Chicken Treat in the Indian Markets - Essay Example

?Introduction Chicken Treat is one of the largest s in the processed food as well as quick service restaurant industry in Australia. Operational for the last three decades, Chicken Treat has carved a distinct market for itself not only in the Western Australia but has also opened outlets in New Tasmania (Chicken Treat, 2012). The brand has only grown over the years and today the company has more than 100 outlets all over western as well as southern Australia. Basically a firm belonging to the service sector, Chicken Treat has been functional since 1974. The report focuses on how Chicken Treat would be able to enter the Indian markets in the light of the fact that there is currently a boom in the processed food sector in India and also the quick service restaurant sector (Serletis & Allen, 2009, 8-17). Given the fact that Chicken Treat is into the quick service restaurant industry, the nation has already witnessed a lot of new players in this particular area starting operations in India. The world famous players like MacDonalds, Taco Bell, Pizza Hut etc have already opened scores of outlets in all major cities within India. So the time is ripe for making an entry into the Indian markets since deferring this decision would only increase competition and may also lead to entry in an already saturated market. The report would harp on the macro environmental factors that are probable to become important if Chicken Treat actually mulls expanding these outlets into the Indian shores. With the help of PESTL and SWOT, the literature available on the industry at large, the upcoming trends, the best market entry decision for Chicken Treat would be suggested in order to make the new market development work a likely success. PESTL Analysis The analysis should initiate with the PESTEL Analysis, which refers to the blend of various macro environmental forces that drive the performance of the organization and consists of the political, economic, sociological, technological, ecological and legal forces (Viardot, 2004). Furthermore, “it assists companies in the selection of attractive markets and the appropriate entry mode” (Aubert & Frigstad, 2007). Political India as a nation is indeed currently politically stable and post globalization the country has been trying to attract FDI in various sectors and one of those leading industries is the quick service restaurant industry. This is likely to prove to be an advantage in terms of the political environment of Chicken Treat and its subsequent market expansion in the Indian markets (Krafft & Mantrala, 2010, 130). As already mentioned, South Asian nations in general and specifically India and China have gradually geared up for globalization and are therefore welcoming multinationals like MacDonalds and Pizza Hut. In the context of globalization, various regulation and tax policies as well as FDI regulations have already been relaxed to a substantial extent and the processes of deregulation and delicensing of various products and services are taking place at a fast pace. This should also work towards paving the way for companies like Chicken Treat to open outlets in India. However, given the high order of democracy in India, various political organisations have been trying to resist the entry of too many firms in food sector with particular emphasis on FDI in retail and especially multi brand retail (Datt, 2008, 178). This may also affect the quick service restaurant industry to a considerable extent and hamper the proper functioning of firms such as Chicken Treat. Again, it is sure that the Indian government wants more investment in FDI; therefore the environment should work out to be overall congenial for Chicken Treat in India. Legal The legal environment of Chicken Treat in India again brings forth quite a few heartening aspects of heightened outlay in FDI and patronization from the government along with various other legal entanglements that should be adhered to if a firm intends to open sales outlets in India. Among the other aspects of the legal environment in India, the working age, for example, would not let Chicken Treat to employ children below 14 years of age to work. Various other conditions are in uniformity with many other nations of the world. Again, the regulatory framework is highly transparent as well as well laid down and the system taxation includes Value Added Tax on the sales of products though the rate of taxation is not exorbitant. Economic The economic environment of India is verily congenial for new market development in almost any sector. Various reports have suggested that among the leading emerging economies in the world, though the nation would be unable to put forth a GDP growth rate of more than 8% (Bhupta, 2011). This puts a big question mark on how successful are the projections of India being a great market for new market development or in more specific terms how well would Chicken Treat fare given the changing fortunes of India, at least as far as the latest reports suggest in the light of the macro environment the restaurant sector operates in. Chicken Treat should always have contingency plans ready and be prepared so as not to be adversely affected by the return of any economic downturn that may bring down the economy of the nation. This may be done by adopting a proactive approach in responding to the changes in the market. Also, Chicken Treat should take some time to settle and not be too fast or aggressive in entering new markets. Chicken Treat should also keep their bail plans ready along with the exit policies from the various markets of India in case