Contemporary Development in Business and Management - the United Kingdom - Case Study Example

Contemporary Development in Business and Management Executive Summary Subway is world’s third popular fast food retail outlets. The study focuses on several external factors, which are influencing the company’s growth in the UK. In addition, an industry analysis has been performed based on which the UK market structure has been identified. Based on the external factors and industry analysis, the position of the company has been identified in terms of competition, innovation and customers’ needs. Table of Contents Executive Summary 2 2 Table of Contents 3 1.0 Introduction 4 2.0 Task 1- PESTLE Analysis of United Kingdom 5 2.1 Political Factor 5 2.2 Economic Factor 6 2.3 Social Factor 7 2.4 Technological Factors 8 2.5 Environmental Factor 8 2.6 Legal Factor 9 3.0 Task-2 Porters Five Forces Model 10 3.1 Analysis 10 3.1 Critical Evaluation 10 3.3 Areas of Improvement 14 4.0 Conclusion 15 References 16 16 Appendices 19 1.0 Introduction In the modern scenario, gradual development in the business sector has been noticed due to factors that include technological advancement and globalisation. In order to describe the modern business environment and its corporate culture, the rapid improvement in fast paced global business is mandatory. Several companies are identified to be adopting different strategic options for mitigating challenges in order to develop their businesses in the contemporary business scenario by providing support to the corporate function level. Improvement in businesses or business development is a continuous process, as businesses are required to adopt changes in accordance with the changing market scenario for better business sustainability (Timms, 2011). Currently, modern companies are experiencing evolution in the business development. The main advantage of evaluation in business development is the growth of jobs opportunities in a society. Business development has been identified to be an aspect for the growth of the business sector and a society. In addition, business development is important for increased expansion of business activities and investment (Christensen, 2007). Correspondingly, the objective of the assignment is to describe business development and its impact on the business operations of Subway. The study also considers external factors of business environment and its effect on Subway. In addition, the culture of the international business environment with its effect of Subway has been discussed. 2.0 Task 1- PESTLE Analysis of United Kingdom In the modern scenario, companies are needed to develop their business process in an appropriate manner. In order to develop a successful business operation, companies need to consider few factors before making further progress in a business. To establish a successful business, a company needs to consider the external factors. The analysis of the external environmental factors provides important information in relation to the opportunities and threats that prevail in an economy The UK is a well-developed country including a huge scope of business prospect. Subway is one of the most popular fast food retail outlet chain restaurants in the UK (Ibrahim, 2012; Liutu, 2010). The PESTLE analysis has been discussed hereunder. 2.1 Political Factor To establish a business in a country, a positive influence from the government policies is important for a company. Support from the political entity will be very much helpful for a company. The political factor mainly includes government policies, rules and regulations. In this regard, it can be expected that the government of the UK has formulated as well as implemented supporting policies based on which companies can conduct businesses with better growth prospects. In order to establish its business in the UK, Subway has been identified to be following all the governmental rules and regulations for effective expansion of its business. The UK governmental policies for the fast food industry are also recognised to be the strictest. It has been also observed that the UK has adopted few strict regulations and rules for the fast food sellers and fast food selling industry for health related aspect. In this regard, Subway has faced several problems at the time of establishing the business. Subway is an American fast food chain restaurant, which is accustomed with different types of rules and regulations. The political background of the UK has highly influenced the market decisions of the fast food retail industry (Antonsson & et. al., 2011). 2.2 Economic Factor The economic factor is one of the most important factors for all the business industry both nationally and globally. Economic policies re devised to have an influence on the purchasing power of the customers. The cost of capital of a firm is also influenced by the economic factors of a country. In this context, the UK has been identified to be one of the strong countries in terms of economic perspectives. The economic growth of the UK is good and sound. In term of establishing a new business, the UK is preferably suitable place among other European countries. Entry in the UK market for establishing a new business is easy and convenient, as the economy of the UK is very favourable for setting up a business. The franchising facility is a good factor for the company. The economic policies of the UK are providing the fast food sellers franchisers with added beneficial factors for building up a good brand image. At time of entering in the UK market, Subway has earned many facilities from the supportive UK policies. Subway has been able to obtain support from major suppliers of the UK. The suppliers are identified to be supportive for the company in procuring required materials. In case of fast food retail outlet, the support from the suppliers is an important factor for the expansion of the business. The market condition is important for the success of every business. The growing market is one of the most important factors for the fast food retail industry. In other word, it can be stated that the growing or raising market is the key influencer for the successful business of Subway. It can be expected that the during the recession time the business of fast food retail outlet can be a good options for earning more profit. As per the market condition of the UK, it has been stated that Subway did better business during the recession in the UK as compared to other fast food restaurants. During the recessions the price factor is an important consideration for every people so, people are having the trend of cutting down numerous expenses, which are considered to be non-refundable in nature (Antonsson & et. al., 2011). 