In order to meet the company’s expectations for revenue growth, Dan Hannah, vice-president of business development for Ruth’s Chris, decided to expand its international business through a market development model (more of the same restaurants in new markets). The challenge is to decide where to go next, and evaluate which economy provides the best opportunity for Ruth’s Chris. He identified four main variables to be considered in the market selection criteria: * Beef consumption * Population * Urbanization rate *GDP per capita.
After narrowing down to 33 potential markets, a weighting system is needed to rank all countries based on the opportunity that each provides to Ruth’s Chris. The system consists of assigning a percentage weight to each variable according to the importance it represents for the decision making process. The weight allocation is as follows:
*Beef consumption is an important variable: Ruth’s Chris is a steak house and its primary customers are people who enjoy beef. *Population and Urbanization rate were weighted 15% because the restaurants need to be in densely populated areas in the selected country *GDP is important because the average cost of a meal is over $70.
As shown on Table 1, this weighting system ranks the countries from 1 to 33 resulting China in the first position, followed by the U.S. and Ireland. Even though China is not the economy with the highest beef consumption rate, or the highest GDP per capita, it’s extremely large population places it on the first position even when the Population variable is only 15%. With such a large population, even a small percentage of high disposable income people, could create an appropriate pool of potential customers. The U.S is the economy with the higher beef consumption and thus it is the second most favorable economy for Ruth’s Chris.
Two more variables were added to the analysis: *Ease of doing Business * Protecting Investors. The weight allocation for the 6 variables is...
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