Subway Case study
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Subway Case study
Franchising is a marketing concept that is geared towards business expansion. It refers to a business model where the business owner, often called the franchisor, gives the franchisee the privileges to do business. In the process, it helps in offering assistance such as organizing, training, and merchandizing. A franchise management strategy, therefore, involves structuring the franchise system, having proper organization leads towards success and clear management of all its business chains. This paper will, therefore analyze a case study involving the subway regarding its growth strategy with the MacDonald’s.
Based on the case study presented, the subway had had the desire to expand its regional reach. Their strategy had been intertwined around promoting wellbeing, protecting communities, protecting the planet, and general practices and processes. Moreover, the subway had had a long term objective of having over 100000 locations all over the world (Tang, 2017). In this regard, it has had a soft landing spot on franchising. They have aimed to expand their existing market base to attract more customers and increase their net profitability. In this regard, subway has been encouraging franchisees with a target to open its target restaurants for relatively low costs.
Based on the objectives of the subway, franchising is the most logical growth strategy that they have used over the years to expand their business. Franchising has been the best growth strategy for the subway due to the following reasons; firstly, based on the concept of franchising, new restaurants can be simply acquired and cost-effectively development from anywhere. Thus, this growth strategy model allows the franchisees to bear all the economic risks that the business is likely to face. In the long run, the franchisor develops a large business empire at an almost free and cost-effectively with little or no expenses incurred.
Subway logical growth strategy
In order to develop a successful global franchising strategy, the subway must ensure that all its plans are put into action in the right way and a strategic. This involves embarking on a clear drawing of a strategic plan on which markets to establish and where (Arman, 2019). Moreover, it is also imperative to build on strategies towards adopting the markets and key ideologies strategies they are going to employ towards marketing the opportunities they have. Moreover, it is imperative also to understand the skill set required to execute such a pragmatic decision. Therefore, there will be a need to recruit, train, and support those franchisees.
Competencies and Capabilities
A good planning strategy calls for adequate finances to support the franchising strategy. Moreover, it is imperative also to understand how to structure the intercontinental franchise bundle as well as building international sustain infrastructure. The approach involves engaging a wider perspective of individuals with the relevant skills to develop a bespoke plan geared towards developing a massive franchising business.
Secondly, international franchising requires an enormous skillset that can support the franchisor’s preparation and marketing strategies. Based on this case study, subway needs to develop a group of experienced professional practitioners who have the right strategies in driving a franchisor move around the world. The experts will be involved in the preparation of a franchise offer package and developmental plan. This will also involve the development of a marketable package that will be used in researching the market and building a new customer base for the products being franchised (Simin, 2018)
Sustainability of subway
According to O’Neill (2017), social responsibility and sustainability are the key pillars that support the Subway franchising business model. In this context, the economic pillar of franchise sustainability focuses on the firm long-term survival through innovation, efficiency, and wealth creation. Additionally, the franchise model applied by Subway is characterized by fluent dialogue and highly profitable franchisors with the target output towards the massive output. The economic sustainability aspect of franchising enables the subway to achieve economic success and helps in the enhancement of reputation through building stakeholder loyalty.
Topics
Resource Based View and Profits
The resource-based view alludes to a model that considers assets as the key components towards unrivaled execution. In this model, if an asset displays VRIO attributes, sufficient assets within a firm are crucial to the success of the company. According to Turner (2017), it is imperative to look into an organization’s source of resources as opposed to looking at the competitive environment that the business operates in. A resource-based view is modeled as below
In light of the RBV parts, it is a lot simpler and incredibly possible to exploit other external opportunities by utilizing the accessible assets in another manner when contrasted with obtaining new abilities for every one of the new opportunities that spring up. As indicated by this point of view, there are two sorts of assets; these incorporate the tangible and the intangible.
Tangible assets allude to physical resources. These resources incorporate machinery, land, gear, and capital. Physical resources can undoubtedly be purchased in the market. Thus, they sometimes present no benefit to corporations over a longer period since contenders can too acquire similar assets in the market. Nonetheless, intangible resources have no physical presence; however, they can even now be claimed by the organization. They include brand reputation, scholarly properties, and brand names. Nonetheless, some intangible assets can only be acquired after a very long period of time. For instance, the reputation of a brand reputation is often built after a very long duration of time, and other contenders cannot buy it from the market. Intangible assets, therefore, often remain inside the organization and are the major sources of the sustainability of the business.
The major assumptions of the resource-based view include; firstly, resources within the business must be heterogeneous, and secondly, they should be immobile. On the aspect of being heterogeneous, intelligence, capabilities, and other resources possessed by organizations must differ from one company to the next. Or else, it would be very difficult to have put in place different strategies to outcompete each other.
