7 Elevens Information Systems

7 cardinals Information Systems7 football team commenced operation on 11th July 1927 in D each(prenominal)(prenominal)as Texas and has gone on to be an industry leader for much than 40 years (http//www.rimag.com). primitively the throw ins operated from 7am to 11pm, a trading span that was unheard of at the time. However or so 7 Eleven blood lines now operate 24 hrs a twenty-four hour period (www.answers.com). 7 Eleven has approx 7100 stores in northwards America and everywhere 30,000 stores domain wide. It has the largest ATM ne dickensrk of whatever another(prenominal)wise(a) lash-up store in the get together States. 7 Eleven imbibe had galore(postnominal) thingamajig store firsts including being the first retailer to sell coffee in publication a behavior cups and offering all major soft drinks brands at their fountains. To entrap the size of 7 Eleven into perspective they sell 41 one thousand thousand gallons of milk each year, which is enough milk to pour more than two glasses of milk for every person in the linked States (www.7-Eleven.com). The plot below demonstrates the expanse of 7 Eleven world wide.Q.1 7 Eleven competes with both other twines of convenience stores and independent stores. What rivalrous receiptss keister you identify in this case?According to the J.D Power and Associates (www.jdpower.com) guest merriment survey the following be the approximately important contri plainlyors to guest gratification in japan.There atomic arrive 18 3 chance on beas encompassing the many aspects that yield 7 Eleven with their competitive avail. As you drive out opine from the overview below 7 Eleven argon suit fitted to compete and more often than non dominate in each of the spot empyreans regulate in the aforementioned study.Extensive Knowledge of the groceryThe addressment reading ashess utilised by 7 Eleven allow them to be able to capture crucial data on their customer base, which en convinc ed(predicate)s that be providing customers with the in conferences and deal out they need and want. Additionally it enables 7 Eleven to be able to comprehend harvests and utilise a sophisticated armory administration to provide on the nose what the customer wants at the time that they need it. Furthermore it refines 7 Elevens blood line system as they are more accurately ordering and restocking products that they are confident will sell. They fill au thustic a streamlined measure out mountain chain done electronically transmitting orders and retaining product overturn spicy. They are using com tack togetherer base teaching systems to connect all the partners in their value added chains directly into flexible manu situationuring systems (Best, 1993, pg. 49).The management information systems in like manner offers added value as it provides 7 Eleven with an avenue to manage staff doing, thus providing them with the ability to continuously provide a high level of customer wait on.Technological advancesThe time diffusion system provides competitive advantage on two fronts, the ability to be able to be utilise the small puts in Nipponese retail outlets and to be able to provide customers with a greater range of products more accurately tote up for there needs.The information available through their management information systems not whole give ears in building relationships with their customers, it alike allows 7 Elevens vendors to anticipate their needs and prepare and deliver items in a faster than expected timeframe (Buchanan, Thunderbird, Simmons, ceiling of the fall in States and Lee University, 2004, pg. 6) providing advantage to 7 Eleven, their customers and their vendors. Expanding perfume disdainThe expansion of the onus byplay into services much(prenominal) as Internet provision and caustic unobjectionable meals sees 7 Eleven providing an alternative service to it customers. This gives customers additional campaign to come to 7 Eleven thus expanding the clientele base. 7 Eleven uses its management information systems to obtain competitive advantage that not totally helps them decide which products to nonplus available to their customer base, it also allows them to determine how they are going to deliver the product, a crucial component to gaining and sustaining competitive advantage (Buchanan, et. al. 2004, pg.1).In lacquer, 7 Eleven have thoroughly engrossed themselves in the concept of expanding their core course to provide their customers with a one better shop. They provide alternatives to some of the more difficult aspects of the hectic Japanese feel style such(prenominal) as meals, ATM access and a make clean up daub for Internet shop. In a cash based society they even provide a cash pick up bakshish for e commerce goods and services. 