Tenpin Kanri Case


Write-Up Questions for the Tenpin Kanri Case

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Note on collaboration:

This is a completely individual assignment and no collaborations of any form are allowed

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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


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:


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


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)

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