2.3 Social Factor The society factors are identified to be playing an important role for every business industry. It has been observed that a business should follow the societal trend of a country where it intended to establish its business. In this regard, for establishing the business in the UK, Subway has to consider social factors very carefully as the people of the UK follow their culture very strictly. The company must considered family culture, religion and educational background as parameter or important factor of the UK society. The population or the age background is important for a fast food retail outlet. The reasons behind selecting the age group as an utmost consideration, as the young generation are the main consumers of fast food products. It has observed that the fast food retail industry has been focused towards the social requirements of the country. It has been also observed that the fast food retail outlets are very popular for their fast and convenient services. In this context, the fast food retail outlets are important segment of the fast food industry, which are providing fast food products in accordance with the demand of the customers and their lifestyle. As the life style of the people of the UK are quite busy, so the adoption of the trend of fast food retail outlets is very useful for meeting with the fast-paced lifestyle. Although the people of UK are identified to be health conscious and accordingly, developing the habit of avoiding calorie food products and started eating healthy, but they prefer fast food owing to factors that include convenience and price (Antonsson & et. al., 2011). 2.4 Technological Factors In the current society, technology is identified as the key influencer for every business. It has been identified that the UK government is supportive towards the adoption of advanced technology. Advanced technologies are also identified to be considered by marketers as important consideration in terms of conducting operations in a time effective way. For the on-going success of the fast food retail industry, technology plays a great role. In this respect, Subway has adopted modernised technology with the aim of ensuring that business operations are performed with better competitiveness. Similar to other renowned fast food retailer such as McDonald, Subway also intended to install Electronic Funds Transfer at Point of Sale (EFTPOS). With the assistance of this process, Subway has been facilitated with the opportunity of accepting payment from the customers through debit and credit card at the time of purchasing the products. The online marketing or online purchasing is now days adopted as one of the most common processes of purchasing a product (Antonsson & et. al., 2011). 2.5 Environmental Factor The environmental factor is another vital factor, which is considered by all businesses. It has been recognised that the environmental policies are implemented for ecological benefits. In order to control the illicit animal destruction, the animal rights has been adopted for protecting the animals and their irregular murder. In order to measures the rate of animal slaughter, proper animal rights has been taken into the consideration. In this regard, the UK is one of the strictest regulated countries, which mainly pays focus on animal rights in the society. In the context of adopting proper measures into consideration, several animals rights campaigns have been organised, which are related to mistreatment of the animals in the slaughtering houses. It has ben also observed that the UK fast food retails houses are mainly depending on natural resources. It has been identified Subway is not using meat as an only ingredient for preparing the products. Subway has been recognised to use several ingredients such as meat, chicken, seafood, fish, egg and vegetables in its products as ingredients. It has been also observed that an environmental friendly company is able to create a good image of its company among the customers. In this regard, Subway has been adopting environment friendly or eco-friendly packaging in its operational propose as per the customers’ demand. It has been also observed that the people of the UK are more cautious regarding eco-friendly products and packaging. The use of the polystyrene boxes is one of the most eco-friendly packaging used by the company for maintaining eco-friendly considerations (Antonsson & et. al., 2011). . 2.6 Legal Factor The legal factor provides the policies and conditions based on which business operations are needed to be conducted for better legitimacy. It has been also observed that the legal factor of a country is mainly imposed for the safety of customers of the UK. In the UK, the fast food standard agency is the main authorised entity, which primarily responsible for all health related issues of the public of the UK. The UK government has made few rules and regulations in the fast food industry and accordingly, every company belonging to the fast food industry of the UK have to follow the regulation mentioned by Food Standard Agency. This regulation is mainly imposed as per the interest of public health. In this context, Subway is identified to conduct operation in adherence with the legal norms for better legitimacy of business operations (Antonsson & et. al., 2011). 3.0 Task-2 Porters Five Forces Model 3.1 Analysis Industry analysis is an important management tool for ascertaining market conditions. Industry analysis is helpful for a company to achieve success. In this regard, Subway with the assistance of this management tool will be able to have a better understanding about market structure of the respective industry. Based on industry analysis, it has determined that every industry is influence by five forces that include threat of entry, supplier’s power, threats of substitutes, rivalry and buyers power. Porter’s five forces model helps Subway to understand the strength of the industry and the future position of the company (City University of Hong Kong, 2010). 