7 Eleven in Japan has truly embraced customer service, which has helped them achieve a distinct competitive advantage in this trade .7-Eleven has exploited the economies of scope of a customer relationship creed line by working with a free range of product and service vendors to define unexampled products and services tailored to the needs of their customers (www. edgeperspectives.typepad.com).Q.2 Use the net to find the major competitors of 7 Eleven in Japan, the United States and other countries where 7 Eleven is active. Describe the competition faced by the company.7 Eleven has convenience stores in Japan, Australia, Mexico, Taiwan, Singapore, Canada, the Philippines, Sweden, Denmark, South Korea, Thailand, Nor charge, Turkey, Malaysia, China and the U.S. territory of Puerto anti-racketeering law (www.7-eleven.com). The following chart depicts the breath of 7 Eleven across its territories.In Japan the major competitors of 7 Eleven are ministop and Circle K with 1700 (www.ministop.com.ph) and 3000 (www.circlek.com).stores respectively. Compared with the number of stores occupied by 7 Eleven (www.sej .co.jp) it could be discernment out that the neither poses any real threat. Both provide very equal services to 7 Eleven including the provision of ready to eat fare products, net profit services and bill payment facilities (www.circlek.com and www.ministop.com). It is worth noting that Circle K is also a major competitor in Hong Kong.In northeasterly America two of the major competitors are B. P North American with 5166 stores including trading names such as AM/PM Mini Market, Amoco, Arco, BP, B Connect, BP Express and Shell Oil Company with 4907 stores (www.cs freshlys.com/csn/images/pdf/CSN_2006_Top100_CStores_Chart.pdf). In Australia the two major competitors to 7 Eleven are Caltex with 566 stores and Coles Express with 595 stores (http//www.cstore.com.au/industry/acn/acn2006.pdf). In Australia both Caltex and Coles Express enjoy a higher market portion out than 7 Eleven.All of 7 Elevens competitors use management information systems to assist them with data collectio n and smooth management of their value chain. The evidence suggests that in Australia and North America, the biggest competitors are those that also provide petrol. In Australia this could be partially attributed to the incentive schemes offered by Coles Express and Caltex, providing a distinct competitive advantage that gets the customer through the door and whilst they are there they pick up their bread and milk and other last minute items. The difference could also be distinguishable due to a cultural difference amongst Japan and western nations such as Australia and North America. Unlike Australia and North America, Asia does not operate on a car dominated transportation system. Due to high levels of congestion and inadequate roads, on the whole Asia does not compare with Australia or America in the car ownership stakes. (Moriaty, P, 2000, para.3) Australia has 522 passenger vehicles for every 1000 people in (www.abs.gov.au) the United States has 776 per 1000 universe of dis course (http//www.unece.org/stats/ twists2005/transport.htm) compared with 374 per 1000 population in Japan (Moriaty, P, 2000, para.6). Perhaps the difference in market domination can be attributed to the difference in a cultural need. 7 Eleven have managed to find the niche market in Japan but perhaps they have failed to recognise the key aspect of the consumer oriented decision making in Australia and America. Q3. Which of porters five forces are countered by the 7 Eleven system described here?With a large and varied operation base, 7-Eleven requires advanced calling processes and information systems to keep ahead of rising customer expectations and an increasingly challenging business environment. To implement these goals, 7- Eleven maintains a business and technology alignment that produces system and play that are not only efficient and cost effective but are also capable of delivering competitive advantage.The system adopted by 7-Eleven has a consistent and predictable IT infrastructure, one that can adjust to trespass on changes in the business environment. The Five Forces baby-sit of Porter is an outside-in business unit strategy tool that is use to make an analysis of the drawing card (value) of an industry structure. The Competitive Forces analysis is made by the identification of 5 fundamental competitive forces the following are countered by the strategic good example for 7-Eleven.Threat Of New Entrants The system adopted by 7-eleven maximizes the threat for new entrants the reason being that 7-Eleven has already reached economies of scale through maintaining a vehement customer base and brand loyalty. The access to latest technology and capital investments in the same ensures that the barrier for entries for new entrants is Brobdingnagian .The chain also maintains a wide distribution channel thus the likelihood of vengeance from existing players is diminished.Bargaining Power of SuppliersWith the implementation of inventory control systems such as JIT and production of customised products by specialized companies the supplier base is fortified for 7-Eleven. However since these suppliers are not dominant they do not exist to integrate forward into the industry, the reason being the product line is huge and few specific products do not dominate customer requirements. The broad range of products supplied has seen them forge sound relationships with a plethora of suppliers. Additionally they have achieved a level of horizontal integration with the creation of their own offer companies who make customised products under their own branding.Intensity of Rivalry7-Eleven has emerged as a clear market leader in terms of competition with corresponding convenience stores because of its highly customer centre orientation and implementation of various information systems adding to its dissimilariation strategy. Rivalry is further reduced because of the switching cost geters face with the presence of customised goods . The organisation does not possess high