Description
Write-Up Questions for the Tenpin Kanri Case
Your Name:
Length Requirement:
While quality answers are the ultimate basis for my grading on this assignment, the following
important length requirement may help ensure that enough effort, thoughts, and details are
demonstrated in the answers. Please input your answers in this document and limit your answer
to about 3 single-spaced pages, using size 12 of Times New Roman font and leave a 1-inch margin
on all sides. As my own questions and instructions already occupy about 3 pages, please limit
the length of the whole completed document to about 6 pages. Type your answers in blue.
There will be the penalty for “net” write-ups significantly going over the 3-page length limit (5
points deducted per extra page), and writer-ups coming significantly less than 3 pages could miss
important, pertinent details needed for high-quality answers.
Upload your completed write-up in the Assignments section and for organizational purposes,
please name your file as “Your Last Name. First Name Initial”, such as in “Gao.T”. You may
email it to me if you experience technical difficulties in uploading your file.
Please also write your full name at the top of this page, aside from naming your file as above.
Note on collaboration:
This is a completely individual assignment and no collaborations of any form are allowed
between or among members of the class or with any outside parties. Similarities among answers
from different students and outside sources will be closely monitored.
Questions:
1. Compute or list key financial performance measure for Seven-Eleven Japan in fiscal 2003
(shown in Exhibit 1a as the year ending on 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 the 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:
2
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 yens (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 in
an exhibit (Word or Excel).
Your answer:
2. Assume that for the 2003 fiscal year (ending on Feb. 28, 2004), Seven-Eleven Japan’s
Marketing and Sales Expenses is 70% of its Operating Expenses. Use the information is given
in Exhibits 1a and 1d and the formulas are 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)
Your answer:
3. Briefly describe the key differences between the Tenpin Kanri practice and the POS
systems typically used in Japanese (and similarly in North American) stores since the
70’s? (10 points)
Your answer:
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)
Your answer:
5. Identify and discuss 5 specific, respective ways in which the Tenpin 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 Tenpin Kanri’s impacts
on customer experience and 5 additional ways for its impacts on the firm’s financial
performance.)
Your answer:
6. While the benefits of the Tanpan 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 successfully implement it. Identify 4 such key barriers and
briefly discuss ways to overcome them. (15 points)