3.1 Critical Evaluation Competitors or Rival In the present scenario, market competition has raised to a large extent due to increased number of competitors. It has been also observed that Subway having few competitors in the market will be able to conduct operations in a competitive manner and vice versa. With regard to intense competition in the fast food retail industry, McDonalds and KFC are identified as prime competitors in this industry. As per the market evaluation, Burger King is also one of the important rivals for the company in the fast food industry. It has been also observed that the fast food industry is having high competition in the UK, as the lifestyles of UK people are fast and comparatively busy. In this context, McDonalds, Burger King, and KFC are the major competitors of Subway. In addition, there is a small retail outlet named fish and chips which is also a strong competitor for Subway. The impact of the political factor resulted to a huge impact or low impact on the operational policies of a business. The political factors mainly includes the areas of taxation polices, employment or labour law and consumer protection act of a company. In the UK’s fast food industry, the Genetically Modified (GM) labelling is becoming more important for the fast food industry. The government of the UK has made the GM labelling policy mandatory from the year 2004. This GM labelling policy is mainly introduced for customers. This GM labelling rules imply that if any food products or ingredients are genetically modified, then the customers can have the rights to take purchasing decision. Online order is an important innovation, which has been adopted by Subway for the benefits of the customers. It has been observed that the invention in technology or adoption of the online order trend has assisted Subway to provide products at the place of need by customers for their convenience. The computerised process of billing and taking orders from customers have also aided in making the transactional or purchase process very easy. The computerised process reduces time-consuming activity and establishes a fast moving service. In order to achieve the success in the fast food retail industry, environmental factor is one of the most considerable factors for a business. It has been observed that majority of restaurants are the main producers of fast food, which is mainly prepared with non-vegetarian and vegetarian ingredients. Thus, fast food retailers with the aim of performing operations effectively are required to have a blend of ingredients. In this regard, Subway is identified to face competition to a certain extent, but the company in adherence with quality standards and innovative products and/or services is able to conduct operations effectively (Subway, 2013; City University of Hong Kong, 2010; Luxinnovation G.I.E, 2008). Substitutes In the fast food industry, several substitutes are considered to be a major threat for the company. Subway is also having several substitutes of the products. Frozen foods are also refers to be one of the most important substitutes in terms of cost effectiveness. The frozen foods and other semi-cooked ingredients, which are cooked in home is also considered to be one of the most popular substitutes of the Subway’s products. The substitutes are cheaper than the fast food products, but the fast food industry does not considered as a threat for the company. Big five star restaurants are also regarded as substitutes of the company. The five star restaurants are the main market players in the UK, providing fast food products. Many people in the UK still prefer big luxurious hotels or restaurant as their food destination rather than any fast food retail outlets. The fast food industry in the UK has been identified to be based on different resources or ingredients. The prices of resources are raising and it has been also expected that the price of fast food is highly depended on the price of resources. It has been also observed that Subway does not deepen only on animals products. In this regard, Subway needs to establish a very good and proper strategy to eliminate several threats for substitutes (Doctors Associates Inc., 2014; Subway, 2013; City University of Hong Kong, 2010). Threat of New Entrants In the contemporary business culture, Subway has been facing few obstacles in its business process. These obstacles are becoming the main pitfalls for the Subway’s business process. In order to establish a popular business in the respective industry, it is mandatory for every company to control the macro-environmental factors. Technological advancement in a business is determined to be an important consideration for ascertaining that business operations are conducted in an effective manner and with better innovativeness. Thus, advancement of technology in business has been recognised to improve the operational procedures to a large extent. Fast food retail outlet is having certain barrier in the entry of a new entity in the market. The main intention of the UK government for imposing legal constitution in the fast food industry is related to the health and safety guidelines of foods. Currently, the UK has few strong and strict regulations over the taxation for the products. It has been also observed that by increased norms and regulations, the fast food industry is extremely affected from the imposition of the Goods and Service Tax. In this context, the fast food industry is now focusing on providing fast food services rather that providing products. The legal imposition in the fast food industry has obtained proper attention and great impotence. In order to establish a fast food retail outlet in the UK, every company faces few rules and regulations in the industry. These types of rules and regulations are also categorised as important limitations for an industry to enter and conduct business operations effectively. In terms of establishing a fast food chain retail outlet in the UK, the cost of setting a business is comparatively lower than other business segment. It has observed that setting up a fast food outlet in the UK will be positive in terms of establishment, as it has lower cost. However, in the UK, the government has devised