Upon reading the Ruth’s Chris case on international expansion, it was apparent that Ruth had a plethora of options with which to expand. Because they were already firmly entrenched in the United States with 92 locations (Exhibit 1), more than any other steak house, it only made sense to enter into new markets with a market development model. After all, there were already franchisees in four international markets: Canada, Hong Kong, Mexico, and Taiwan. Based on the criteria the management team developed, China would be a more than feasible option as a new market of entry.
As with any country, there are positives and negatives that must be evaluated based on many different factors. The management team’s first criteria was that the potential country must be filled with beef-eaters. As seen in Exhibit 3, Asian has shown a 9.45% increase from 1998-2002 in meat consumption per capita, second only to Central America. The very following Exhibit 4 displays a staggering disparity in the population of listed countries, with China more than quadrupling the nearest country, the US, in shear populace. Although China’s per capita beef consumption is only 52.4 kg per person, this is a highly skewed statistic due to the fact that China’s population is so much greater than every other country’s. In 2006, China agreed to import US beef (China Daily) which qualifies under the 2nd criterion of whether or not it is legal for the country to import US beef. The next two criterion of population and high disposable income are easily met because China is the most populous country in the world. In the case itself, it states, “there are countries (e.g. China) that have such large populations that even a very small percentage of high disposable income people could create an appropriate pool of potential customers” (Ruth’s Chris case). The last piece of criteria, affinity for US brands, is satisfied easily as Chinese consumers are known to embrace American products due to their high quality...
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