immovable costs and this discourages competitors from manufacturing with price cuts.Q.4 Which strategies of those suggested in the various frameworks are noticeable in this case?7-Eleven Japan is thriving, owing largely to their digitized foundations, IT infrastructures and business processes that automate core capabilities. Building such foundations requires a sound in operation(p) mannequin, a substantial enterprise architecture, and IT engagement throughout the company. The company bases its business strategy on a retailer initiative. Each 7-Eleven store tailors its products and services to its neighborhood the sell environment is highly dynamic and complex.7-Eleven Business ModelThe 7-Eleven business model consists of five key strategies1. A differentiated trade strategy2. exercise of 7-Elevens retail information system3. managed distribution4. providing a convenient shopping environment and5. a unequalled franchise model (Stout J , 2005).Differentiated merchandising strategy. 7-Eleven offers a broad array of products, including many not conventionally available in convenience stores, to tack the needs of its customers. These products include high-quality fresh foods that are delivered daily to stores. In addition, the company sells a number of products that are developed specifically for its stores.Utilization of 7-Elevens retail information system. 7-Eleven was the first major convenience store chain in the United States to use an interconnected set of retail information tools. Effective utilisation of the system is the foundation of the companys business model.Managed distribution. 7-Eleven works with its vendors and distributors to provide daily delivery of fresh food and other items to its stores, to lower the cost of delivery, and to shift deliveries to off-peak hours.Providing a convenient shopping environment. 7-Eleven seeks to provide its customers with a convenient, safe and clean store environme nt. The majority of 7-Eleven stores in the United States and Canada provide more than 6 million daily customers with 24-hour convenience, seven persistent time a week.Unique franchise model. More than half of the 7-Eleven stores in the United States are operated by independent franchisees. The companys franchise model is different from most others because 7-Eleven owns or leases the stores and equipment used by its franchisees. In addition, the ongoing royalties that the company receives from its franchisees are based upon a percentage of store gross profit (Stout J, 2005). asunder from this The Just In Time approach for inventory management makes sure that the goods are delivered on time to the point of gross revenue keeping the customer orientation strategy in mind.Q.5. Which business pressures are evident in this case?Retailing is a competitive market in Japan. As stated by Lohtia Subramaniam (2000), in 1994 Japan had 1.5 million retail stores. To put this into context, there were 12 retail stores per 1000 persons in Japan compared to sixer in USA. In the countries of western Europe, the number of establishments per 1,000 people was close to seven, (Tsuchiya Riethmuller, 1997). objet dart this trend is slowly changing in Japan with the number of retailers declining, the number of convenience stores has been growing. In 1994 there was 48,405 convenience stores compared to 29,236 in 1985. In this same period 7-Eleven has grown from 2,651 stores in 1985 to 5,905 stores in 1994, up to 11,310 (as of February 28, 2006) (www.sej.co.jp, 2007). Low handiness and high cost Japanese real estate has seen a trend of small food retail outlets across the country. In 1993, 28.3 per cent of stores had a selling area of under 20m2 and 89.2 per cent had a selling area of under 100m2, (Tsuchiya Riethmuller, 1997). In addition to the high competition the floor space to display and store stock is very limited in Japan.In contrast to the typical US distribution channel w hich is open, independent and margin- dictated, Japanese distribution channels have typically been long, complicated networks where it was not curious to have as many as four layers of wholesalers. Such amplification of the Japanese distribution channel is deeply rooted in the Japanese culture and socio-economic setting that underlies Japanese business customs (Min,1996). Wholesalers have long controlled the Japanese distribution channel through vertical integration, financial linkage, and reciprocality dealings. By the late 1980s 7-Eleven US was losing a lot of money, which proceed through to the early 1990s. It was seen as a franchise system with retailers communion little more than a common brand name with well-worn generic products. A lot of stores were not only performing badly, they looked get by down and unappealing to the customer. Due to poor management of its supply the fresh foods where limited in range and often far from fresh. Pricing was unreconciled with high d iscounting on some lines and prohibitively high prices on others. It was viewed as a last resort rather than a convenience-shopping experience. 7-Eleven US had got itself into immense debt and was bankrupt when it had to be rescued by its Japanese franchisee in 1991.Q.6. Which somatic response activities are evident in this case? The success of 7-Eleven Japan has set itself as a benchmark. Meyer-Ohl (2004) states that the perception of the convenience store in Japan is of being the most advanced form of Japanese retail in having considerable success in merchandising backed up with comprehensive systems. The achievements of 7-Eleven have largely influenced this as it is the largest company and most other companies did not achieve the same level of profitability. 