Global Expansion Strategy of Buffalo Wild Wings - Case Study Example

Content Topic Page number Overview of the organization 2 Process for the selection of the chosen market: 3 Analysis of the market in China for international expansion 4 Background of the chosen market: 7 Competitor analysis of the chosen market 7 Strategic options available to the organization for the international market: 10 Conclusion 12 Bibliography 13 Global marketing Strategy The paper studies the global expansion strategy of Buffalo Wild Wings in the probable market of India, Japan and China. Various international models for expansions have been considered and from the analysis of the various factors relating to expansion in the international market, the best market for expansion of the organization is chosen. Overview of the organization Over the years Buffalo Wild Wings have emerged as the one of the casual dining restaurant throughout United States of America. It was founded in the year 1981 in the city of New York (Buffalo Wild Wings, Inc, n. d). Within 2009, the restaurant spread across 652 locations. The organization recently changed the headquarter form Cincinnati to Minneapolis (Buffalo Wild Wings, n. d). The most famous products of the organization are Buffalo wings and various sauces. The organization is popular all over the world as BW3 (Company history, n. d). Over the years, the organization have increased the variety of products with the introduction of more than dozen unique dipping sauces which are served with the special Buffalo style chicken wings. Besides specializing on the Buffalo wings, the restaurant chains have included various appetizers, burgers salads, desserts and refreshment in their menu (menus, n. d). More than 250 units of the restaurant are directly under the operation of the organization and the rest are operated by the franchisees (Franchise info, n. d). Reason for the primary choice of the markets of India , Japan and China could be attributed to the fact that the markets are hugely diversified and the preference of the customers for the fast foods in this part of the world are always at an increasing rate. Another factor which has guided behind the selection of the organization is the fact that the economies in the market of three countries are much more stable among the Asian countries and the organization is expected to deliver its best in the region. Process for the selection of the chosen market: The process of screening of the international market is undertaken by the analysis of the internal and external environment of the potential markets and finally coming to a conclusion regarding the choice of the country. Below is the diagrammatic representation of the screening process Internal environment Size of the market Amount of resource Degree of knowledge External environment Competitive environment Structure of industry Consideration of social, cultural and economic factors. Analysis of the market in China for international expansion Market Size: China is the most populous country in the world with a present population of nearly 1.341 billion. The vast population of china attracts business from all industries to invest in Chinese market. Market growth: The substantial growth in the market makes China as the second largest economy of the world after United States (CSR report for congress, 2007). Risk of investment: Initial research regarding the economic conditions interprets the market in china is stable and is capable of facing economic downturns. So any change in the global market scenario will not cause any huge loss for the marketers in China. Internal factors: In China the overall condition of the fast food industry is also very stable and the market keeps going in a rapid rate. China also the presence of various multinational fast food organizations and their figures reflect the fact that adoption to correct business strategies can yield favorable results for them (Fast food battle heats up in China, n. d). Market in Japan: Market size: The fast food market in Japan has been one of the most competitive markets in Japan’s consumer markets. Market growth: Recent figures suggest that the sales in the market have substantial growth in the year 2010. The overall visits of the customers per shops have also increased during the period. Risk of investment: However the significant part regarding the fast food market is the fact that the market has gone through various ups and downs with the depressed income of the middle class society. Another factor which needs to be considered in the market analysis is the fact that few of the organizations from Americans fast food chain industry like Wendy’s and Burger King has faced several period of crisis and has felt the competitive pressure in their operation (Fast Food Sales, n. d). Internal factor: The overall spending habits of the people have declined considerably due to the fluctuations in the economy and they are willing to save more on their consumptions which is a negative sign for the fast food chains. Market in India: Market size: The fast food industry in India has experienced the largest boom in the market over the years. The difference in taste and preference of the customers throughout the country has benefited the organizations that have catered the needs of the customers in a better fashion. Market growth: Other than the fast food market the overall economic condition of India also has been stable over couple of years as the GDP accounts to figure of 8.5% as of 2011 -2012 and the currency exchange rate to near about Rs 50 per American dollar (India’s GDP, n. d). Risk of investment: The market in India poses lesser risk for the investors as the government of the country has incorporated flexible policies for the foreign investors. Besides, it has been found that the majority of the consumers in the country have a preference towards the western menus and the fast food chains are found to apply the formula of a mix of western and local menus to attract the customers. Moreover the country has been greatly influenced by the western cultures (Indian Food industries. net, n. d). Internal factors: The market analysis reveals that the income levels of the citizens are on a rise and they are willing to spend more on foods and leisure activities which poses a good opportunity for the fast food chains Comparative analysis: A comparative analysis has been carried out to rank the market based on the consideration of the factors discussed above: List of factors China India Japan Market size 9 8 7 Market Growth 7 8 5 Risk of investment 8 8 4 Internal factors 7 9 9 Total score 31 33 25 (The scoring have been based on the rating of 1-10 where 1 signified extremely unattractive and 10 extremely attractive) The overall rating of the factors considered in the country analysis depicts the fact that the market of India appears to be the most suitable based on the overall score comparison between the three countries. Background of the chosen market: The market of India has been chosen for the expansion of Buffalo Wild Wings. The market of India appears to be profitable considering the factors mentioned in the above section. However it is to be accepted that the market has the presence of various competitors and the organization needs to adopt flexible strategies for expansion. The market in India also fluctuates considerably