KELO26 SEVEN-ELEVEN JAPAN CO 1. Boosted distribution efficiency 2. Improved brand awareness 3. Increased system efficiency 4. Enhanced efficiency of franchise support services 5. Improved advertising effectiveness 6. Prevented competitors entrance into the dominant area Adhering to its dominant strategy, Seven-Eleven Japan opened the majority of its new stores in areas with existing clusters of stores. For example, the Aichi prefecture, where Seven-Eleven began opening stores in 2002, saw a large increase in 2004 with 108 new store openings. This represented over 15 percent of the new Seven-Eleven stores opened in Japan that year geographically, Seven-Eleven has a limited presence in Japan. In 2004, the company had es in about 70 percent(32 out of 47)of the prefectures within Japan. However, within fectures where they were present, stores tended to be dense. As the 2004 annual report stated Filling in the entire map of Japan is not our priority. Instead, we look for demand where Seven- Eleven stores already exist, based on our fundamental area-dominance strategy of concentrating stores in specific areas With Seven-Eleven franchises being highly sought after, less than 1 out of 100 applicants was awarded a franchise(a testament to store profitability). The franchise owner was required to put a significant amount of money up front. Half of this amount was used to prepare the store and train the owner. The rest was used to purchase the initial stock for the store. In 1994, 45 percent of profits at a store went to Seven-Eleven Japan, and the rest went to the store owner. The responsibilities of the two parties were as follows SEVEN-ELEVEN JAPAN RESPONSIBILITIES Develop supply and merchandise Provide the ordering s Pay for the system operation Supply accounting services Provide advertising Install and remodel facilities Pay 80 percent of utility costs FRANCHISE OWNER RESPONSIBILITIES Operate and manage store Hire and pay staff KELLOGG SCHOOL OF MANAGEMENTKEL026 SEVEN-ELEVEN JAPAN CO. 1. Boosted distribution efficiency 2. Improved brand awareness 3. Increased system efficiency 4. Enhanced efficiency of franchise support services 5. Improved advertising effectiveness 6. Prevented competitors’ entrance into the dominant area Adhering to its dominant strategy, Seven-Eleven Japan opened the majority of its new stores in areas with existing clusters of stores. For example, the Aichi prefecture, where Seven-Eleven began opening stores in 2002, saw a large increase in 2004 with 108 new store openings. This represented over 15 percent of the new Seven-Eleven stores opened in Japan that year. Geographically, Seven-Eleven has a limited presence in Japan. In 2004, the company had stores in about 70 percent (32 out of 47) of the prefectures within Japan. However, within prefectures where they were present, stores tended to be dense. As the 2004 annual report stated, “Filling in the entire map of Japan is not our priority. Instead, we look for demand where Seven￾Eleven stores already exist, based on our fundamental area-dominance strategy of concentrating stores in specific areas.” With Seven-Eleven franchises being highly sought after, less than 1 out of 100 applicants was awarded a franchise (a testament to store profitability). The franchise owner was required to put a significant amount of money up front. Half of this amount was used to prepare the store and train the owner. The rest was used to purchase the initial stock for the store. In 1994, 45 percent of total gross profits at a store went to Seven-Eleven Japan, and the rest went to the store owner. The responsibilities of the two parties were as follows: SEVEN-ELEVEN JAPAN RESPONSIBILITIES • Develop supply and merchandise • Provide the ordering system • Pay for the system operation • Supply accounting services • Provide advertising • Install and remodel facilities • Pay 80 percent of utility costs FRANCHISE OWNER RESPONSIBILITIES • Operate and manage store • Hire and pay staff KELLOGG SCHOOL OF MANAGEMENT 3