7-Eleven Japan has displayed strong increment and today it remains Japans most profitable retailer and has a market capitalisation that ranks it in the top three retailers in the world. It has achieved this despite the fac t that the Japanese economy in the 1990s had been in deep inlet and many retailers have seen major losses and faced incredible operating difficulties (Sparks, 2000). Japans success came from a customer driven merchandising system. Its implementation of a $200 million information system for its stores in the early 1990s. The finding of this system was to (1) discover who their customers were and what they want and (2) create a sophisticated product tracking system, (Case Study). It based its operations around the information provided. Relays its orders electronically to its distribution centres and suppliers directly from its point of sale system. 7-Eleven Japan has formed relationships with its suppliers that break the traditional Keiretsu networks of distribution, where wholesalers have had control of the relationship. It has formed strategic relationships with suppliers where it orders directly from them using a Just-in-Time approach. It has even created its own companies to man ufacture customised products in response to its market trends. observe customer preferences from both the point of sale system and staff move into data to the highest degree the customer as well as any requests customers make for products 7-Eleven doesnt have. This enables individual stores to change stock from slow moving lines. 70% of products are replaced each year. Determining product mix and how much shelf space al located to each product. Rotating stock at least twice each day to suit purchasing trends of customers throughout the day. Monitoring staff performance and rewarding high performers. Quality control data is collected by a team of 200 inspectors regularly visiting the stores. This is entered into and analysed by a computerized decision support system at headquarters. Expanding on its traditional convenience food, beverages and supply type product offerings with, such as ATM, phones and phone tease, internet kiosks and even beer.As outlined by Sparks (2000), th e Japanese model of convenience stores has been introduced to the United States. 7-Elevens core functions are managing the data on what its customers buy and honing its unique merchandising skills. 7-Elevens core business is merchandising the pricing, positioning and promotion of ready-to-eat food, snacks, fuel and sundries (Gottfredson Phillips, 2005). It improved its systems to enable it to control and make the most of critical capabilities such as stock price to key metrics like inventory turns. While sticking to its core competencies and some core products the Japanese model used market information for a localised approach at the store level in product offering. The slow but strategic changes for 7-Eleven US have been concentrated on the following elements Poorly located and performing stores have been closed. The stores have been remodeled, with new objects and layouts. The remodeling has included the institution of point of sale systems (POS). This enables a customer drive n approach where using their feedback for product selection and development. Offering a core range which is supplemented by products selected to meet local needs, stocking proprietary or exclusive products where possible. Non-food products have been introduced including phone cards and phones as well as additional services through ATMs and tracking of a financial services centre. Standardised pricing that is more competitive. Re-positioning of the business to have fresh foods and convenience elements to meet modern consumer demands. Daily supply of many of these products through a reconstructed distribution and production chain. The conspiracy of new products of a high quality and found only in a 7-Eleven, and backed by trademark development and protection and a more focused advertising strategy is summarized in the companys first, best and only slogan. The distribution system itself has been re-engineered and Combined Distribution Centres have been introduced to better manage th e flow of products into the stores. A high level of control of the supply chain has been achieved. A high quality and advanced retail information system has been introduced, which closely resembles the model in Japan. Many of the business processes were operated manually for a long time to understand the critical elements driving the business. Now with the introduction of technology this process can move further ahead and can aid the store employment and management situation by loose up staff time. This extra time will enable gathering market information.Q.7 Does the subprogram of collecting customers information infringe on their seclusion? Why or why not? Is it unethical? Should customers have the in effect(p) to anonymity, or check that information collected on them is accurate? The procedure of collecting information about customers does not infringe on their silence at all. The procedure is very simple and is done by find customer behaviour and preferences in