Secondly, immobile assumptions require that business assets not be mobile and, therefore, do not move from one company to the next. Thus, based on this immobility, companies cannot replicate rivals the resources owned by a given. However, having immobile and heterogeneous resources are not the only way towards having a sustainable business; it incorporates having synergistic human personnel and financial capacities for things to move smoothly.
Businesses often do not exist in isolation. They often exist in a difficult situation that comprises the social, political, economic, as well as the competitive environment. Thus, to counteract these situations, firms often develop a strategy. In this context, a firm’s strategy involves having an elaborate plan that has been developed by the firm to achieve its goals in the face of these conditions.
Role of Strategy and Value to Business
The components of a business strategy, therefore, involve the following; the firm’s main competitor, the target market, and the big plan. Before building up the business strategy, it is imperative to understand the competitor’s business strategy, what they do best, and finally, how your company can stand better the competition available. Secondly is the target market of the business. This incorporates an understanding of your key target demographic and its features. Once this has been identified, and more expectations and needs are identified, it will be easier to develop a more effective method to seek attention (Turner, 2017).
The third component is the big plan. This is the main source of business success. A well-structured business plan often highlights the key strategies and mechanisms a given business will employ to achieve its success. Moreover, it incorporates setting future goals for the organization and the challenges likely to be faced in realizing these goals.
Business strategy often plays several roles in an organization. Firstly, a business strategy is used to provide direction in business. Setting out a well-planned business strategy often helps organizations to work towards their goals and instills a sense of responsibility amongst its employees. Secondly, a business strategy is used to create a measure of success (Turner, 2017). More often, business strategies help in measuring business success and the level of performance against the desired goals. Moreover, a business strategy also helps in the identification of areas that require improvement in the future.
Business strategy also helps in the increment of adaptability. Generally, a business needs to be very responsive to any changes available. Thus, a good business strategy often gives room for prediction and to give the varying needs of the contemporary market. Moreover, market analysis and revision of expectations of the customer and requirements often make it easier for businesses to identify new trends in the market and identify and adapt to their strategy (Donner, 2020). Finally, business strategy is very significant in driving decisions in organizations. More often, they help identify strengths and weaknesses within a given organization. These are often significant in making critical business decisions as well as enhancing business profitability and sustainability.
Business Level strategy
The strategies of business levels consist of leadership cost, differentiation, and focus. In business strategy, cost leadership refers to the establishment of an advantage in the competition through the use of the least operation cost in that company. Many times, leadership cost is governed by the efficiency of the company as well as the accumulated experience. Cost leadership, therefore, results in increased efficiencies and a reduction in production costs below the companies’ average (O’Neill, 2017).
The second business level is differentiation. This refers to an approach developed by businesses to provide customers with something unique that is not provided by their competitors. The main objective of this business strategy is to increase its competitive advantage. Through differentiation, most businesses are often capable of defending their high prizing strategy on unique products they provide in the market.
The last strategy is the focus strategy; this is a strategy where a given company concentrates all of its resources on getting or enlarging a given market base or its industry control. More often, this strategy is employed, where the company understands its segment and has products that can adequately satisfy the needs of its customers (Udova, 2020).
Effective promotional strategies
These include strategies employed by businesses to reach their targets and make profits. They include social media promotion, promotions that are done at the point of sale, and marketing using mail order.
In conclusion, business strategies are very important elements of business success. They provide direction, focus, and motivation towards meeting the goals of the organization. The three levels of business strategy, including focus, differentiation, and cost leadership, offer a significant opportunity for every organization to achieve a competitive advantage against its competitors.
References
Arman, M. E. (2019). FRANCHISING AS A STRATEGIC ALLIANCE MODEL. QUALITATIVE RESEARCH. FUTURE ACAD.
Donner, M. G. (n.d.). NOAW project deliverable 5.3: Report on Business Strategies. 2020.
O’Neill, R. (2017). Franchising. Busidate.
Simin, M. J. (2018). ADVANTAGES OF FRANCHISE SYSTEM FOR DEVELOPMENT OF ENTREPRENEURSHIP. Knowledge International Journal, 177-181.
Tang, M. (2017). Research on Franchising Model in Small Business. . China-USA Business Review, 287.
Turner, S. &. (2017). Strategies for enhancing small business owners’ success rates. . International Journal of Applied Management and Technology.
Udova, L. (2020). Agro-franchising as a prospect for small agribusiness development in Ukraine. The Scientific Journal of Cahul State University “Bogdan Petriceicu Hasdeu” Economic and Engineering Studies, 105-109.