considering the rise and fall of the economy and the varied taste and preference of the customers. However an opportunity remains for buffalo Wild Wings considering the growing preference of Indians towards the western culture. Competitive analysis of the market For the selection of the market, India seems to be a good option for the setting up of the unit based on the study of demographics undertake. However to confer the issue a SWOT analysis of the competitors in the fast food chain has been carried out to analyze the market. The SWOT analysis will help ion the evaluation of the position of the competitors and analyze the threat from them. SWOT analysis of Mc Donald’s Strengths Presence of a worldwide brand equity Huge market overseas Flexible financial position Weakness Decline in the market share Frequent change in taste and preference Weak product development Opportunity Considerable number of people moving towards fast food industry People have a high preference towards western trends. New menus and variety offered will surely attract the people. Threat Oversaturation in the fast food industry Presence of international competitors Rise of health conscious consumers Fluctuations in the foreign exchange rate. SWOT analysis of KFC in India. Strengths Reputation as a global brand. One of the market leaders across US Presence of competitive marketing strategy Weakness Preference of people towards local food Continuous restructuring of the organization at managerial level Decrease in sell in chicken segment. Opportunity Strong preference of the customers towards menus dealing in chicken. People have a high preference towards western trends. Threat Oversaturation in the fast food industry Presence of international competitors Consumer trend in health food division. (Marilyn & Nixon, 2010, pp. 215-21) (Balamuralikrishna & Dugger, 1995) The SWOT analysis of KFC and Mc Donald’s confirm that though the multinational food chains have emerged as the leading organizations in the fast food fast market but Buffalo wild wings do have the opportunity to take advantage of the weakness in opening their unit in India. In devising the international marketing strategy a careful analysis of the risk factor is undertaken by the help of risk matrix. Risk matrix: Negligible Marginal Critical Catastrophic Certain Initial entry Customers with adherence to a particular brand Likely New innovations of the competitors in their product line Product quality in comparison to the competitors Customer’s likeliness Possible Pricing strategy Fluctuation in market unlikely Opposition from the foreign brands Marketing strategy The risk matrix denotes the certain risks which the organization will encounter from the various competitors in the market like local organizations as well as the international organizations have been considered and the risks have been classified as certain, likely, possible, uncertain. The probability of the occurrence of risk also has been considered and various risks factors are thus plotted on the matrix according to their chances of occurrence (Wheller, 2011, pp.228-242) (Ayub, 2010, pp. 28-33) Strategic options available to the organization for the international market: One of the critical decisions which organizations need to incorporate is the market expansion which they should incorporate for the process of international expansion. The strategic options which are available to the organization are 1. Direct export 2. Joint Venture 3. Franchisee 4. Partnership. Of the various modes of market entry strategy available, Buffalo Wild Wings should adopt the strategy of franchisee considering the fact that the market in India is widely diversified and it may be difficult for a new entrant to analyze the market completely. The option of franchisee will provide the organization to seek advice from the local player and reduce the operational risk considerably (Levi, 2006, p. 19). The organization should also consider the fact that the other fast food organizations entering in the country have adopted this mode during the entry and it has yielded substantial results for them. The option of franchisee will allow the organization not to undertake the development cost and thus they can sufficiently look to cut down cost and spend considerably in the marketing activities and carry out extensive research regarding the taste and preference of the consumers (Rao, n. d, p.450). The local market knowledge will also be greatly enhanced from the active participation of the franchisee. Another considerable advantage which Buffalo Wild Wings will have in Franchising of the unit is the fact that they have sufficient knowledge and experience in handling the franchisee units. However the organization needs to be conscious regarding the quality of the products as the quality of the products offered to the customers will depend on the franchisee (Fraser, et al. 2007. pp. 1037-1054). Business portfolio matrix: Market growthrate Relative market share Market share The BCG matrix stresses on the fact that increase in market share will lead to increase in cash generation. The category of stars according to BCG matrix reveals that large amount of cash are generated because of strong market share that needs to be maintained by investing in advertising and personal selling. Question marks represent the categories generating high growth in the market but with lesser cash generation so more efforts needs to be put by the organization in marketing ventures. The category of cash cow represents higher market growth and market share and Buffalo wild wing should concentrate on holding this position. Dogs on the other hand represent low market share and market growth and Buffalo Wild Wings should think to drop some of the products or services from their product line (Armstrong & Brodie, 1994, pp.1-12) (Mc Millan, et al, 1982, pp. 733-755). Conclusion: The above discussion reveals the international marketing strategies of Buffalo wild wings, an organization based in the United States. Based on the market analysis of China, Japan and India, the market of India has appeared to be beneficial for the expansion of the organization. In matters of selection of the modes of entry by the organization, Franchising appears to suit the purpose of the organization as it will enable them to reduce their operational costs and spend much more on the advertisements and the promotional events which are required by the organization during their initial stages of operation. The organization should also need to analyze the culture of the people and a thorough analysis of the taste and reference of the consumers needs to be analyzed and delivered accordingly for the organization to prosper in India (Lam, Desmond; Lee, Alvin; Mizerski, Richard, 2009, pp.55-70) References 1. Aviles, J, (2008). Conceptual model of international marketing strategy, available at: http://www.delaguardia.com/Unpublished_Works/International_or_Global_Marketing_Strategies.pdf (accessed on February, 22, 2012) 2. Ayub, B,(2010), RISK INFORMED DECISION MAKING.  Mechanical Engineering, Vol. 132, No. 1, pp. 28-33 3. Armstrong, J & Brodie, R (1994) Effects of Portfolio Planning Methods on Decision Making: Experimental Results, International Journal of Research in Marketing 11, pp. 73-84 4. Balamuralikrishna, R. & Dugger, J. C. 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