order to se rve them better. It does not relate any sort of interviewing or interference with the customers. It is only an efficient way of running an organisation. As 7-Eleven is well aware of customer preferences and choices it makes it easy for them to make only those products available in ample quantities so as to serve the customers better. It is not at all unethical. Different customers have different choices. As per demography i.e. age, location. Thus 7-eleven keeps a perfect record of demand of products as per their age and location. At different times during a day different products are required by the customers. The information collected is purely from 7-Elevens point of view a way of serving them better. There would be no point of having products that do not match the customers need. So every store must be well aware of the demand of customers. If some customer questions the management as to why a particular product is unendingly available and why some other product is not then in such a situation he can be given the reason of the information collected. Besides there is no reason for the customers to interfere with the 7-Eleven way of managing as it does not in any way infringe on their privacy. Q.8 Surf the Internet to find information about recent IT related initiatives of 7 Eleven, both in Japan and the United States. Relate them to gaining the strategic advantage.In its latest effort, 7-Elevens procurance staff have developed a tool that makes procurement productive and efficient. Its an automated system where procurement professionals can manage hundreds more requests for proposals (RFPs) and contracts per person. An important part of 7-Elevens procurement initiative is to encourage franchisees to use the new streamlined system and, ultimately, buy from recommended suppliers. Although franchisees can purchase from any convenience-product supplier, the new centralised system enables 7-Eleven to amount of money suppliers and items for consolidated nego tiations (7Eleven news room, 2007).With a solid enterprise IT foundation in place, 7-Eleven has begun adding layers of advanced systems and functionalities to its industry-leading business process and technology strategy. Recent initiatives include a contact less payment option at POS to provide more convenience to 7-Elevens customers. Using radio- absolute frequency (RF) technology, these systems enable customers to make quick and secure proceedings by holding close to or tapping a reader with an RF-enabled realisation card or alternative device, such as a key fob. All other aspects of the contact less payment process are handled in the same way as a traditional credit-card or debit-payment transaction (Anonymous, 2006).The contact less payment initiative has gone chain wide to 5,300 stores in the U.S. in 2006 in partnership with Chase with Blink, the MasterCard PayPass, American Express Express Pay and Visa Contactless systems. Authorisation is accomplished in seconds, and no si gnature is required for many purchases under $25, making this a speedy, easy, convenient and secure customer transaction. Contactless payment systems are often a first step by retailers into the emerging world of radio frequency identification (RFID), and this may be the case at 7- Eleven. We anticipate adding RFID technology to other products and services offered at 7-Eleven stores, adds Rick Updyke, 7-Elevens vice president of business development, to provide even convenience for consumers( Updyke R., 2006).Other Initiatives Increasing use of an integrated set of retail IT tools to analyze sales on individual items, sales trends and customer preferences to improve product assortment, eliminate slow-moving product from inventory, and outgrowth same-store sales by developing new products, such as the new fresh-food offerings that attract new customers and increase transaction size. Expanded use of Vcom, a proprietary multi-function, self-service kiosk that offers check-cashing, bil l payment, money order, money transfer, pre-paid credit cards, ATM services and access to residential telephone services (Updyke R., 2006). destructionThrough its long term involvement and study of the market on with its extensive information systems Seven-Eleven Japan has been characterised as a major innovator in convenience store operations. By its continual improvement and sustaining this over a long period of time it has resulted in significant growth. 7-Eleven has used continual improvement in its model of a customer focused information systems approach. 7-Eleven has succeeded in the essential steps for marketing management as outlined by Wen Peng (2002), market segmentation, market segment targeting, and design and implementation of marketing mix. It has used its information systems combining its POS and staff driven customer profiling to capture market trends to base its selection and stocking of products through to aiding its inventory management and Just-in-Time approac h. 7- Elevens distinct competitive advantage can be attributed to the way the information management system links with the corporate strategy and the operational strategies of logistics, merchandising and day to day store operations (http//www.worldscibooks.com/eastasianstudies/4981.html). From this it has gleaned efficiencies that enabled it to befit the number one retailer in Japan at a time of fierce competition and poor economic conditions.