7 eleven japan final

7-Eleven Japan

Presented By:Lalit Kolte 2818716Mukesh Kulal 2818510John Cullen 8005781

“Oh Thank Heaven”

Unit: International Marketing

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.

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

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/EmeraldFullTextArticle/Pdf/0360170406.pdf. Last accessed 28 February 2010.

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.

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.

Need for Convenience

Who need Convenience?• Working Individuals• Students living alone• Old Citizens

Why there is need for Convenience?• Time• Distance• Availability

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 2005.

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 2005.

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)

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.

Factors influencing entry modes

Wholly owned

subsidiaryAcquisition 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.

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

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.

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.

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.

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.

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 PenetrationConsolidation

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/EmeraldFullTextArticle/Pdf/0360170406.pdf. Last accessed 28 February 2010.

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’)

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

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.

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=76430CF81BA2ECCCDB00F36FBD1AA513?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.