1. How would you characterize the business strategy at 7-Eleven? What level of responsiveness are they aiming to achieve? Like all companies that strive to make best use of its structural elements and infrastructural elements through its effective strategy, 7-Eleven has put in place a business strategy that is fully cross functional. The strategy incorporates the strengths and potential of all sectors at the functional level and is aligned with the mission statement of the business. The operations and supply chain activities of 7-Eleven are aligned in the ‘Internally Supportive’ stage with the overall business strategy of providing convenience to its customers. This growth has been very carefully planned exploiting the core strengths that Seven-Eleven Japan has developed in the areas of Information systems and Distribution systems and a variety of store services. To begin with, 7-Eleven made particular a very efficient franchise system wherein only 1 out of 100 applicants received the license and had to adhere to very strict requirements such as operation and management of the store, customer service and appearance in order to keep with the overall image and reputation of 7-Eleven convenience stores. Additionally, according to 7-Eleven – ‘filling in the entire map of Japan is not our priority, instead we look for demand where 7-Eleven stores already exist based on our fundamental area dominance strategy of concentrating stores in a specific area.’ 1This strategy works wonders for the 7-Eleven stores as the following advantages follow such practice: 1. Boosts distribution efficiency. 2. Improves brand awareness. 3. Increases system efficiency. 4. Enhances the efficiency of franchise support services. 5. Improves advertising effectiveness. 6. Prevents competitor’s entrance into the dominant area.
By resorting to regional merchandising as part of their strategy, the 7-Eleven’s in every area have helped boost their sales and customer satisfaction by many counts. This is achieved by their efficient Information System that is in place. The POS system, SKU’s, Graphic order terminals and the ISDN network ensure that both the supplier and the Distribution centre better understand the needs of the store and the consumer buying patterns at different points of time. This also helped get rid of the ‘non selling products’ from the store shelves and introduced the skill of ‘item by item management.’ 2The practise of replenishment of goods accurately, ensured that the customers always find what they are looking for and there is no dearth of availability. This goes a long way in terms of aligning with the business strategy of convenience to the consumers by efficiently predicting demand. In fact, they were one of the first to introduce the POS system in 1982. On that same note, the flexibility provided to the customers through the Utility Bill Payment service, i.e., electricity, gas, insurance premiums were made available in convenient times and locations as well as the option of instalment payments on behalf of credit companies, makes life easier for the customer who starts developing loyalty towards this chain of convenience stores because it makes the shopping experience easier. 7-Eleven has built its competitive advantage also through its efficient ‘combined distribution’ system which is run by Transfleet Ltd. The various food types are segregated according to the temperature required for freshness and depending on the information received from stores by the suppliers; adequate amounts of products are brought to the Distribution Centres (DC’s) from where delivery trucks maintaining different temperatures transport different food types to stores. This system has reduced the number of trucks, delivery costs and increased flexibility in distribution and saves time. This along with the IS helps in micro-matching of demand and supply.
I believe that 7-Eleven is on the way to achieving ‘Externally Supportive’ alignment with business...
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