different environmental measures with the assistance of which businesses are required to conduct operations for minimising negative impacts. In this regard, the government has implemented ‘Companies Act 2006 (Strategic Report and Directors’ Report) Regulation 2013’ among others for reducing emissions of greenhouse gas. In this regard, the threat of new entrants is recognised to be on a certain extent (Crown, 2014; City University of Hong Kong, 2010). Suppliers Power The bargaining power of the suppliers in the UK is comparatively stronger in case of fast food industry. In the UK, two major suppliers of the fast food industry one is 3663 and another is Brakes. It has been also observed that the suppliers are earning more profits from other food services by reducing cost of production. In the fast food industry, there are a minimum number of suppliers in the UK. In this respect, the bargaining power of suppliers for Subway is identified to be minimal (Subway, 2013; City University of Hong Kong, 2010). Customers Bargain Power In order to establish a business in a separates country, the demographic changes should be considered as a vital factor. In case of establishing a retail food outlet, the demographic changes are the main factor for ensuring the products and/or services are offered in accordance with their needs. It has been observed that in the fast food industry the buyers are having minimum bargaining power. In this regard, the industry is having minimum number of customers. As the customers are enjoying fewer benefits in terms of bargaining, the customers are identified to have minimum influence on Subway. Subway with the provision of quality and innovative products is also regarded as an important factor accountable for building loyalty amid customer (Subway, 2013; City University of Hong Kong, 2010). 3.3 Areas of Improvement Based on the industry analysis, Subway is identified to achieve success in its operational or working process. The company has achieved success in its tenures, but it has few limitations or areas of improvement. The architecture of the stores is old fashioned. In this regard, the other stores with beautiful decoration are able to have a better competitive position. This aspect of Subway is needed to be improved. There are several franchisees, which are still unhappy and still unsatisfied with the main company. Subway does not have home delivery services in its operational system. In this context, Subway needs to introduce free home delivery services in its services by considering the demand of the customers (Subway, 2013). 4.0 Conclusion From the above analysis in terms of external factors and industry analysis, it can be comprehended that the fast food segment in the UK has been developing in a continuous manner. Based on the analysis of the external factors, it has been recognised that the UK market segments are appropriate for the growth and development of fast food industry. In this regard, the appropriate conditions of the external factors have been identified to be appropriate for Subway to conduct operations with better effectiveness and sustainability. In addition, based on the industry analysis, it has been identified that fast food industry is having adequate opportunities to conduct operations successfully with appropriate market conditions. Subsequently, it has been recognised that Subway with the provision of quality and unique products is able to perform with better effectiveness. References Antonsson, H. & et. al., 2011. Innovation within Fast Food Restaurants. The Role of the Local Restaurant Management, pp. 1- 77. Arifsari.Net, No Date. Sales Strategies. Chapter, pp. 46-71. A.T. Kearney, No Date. Five Force Shaping the Banking Industry. Preparing for Economic Recovery, pp. 1-20. City University of Hong Kong, 2010. Expansion of Subway in China. Research Report, pp. 1-21. Christensen, J. W., 2007. Business Development Management. Best Practices in Managing and Executing Business Development, pp. 1-72. Crown, 2014. Measuring and reporting environmental impacts: guidance for businesses. Guidance. [Online] Available at: https://www.gov.uk/measuring-and-reporting-environmental-impacts-guidance-for-businesses [Accessed December 15, 2014]. D & M Consultancy Services, 2013. Strategic Management Analysis: Starbucks. Analysis, 1-18. Doctors Associates Inc., 2014. The history of SUBWAY restaurants. About Us. [Online] Available at: http://www.subway.co.in/page_about_us.html [Accessed December 15, 2014]. Fong, V. I., 2012. Competitiveness of Subway Restaurants Franchising In Macau. University of Macau, pp. 1-75. Hamilton, L. & Webster, P., 2012. The International Business Environment. Oxford University Press. Ibrahim, E., 2012. Fast-Food Industry. International Marketing, 1-31. International Markets Bureau, 2011. The United Kingdom A Diverse Food Service Sector. Market Analysis Report, pp. 1-21. Liutu, T., 2010. Subway Market Research. Bachelor’s Thesis, pp. 1-83. Luxinnovation G.I.E, 2008. Porter’s 5 Forces Analysis. Enterprise. [Online] Available at: http://www.innovation.public.lu/en/ir-entreprise/techniques-gestion-innovation/outils-gestion-strategique/080905-5-forces-Porter-eng-2.pdf [Accessed December 15, 2014]. Rudd Center, 2013. Overview of Fast Food Market. Fast Food Facts, pp. 1-59. Subway, 2013. Subway Restaurant Chain Reaches 40,000th Restaurant Milestone Largest Restaurant Chain in the World Continues Global Growth. Release, pp. 1-2. Subway, 2013. Nutritional Information. Assets, pp. 1-20. Transport for London, 2012. Tfl Rail and Underground Annual Benchmarking Report. Report, pp. 1-159. Timms, J., 2011. Introduction to Business and Management. Undergraduate study in Economics, Management, Finance and the Social Sciences, pp. 1-239. Weatherston, J. & et. al., 2011. The International Business Environment. : Challenges and Changes. Financial Times Prentice Hall. Appendices Company Profile Subway is a renowned American based fast food industry. It has been also observed that Subway is main producers of Submarine Sandwich. It was founded in the year 1965 by Fred DeLuca and Peter Buck. The headquarter of the company is located in Mildford, USA. It is an international chain restaurant, which already established its business throughout the worlds (Subway, 2013). 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