Write-Up Questions for the Tanpin Kanri Case

Questions:

1      Compute or list key financial performance measure for Seven-Eleven Japan in fiscal 2003 (shown in Exhibit 1a as year ending in Feb. 28, 2004 and in Exhibit 1d) in terms of the total sales (or sales revenue), gross margin (%), net profit margin (%), inventory turnover, and sales per square foot.  Report your results in US$ when the results are in currencies.  (15 points)

Find the exchange rate between the US dollar and Japanese yen at the end of February 2004 (e.g., Feb. 27, 2004) and use it to translate the total store sales data for the 2003 fiscal year into US$.  Note that the fiscal years for Seven-Eleven Japan ends on the last day of February, so the data given in Exhibit 1a under 2004 are for the 2003 fiscal year. 

Here is one website where you can locate historical exchange rates data (Click on March 1 for the exchange rates on Feb. 27): http://www.federalreserve.gov/RELEASES/H10/. 

The company’s approximate average sales per square meter number in 2003 is given on page 1 of the case (at the end of the 3rd paragraph) but you will need to convert it into an amount in dollars per square foot). 

Please use this formula to calculate the inventory turnover:

Inventory turnover (in a year) = Annual COGS ÷ average annual inventory

Assume that the average total inventory per store for the entire 2003 fiscal year was 4,000,000 Japanese yen’s (as estimated from Exhibit 4).  To get COGs, use this formula (with numbers from Exhibit 1d): COGS = Sales (1-Gross Margin %).

Please show the processes of your calculations for questions 1 and 2 either in the text or an exhibit (Word or Excel). 

2.   Assume that for the 2003 fiscal year (ending on Feb. 28, 2004), Seven-Eleven Japan’s Marketing and Sales Expensesis70% of its Operating Expenses.  Use the information given in Exhibits 1a and 1d and the formulas given on pages 49-53 of the Best book to calculate Seven-Eleven Japan’s Net Marketing Contribution, Marketing ROS, and Marketing ROI.  How do these numbers compare with Apple’s numbers reported on pages 67-69 of the Best book?  Note that you may derive the company’s Operating Expenses (or SG&As) by using the following formula: “Operating Income = Gross Profit – Operating Expenses,” which is similar to the ones given in page 50 of the Best book.  (10 points)

3.     Briefly describe the key differences between the Tanpin Kanri practice and the POS systems typically used in Japanese (and similarly in North American) stores since the 70’s?  (10 points)

4.    What is meant by the term “hypothesis” as used in the case?  Who in the company (Seven-Eleven Japan) are mostly responsible for “hypothesizing”?  Give an example of a hypothesis that the responsible party may form.   (10 points)

5.      Identify and discuss 5specific, respective ways in which the Tanpin Kanri system helps enhance both the customer experience and the financial performance of Seven-Eleven Japan in the increasingly competitive Japanese retail environment. (30 points – Please note the particularly high score for this question) (Identify 5 ways for Tanpin Kanri’s impacts on customer experience and 5 additional methods for its implications on the firm’s financial performance.)

6.      While the benefits of the Tappan Kanri method to shopper demand management may be compelling, the typical North American convenience retailer would need to overcome some major barriers in order to implement it successfully.  Identify 4 such key obstacles and briefly discuss ways to overcome them. (15 points)

7.      Briefly discuss what lessons about effective marketing your company/organization or a manufacturer such as Kellogg could learn from this case.  (10 points)

More Notes:

Questions 1 and 2 require careful reading of the case financials information and the textbook.  Please show your calculation processes to get full credits for these 2 questions.  If the length of your answers is a concern, you may include the complete calculation processes for questions 1 and 2 as an appendix and only show the results in the front section. 

The most pertinent answers to questions 5-7 are not readily shown in the case and will need deep thinking beyond the materials.  As such, directly copying and pasting large sections from the case wouldn’t yield high-quality answers here.  The answers to questions 3 and 4 are easily identifiable from the case, but please make sure you cover all aspects of those two questions. 

In general, you don’t need to cite the sources when copying and pasting from the case itself or the Feds website for the exchange rate, but you should cite any other materials you read from the web or other publications.