of economic downturn. Socio-Cultural The socio-cultural perspectives for what Chicken Treat has to offer would be largely governed by the tastes as well as the regional along with religious sentiments of the populace. Again, India is still a conservative nation and therefore with the proliferation of globalization, individualism has started entering the ethos of the nation, thus the nation is largely an adherent of collectivism. The power distance is moderately high in India in accordance with the inequality that prevails in the social fabric of India. The level of uncertainty avoidance in India is comparatively low since most people are not very straight forward. However, the social fabric has lent India a comparatively longer term orientation. Technological Technological changes are likely to be taken by Chicken Treat in an encouraging light and various ordering formats or for that matter upgradation of technology leading to better or quicker productivity is likely to be followed in order to serve the customers better. SWOT Analysis SWOT analysis helps in summarizing the salient environmental drawbacks as well as the strategic potentials of a firm that are most likely to influence the development of the organizational strategy (Johnson, Scholes & Whittington, 2005, 102). Strengths The greatest strength of Chicken Treat is that the company has built a strong brand Already standardised menus, various popular products, freshness component of their products, preference on the part of their existing customers are likely to positively influence the firm Weaknesses The biggest weakness that Chicken Treat has is the fact that even if the brand is very well known in Australia, people of other nations are not aware of this brand. Thus brand awareness is yet to be created outside Australia, thereby informing us that the firm has to start from the absolutely grass root levels. Quite a few players including various MNCs have already started reaping enormous profits from the market and have built good market share for themselves. This makes the market entry plans of Chicken Treat even more problematic in comparison with the product offerings and business models that have already proven to be successful for many other quick service restaurant business conglomerates that are functional. Opportunities Opportunities are aplenty in the quick service restaurant market. Although many players have been skimming the markets, there is enough scope in these markets and it has a long way to go before the market gets saturated. Only India has an estimated catering services industry of approximately 570 billion INR (Baisya, 2008, 114). China and India are the two specific nations that have recorded the highest GDP rates of growth and another point is that the population of both these nations turn out to be more than 25% of the overall population of the world (15 April, The Economist, 2011). Proper studies should be undertaken before entering the Indian markets because despite that the markets are booming and have immense potential due to the increasing purchasing power of the Indian middle class, along with greater number of people specifically women joining the work force, Chicken Treat is likely to “glocalise” so as to better cater to the exact requirements of the Indian market (Joshi, 2005, 22). Threats Industry rivalry is high in the restaurant sector, so threats of price cuts and other machinery to curb competition is high. Smaller players with lower investments and operating costs are likely to focus on delivering the same products or services at a lower price thereby accentuating the competition. Suppliers may also integrate vertically so as to come in direct touch with the customers, since entry barriers to these markets are low. Recommendations The PESTL along with the SWOT analyses makes it evident that India is an emerging market for quick service restaurant industry. Despite the fact that MNC firms have already started developing these markets, much is yet to be achieved. Thus, Chicken Treat may enter the Indian markets and even think of positioning themselves differently from their competitors like KFC. The exercises in brand awareness should be religiously followed and new markets should be developed carefully by properly analysing the markets for these products. References 1. Chicken Treat. 2012. http://www.chickentreat.com.au/default.aspx?MenuID=8 2. Serletis, G. & B. Allen. 2009. India: Effects of Tariffs and Nontariff Measures on US Agricultural Exports. Washington DC: USITC 3. Viardot, E. 2004. Successful Marketing Strategy for High-Tech Firms, Volume 5,. MA: Artech House, Inc. 4. Aubert, AE & Frigstad, AK. 2007. Strategic Analysis of Statoil’s International Competitiveness. Bergen: Norwegian School of Economics and Business Administration, 20. 5. Krafft, Manfred & Murali K. Mantrala. 2010. Retailing in the 21st Century: Current and Future Trends. Heidelberg: Springer 6. Datt, Ruddar. 2008. Growth, Poverty and Equity: Story of India’s Economic Development. New Delhi: Deep and Deep Publications 7. Bhupta, M. 2011. Low Growth: The New Normal. Business Standard. http://www.business-standard.com/india/news/low-growthnew-normal/455726/ 8. Johnson, G., Scholes, K. and Whittington,R. 2005. Exploring corporate strategy: text and cases. Europe: Prentice Hall. 9. Baisya, R. 2008. Changing face of Processed Food Industry. New Delhi: Ane Books 10. The Economist. 2011. India Outpaces China: Winning the Growth World Cup. Hong Kong: The Economist, http://www.economist.com/blogs/freeexchange/2011/04/india_outpaces_china 11. Joshi, RM. 2005. 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