing from a shopping list customized from frequently bought products. They could shop 24/7 since the store is open for 24 hours in 7 days. The store also offers variety of selection from fresh to processed food and whatever shoppers would need. Weaknesses Increase in competition is a great threat to 7 Eleven. Also, with the increasing high levels of educated people, consumers are now more skeptics and are more demanding. In addition, the traditional markets in which people can purchase fresh fruits and vegetables are still in its popularity in Hong Kong. Moreover, 7-Eleven has high employee turnover which is a sign of bad management. Opportunities 7-Eleven has also some opportunities. With the problem of information dissemination, an opportunity to acquire new technology for more efficient operations can now be possible. Also, 7 Eleven has been already known by the people as a store open in 24 hours they have the advantage over it. In addition, the company also got the most strategic locations of their stores. Moreover, the company can still expand their business and open some more stores especially in China which got the opportunities of expansion with its large market. Threats However, despite the strengths, the store has also its weaknesses. One of which is inventory inefficiency in which they would experience stock outs. Moreover, with the presence of superstores, their current marketing strategies have been overshadowed. In addition, low performance of workers also has negative effect on the efficiency of the store. http://www.wikiswot.com/SWOT/2_Retail/7-Eleven.html http://ivythesis.typepad.com/term_paper_topics/seveneleven_japan_company/
- Factors determining the suitability of sites include pedestrian or vehicular traffic, proximity to public transportation and the existence of zoning laws that permit a 24-hour operation and the sale of beer and wine.
- AnsoFF Growth matrix:
- Cultural – Thailand, China and Japan share nearly the same cultures….so adoption of these services wont be a major problem US consumers have got big influence of internet. They have been using the internet for shopping and are comfortable with using credit cards over internet. Companies which provide services through seven eleven might think about launching their own services
- foreign chain’s own resources are insufficient for running convenience store businesses in China and it indicates that some degree of localization is necessary.