STRATEGY!ANALYSIS,!SUBWAY! - · PDF file3.STRATEGY!...
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STRATEGY ANALYSIS- SUBWAY
The Subway story started when Fred De Luca, its cofounder and his family friend Dr. Peter Buck, worked on a business plan for a submarine sandwich shop. Dr. Buck gave a loan of $1000 for implementation of this plan. The first restaurant was opened in Bridgeport, Connecticut, in 1965. It did well in its first summer with the help of advertising slogans like "put a foot in your mouth.''
At first Fred was skeptical, but after Dr. Buck explained how the sandwich shop could finance Freds future education, he was on board. That night, Fred and Dr. Buck formed a partnership that would lead to the first SUBWAY restaurant.
Emphasizing the foot-long sandwich, and "when you're hungry, make tracks for Subway." Buck suggested opening a second restaurant. "That way people will see expanding and think that we're successful." DeLuca has changed the company's system of franchise development several times over the years and has kept the concept simple and relatively inexpensive for franchise buyers (Walker, 2007). Subway restaurants' is a registered trademark of Doctor's Associates Inc. (DAI).
Doctors Associates Inc owns the operational business concept and trademark of SUBWAY Restaurants. It is the franchisor and seeks to find entrepreneurs, or franchisees to partner with. The franchisee buys the right to operate the SUBWAY franchise according to DAI's contract. DAI is a privately owned company, located in Milford, Connecticut. Here, at corporate headquarters, approximately 600 people work to keep SUBWAY restaurants the number one sandwich franchise in the world (subway, 2006).
2. THE EXTERNAL ENVIRONMENT
According to Ennew and Waite (2009), one of the first stages in a marketing process is to understand the environment in which an organization operates. Marketing forces organizations to look outside and to develop an awareness and understanding of the environment in which they operate. There are several components in the overall marketing
environment such as internal and external environment. Internal environment is the conditions within the organization (Kotler et.al, 2009).
External environment is the conditions outside the organization. Strengths and weaknesses are internal factors specific to the organization and opportunities and threat are factors which are present in the external environment and are independent of the organization. PEST analysis is concerned with political system, economy, social and technology (Bensoussan and Fleisher, 2008).
This external environment is also known as the macro environment that is the social, political, economic, etc. conditions that affect a particular industry or business' (Cambridge Dictionaries Online, 2012). This section will analyze the external business environment of Subway. This will involve the analysis of the political, economic, social and technological environmental forces that could impact Subway. This analysis is called a PEST analysis (Cadle , et al., 2010).
PEST (political, economical, socio-cultural, and technological) analysis (Curtis and Cob, 2010) is concerned with Political and legal monopolies legislation, tax policy, employment law, environmental protection laws, and regulations over international trade.
2.1 Political Environment
The political environment is made up of those institutions which make political decisions and implement them. (Hamilton &Webster, 2012). Health and safety guidelines, labeling of GM foods, animal rights campaigns can affect business of Subway. To ensure that forthcoming legislation does not affect them negatively, they must take action before the legislation comes into effect. According to (Lorette ,2010) adapting the green policy and adopting the maximum utilizing of the go green policy will reduce the wastages around the place and will also help in improving the workplace environments and will also result in gaining the positive responses.
The directive 2008/98/EC on waste (Waste Framework Directive) is a directive implemented by the European Union in 2008, it sets the basic concepts and definitions related to waste management, such as definitions of waste, recycling, recover (European Union, 2008).The proper mode of managing and recycling of wastes in and around the organization will effectively improve the workplace activities and also result in the improvement of business activities because clean workplace will gain the positive exposure of the customers.
Whereby Subway pays utmost care and maintains proper social responsibility by adapting new process for maintaining cleanliness and taking care of the customers satisfaction. Hence certain campaigns may influence the business of the subway, where the partnership with the American Heart Association has duel influenced the CSR of the subway where customers has been influenced and hence initiatives like this will give subway a edge over with other competitors who have not initiated like this ideas (Simms, 2011).
2.2 The Economic Environment.
The economic environment is the economic conditions on a national, international or global level that impact the business. The year 2008 marked the downturn in economic activity which was felt across the world (UK Parliament; 2010) it meant the start of an economic recession which influenced thousands of business all over the world where the business has been influenced directly by the economic environmental impacts, where the political factors along with this may also influence the business of the subway.
The economical factors like inflation rates which also influences the supply and the expansion of the organizational growth activities. The subway can also been influenced by the money supply where inadequate supply of money shall influence the business activities ,proper mode of supply and assessing of the financial activities will immensely influence the business.
The changing economic growth trends will immensely influence the growth of the subway because the emerging growth activities and the improper and sudden trends will influence the business activities because any business is completely dependent upon the customers and the improvement of the economical growth (Entrepreneur, 2013).
Marketing is defined as the term where the products or the services are what it is being sold to the customers (Stone, 2001); hence in every business the economical influences the business. The business chains and the promotions and the supply chain of the business are being influenced by the economical activities, where by these may impact the business of the subway like for example low setup cost, where the heavy economical impact over the environment will lead the subway to setup for the low setting up cost of the organization.
Secondly, the growing marketing and the promotions along with the new and the fast growth of the fast food companies will affect the business of the subway, because several fast food companys may lead the subway to look same and equal, hence new food menus along with opening several chains all over the world will lead the subway to look different and exclusive among customers (Entrepreneur, 2013) .
Where the business cycle implements in all over the world whether its nationally and internationally will also adversely influences the growth strategy of the subway, hence all these being overcome by their new modes of maintaining business strategy.
2.3 The Social Environment
The social environment is the different cultures present in the demographic locations in which a business operates. Attributing products to each of the different cultures within the location it operates will determine a successful business (Kotler et.al, 2009).
Consumers needs and wants are always changing, and in the highly competitive market subway has to find itself in, where they have to maintain and improve continuously and find out what the consumers want and fulfill their needs fast and with complete quality maintenance and should provide it to the customers before their competitors does it. They have to come with new innovative products, another advantage to the subway is the affordable pricing strategy which make them to influence their customers, the Socio-cultural influences like customs and the traditional impacts of certain countries may also influence the subway business (Liutu, 2011).
The population influences, changes-age and geographical distribution, lifestyle changes, educational level, income distribution all these influences the business because the different lifestyle may influence the food menu, because different in lifestyle needs different levels of food and the needs, and certain other unavoidable factors like educational level of the people will influence the mode of ordering of the food.
According to Alone (2011), due to religious prohibition to eat pork in case of Muslims and to eat beef in Hindus in India, no pork or beef products are used in any of the sandwiches. Instead these were substituted with lamb, chicken and turkey. Counter area and preparation areas in India are separated because vegetarians do not like to be served from the same place that non- vegetarian food are prepared.Therefore Social environment plays a very important a