Subway case study | Subway and the challenges of franchising in China | | ADVANTAGES AND BEST ENTRY STRATEGY OF SUBWAY | | |
SUBWAY AND THE CHALLENGES OF FRANCHISHING IN CHINA
Question: - What are the advantages of franchising in China from Jim Bryant’s perspective? From Subways perspective, is franchising the best entry strategy for China and why?
Answer: - “Subway is a very big firm and to spread its business with franchises. To enter in China it was the best way. It is the best way of licensing and entry in a new country. In this company has given a trademark fro their promotion and training.” (International Business Environment and operations 11th Edition, 2009). 1. Entry with franchisee system:- Before
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They have same ads and similar requirement of stuffs. But because of all these things it was able to enlarge their branches very fast in China. It was able to open 140 branches in whole china from 1995 to 2011. In this given figure, we can see that the total restaurants in last 5 years the Subway grow very fast than McDonald’s in china. It starts from 31,000 which was less than McDonald’s and it almost hit the 39,000 at the fifth year which is almost the gap of more than 5000. So, now we can say that the subway is very fast growing restaurant in China then others.
Source:- Who is McDonald’s biggest threat? Cahill B. (2013)
The best way for the Subway to enter in China market was franchising. Subway can also use FDI. It is the best way to control and have a link with other headquarters. It is the best way to manage the business, but it takes so much time to do research and make the decision and all. It also needs so much money to provide the facilities. So, in the comparing with the other way to enter in other countries the best way to is the franchise and it is the best way for a fast food industry to enter in a new market and enlarge their branches very fast.
Reference:-
Deniels J (2009) “International Business Environment and Operations” 11th Edition, China machine Press, 2009p. 430 published on 25 Nov., 2010.
Cavasgil, S., Knight, G. And Riesen berger, J.R.(2012), International Business: the new Realities. 2nd ed. New Jersey: perarson, PP. 482 –
Hill, C.W.L. & Hult, G.T.M. (2016). Global Business Today. (9th ed.). New York, NY: McGraw-Hill Education.
(2012). Chapter 7: International Strategy. In G. G. Dess, G. T. Lumpkin, A. B. Eisner, & G. McNamara, Strategic Management (pp. 257, 259-260). New York: McGraw-Hill/Irwin.
In this essay, I am going to deliver a wider understanding of globalisation through the study of a fast food restaurant, subway to be precise. I am focusing on a branch of the restaurant in Bradford, paying attention to the sorts of customers who patronise it as well as the staff who
The first KFC was opened in Tiananmen Square, China 1987; it struggled as western food was unknown to the east. This was still a very conservative nation, not prepared for the “Fast Food” takeover. The restaurant did pretty well, but grew slowly. The Harvard business review, stated that “in 1992 the Chinese government granted foreign companies greater access to markets, KFC China’s managers gradually developed the blueprint that would transform the chain.” (Yums' China, 2017) Although they have done well for themselves they struggled, as growth was steady but slow and their customer base was shrinking. “In November 2016 Yum China Holdings, Inc. became a licensee of Yum brands in Mainland China; they have exclusive rights to KFC.” (Yums' China, 2017) Yum controls approximately 7,300 restaurants and more than 400,000 employees in more than 1, 100 cities. YUMS generated over $8bln in sales in 2015.
McDonalds has always been able to face the challenges that arise when trying to expand to foreign cultures. They have successfully expanded to over a hundred countries, including countries in East Asia. In the book “Golden Arches East” by James L. Watson, he studies different cities and how McDonalds has played a role in their cultures. Three places that he mentioned in his writing were Beijing, Seoul and Japan. They all share similarities in the way the culture was impacted positively and negatively, in society and politically. They have their differences in the way things were dealt with and how the public viewed the American company coming to their countries. In this paper, I will be talking about how McDonalds is involved in the
Despite Yum! brands huge success in china, there have been a lot of risks and threats in entering the local market. In respect to that its critical to mention the oppositionof the local population in perceiving fast food industry and especially western culture entering their own market.
We then have the owners of each franchisee, in a partner ship with the main owner of subway, they are seen to be the ‘principals’ taking risks, they play the main part of setting up the franchise and expect their business to grow earning high profit. Included in this are the suppliers, subways need fresh ingredients, food and drinks supplied to them on a regular basis, suppliers want them to keep purchasing from them and therefore would like the business to work out. The government also under come being a stakeholder as all taxes have to be paid even thought they would like the business to work out. Local communities are included within the stakeholder’s category too, the actions of subway have and effect on the community too, for example, if the franchises have an un-cleared, low in hygiene environment then it will attract rats which will spread.
In the business industry, if businesses want to export their goods and services to other countries, they must become familiar with and adopt international and global strategies. Consequently, there are three types of international and global business strategies. The first type is international, which entails conducting a significant amount of activities outside the home country, yet its focus remains on the home market (Fung, 2014). The second type is multinational, which consists of operating in multiple countries, yet the headquarters is in its home country, not to mention that the competitive advantage will vary by country (Fung, 2014). The third and final type is global, which is when the organization treats the whole world as one market and one source of supply, not to mention, that its competitive advantage is contingent of common brands, standardized products, and global scale production (Fung,
McDonald’s as we know is the biggest multinational-corporation in fast-food industry. McDonald’s is a symbol of American power and hegemony just like Coca Cola and Nike which its operations is all around the world. And how McDonald’s could successfully entering global markets ? the key components is its standardization in all McDonald’s outlets in the world known as QSC&V (Quality, Service, Cleanliness, Value). You can see and feel the same burger quality, same fast service, cleanliness of restroom and the same price in all McDonald’s outlets in every country. McDonald’s also made a strong relationship with supplier because this is another key success, every supplier which supply
However, that being said some large companies have tried to adapt for the Chinese markets, and failed despite their efforts. One large well known company that can be an example of this is McDonalds. Although the very popular and globally recognised company has succeeded almost everywhere else, doesn’t guaranty its success everywhere. By adapting their menus to what they thought was the local cuisine, the managers of the franchise thought they were on to a winner, but as time went on it became obvious that simply changing their menus wasn’t
In United Kingdom, they forecast that Subway will have more stores than McDonald’s by 2008 (Kemp 2007). Much of Subway’s success can be attributed to its strong health message and with many cultures in the middle of wellness boom (Bounds, 2006). People now want fast food without the fat.
This case study determines the critical success factors used by Subway Restaurants Corporation to expand nationally, which the corporation wants to use also to expand internationally. In addition, this paper describes the competition and the prospect success in Asia-Pacific and Latin America. In general, the fast food industry is discovered with respect to the history and future plans of fast food chain Subway international for expanding and accretion in Asia-Pacific and Latin America, containing the four factors that Subway should use to compete and success in those markets. Each proposed country market has unique cultural and religious requirements should be realized by Subway, as well as the consumption patterns, market trends, and the franchise values which determine from the local traditional fast food compared to the viewpoint of Subway’s healthy alternatives and low expansion costs.
This report analyses the expansion of Michel’s Patisserie into the Chinese market through the creation of joint venture franchise agreements. Michel’s will be evaluated based on the motivations for expanding to China, process of internationalisation, choice of entry mode, and standardisation versus adaptation decisions. This analysis will be undertaken so that recommendations can be made to determine the most effective means of securing the future success of Michel’s in Shanghai. It will be demonstrated that while the motivations for expansion were fundamentally sound
First is “Healthy” with the combination of many kind of vegetable with meat and their many types of their own special sauces, their sandwich completely provides the essential nutrients. This will lead the consumer can eat fast food which provide them quick service without destroying their own health. Subway use this key strength to influence the consumers, especially group of people who highly concern about their health. In addition, Subway has a various menu which lead them to reach broadly target group.
INTERNATIONAL MANAGEMENT: CULTURE, STRATEGY, AND BEHAVIOR, EIGHTH EDITION Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020. Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Previous editions © 2009, 2006, and 2003. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited