Chipotle Case
I believe companies fail in the international market because they’re too confident about their success in the local market and because they do not take into account the cultural, political and economic differences and possible rivals that can represent pressure or rejection of the market they want to explore. Also, they do not use the right strategies and approach to reduce risks or get the benefits of such market. In the case of Chipotle, I believe the company failed to appeal its menu to the British community. Just imagine if an authentic Chinese restaurant chain decide to offer real Chinese food at their Americans clients, I’m more than sure they will close business due to the dishes American are not used to see as Chinese food. When
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I was in Japan, the McDonald I tried was kind of different, even in the service they provided. Burgers and drinks were way smaller and they offered shrimp burgers with their Japanese sauce. If the restaurant isn’t too busy, the staff would bring the meal to your table. According to Thompson, Arthur, Peteraf, Gamble, M. J. and A.J. III. (2012), “…McDonald’s, KFC, and Starbucks have discovered ways to customize their menu offerings in various countries without compromising costs, product quality, and operating effectiveness” (p. 192). All these little details keep McDonald successful in Japan or any other country as long as some “customization” is done to their meals. If I were Chipotle’s CEO, to fix this situation I will first study the country I want to explore, by investigating about what kind of food or ingredients the British people like the most and match Chipotle’s menu; what people pay more attention when they eat fast food; what are some characteristics of fast-food restaurant environment that most British people enjoy; what’s too expensive for them to avoid our food and what’s too cheap to discourage their selection?; what’s the appealing meal size?; Is there any other company that sells similar products, if so, what are the qualities? Price? Restaurant layout. Anyway, There are many things to learn about global market before deciding if is appropriate to invest or determine if the company has the capabilities and resources to overcome risk.
Once this study is complete, I would use a transnational strategy to combine local and globalized elements in one strategy. According to Thompson, Arthur, Peteraf, Gamble, M. J. and A.J. III. (2012), “This type of middle-ground strategy is called for when there are relatively high needs for local responsiveness as well as appreciable benefits to be realized from standardization…encourages a company to think global, act local to balance these competing objectives (p. 192). So, we can add a very typical British plate with a Mexican touch in the menu. As time goes, encourage customers to provide feedback to make their experience more enjoyable. Finally, I also would look to join forces with any local business that is familiar with local buying habits and food preferences of customers to learn more and strength our operations there. Macy’s is a great and reputable American company with a chain of department store that hasn’t yet expanded overseas.
I believe the variety and product lines that this company offers to its local customers, might help reduce pressure of rivals and have more chances of attract customers in the international market. The company already ships a lot to merchandise globally. Customers in this specific segment of market, do not have much too lose if they want to try Macy’s products, but Macy’s must design a reward program to engage with customers or find other way to catch customers in a new country. Also, there are many Americans working overseas and many tourists that came to US and might miss the store. To start, the company can track what countries they ship the most and then study the its local market. Then after selecting potential countries, the company must look at the biggest potential competitors in that market, what products are more used or purchased, customer preferences, customs, labor and employment law, political risks, the economic conditions and marketing practices. Then, I would either hire an expert in the market or I will try to partner with a company that can help Macy’s to acquire new knowledge and techniques of sale for that specific market. The company can start by applying a global strategy to see how is perceived by the international market. This will maintain the company’s principles and concept intact. Also, this strategy involves low costs due to scale economies, keeps the benefit of a global brand and reputation, and can lead to greater efficiencies. However, it does not really address local needs, but the company might offer the products that they consider appealing to the local community, based on the study implemented prior the decision (Thompson, Arthur, Peteraf, Gamble, M. J. and A.J. III., 2012, p.
193). The Economist (2014) provides a chart where India, Russia, Saudi Arabia and South Korea are the countries that spend the most in clothing and footwear. So, I would consider India as a great country due to the low labor cost that is famous for and because of other advantages that a developing-country market offers such as the possible development of local distribution networks. There are many potential rivals, but some of the rivals are V mart, Provogue and V2 to name few. However, the retail market in India is experiencing a strong growth and emerging as one of the largest and expected to grow to US$ 1.3 trillion by 2020 (India Brand Equity Foundation, 2013). Macy’s must consider strategic alliances and joint ventures to allocate additional resources and knowledge of this market.
References
India Brand Equity Foundation. (2013). “Retail Companies in India”. Retrieved from http://www.ibef.org/industry/retail-india/showcase
The Economist. (2015). “How Countries Spend Their Money”. Retrieved from http://www.economist.com/blogs/graphicdetail/2015/09/daily-chart-9
Thompson, Arthur, Peteraf, Gamble, M. J. & A.J. III. (2012). Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. (20th ed.). McGraw-Hill Learning Solutions. VitalBook file
I was in Japan, the McDonald I tried was kind of different, even in the service they provided. Burgers and drinks were way smaller and they offered shrimp burgers with their Japanese sauce. If the restaurant isn’t too busy, the staff would bring the meal to your table. According to Thompson, Arthur, Peteraf, Gamble, M. J. and A.J. III. (2012), “…McDonald’s, KFC, and Starbucks have discovered ways to customize their menu offerings in various countries without compromising costs, product quality, and operating effectiveness” (p. 192). All these little details keep McDonald successful in Japan or any other country as long as some “customization” is done to their meals. If I were Chipotle’s CEO, to fix this situation I will first study the country I want to explore, by investigating about what kind of food or ingredients the British people like the most and match Chipotle’s menu; what people pay more attention when they eat fast food; what are some characteristics of fast-food restaurant environment that most British people enjoy; what’s too expensive for them to avoid our food and what’s too cheap to discourage their selection?; what’s the appealing meal size?; Is there any other company that sells similar products, if so, what are the qualities? Price? Restaurant layout. Anyway, There are many things to learn about global market before deciding if is appropriate to invest or determine if the company has the capabilities and resources to overcome risk.
Once this study is complete, I would use a transnational strategy to combine local and globalized elements in one strategy. According to Thompson, Arthur, Peteraf, Gamble, M. J. and A.J. III. (2012), “This type of middle-ground strategy is called for when there are relatively high needs for local responsiveness as well as appreciable benefits to be realized from standardization…encourages a company to think global, act local to balance these competing objectives (p. 192). So, we can add a very typical British plate with a Mexican touch in the menu. As time goes, encourage customers to provide feedback to make their experience more enjoyable. Finally, I also would look to join forces with any local business that is familiar with local buying habits and food preferences of customers to learn more and strength our operations there. Macy’s is a great and reputable American company with a chain of department store that hasn’t yet expanded overseas.
I believe the variety and product lines that this company offers to its local customers, might help reduce pressure of rivals and have more chances of attract customers in the international market. The company already ships a lot to merchandise globally. Customers in this specific segment of market, do not have much too lose if they want to try Macy’s products, but Macy’s must design a reward program to engage with customers or find other way to catch customers in a new country. Also, there are many Americans working overseas and many tourists that came to US and might miss the store. To start, the company can track what countries they ship the most and then study the its local market. Then after selecting potential countries, the company must look at the biggest potential competitors in that market, what products are more used or purchased, customer preferences, customs, labor and employment law, political risks, the economic conditions and marketing practices. Then, I would either hire an expert in the market or I will try to partner with a company that can help Macy’s to acquire new knowledge and techniques of sale for that specific market. The company can start by applying a global strategy to see how is perceived by the international market. This will maintain the company’s principles and concept intact. Also, this strategy involves low costs due to scale economies, keeps the benefit of a global brand and reputation, and can lead to greater efficiencies. However, it does not really address local needs, but the company might offer the products that they consider appealing to the local community, based on the study implemented prior the decision (Thompson, Arthur, Peteraf, Gamble, M. J. and A.J. III., 2012, p.
193). The Economist (2014) provides a chart where India, Russia, Saudi Arabia and South Korea are the countries that spend the most in clothing and footwear. So, I would consider India as a great country due to the low labor cost that is famous for and because of other advantages that a developing-country market offers such as the possible development of local distribution networks. There are many potential rivals, but some of the rivals are V mart, Provogue and V2 to name few. However, the retail market in India is experiencing a strong growth and emerging as one of the largest and expected to grow to US$ 1.3 trillion by 2020 (India Brand Equity Foundation, 2013). Macy’s must consider strategic alliances and joint ventures to allocate additional resources and knowledge of this market.
References
India Brand Equity Foundation. (2013). “Retail Companies in India”. Retrieved from http://www.ibef.org/industry/retail-india/showcase
The Economist. (2015). “How Countries Spend Their Money”. Retrieved from http://www.economist.com/blogs/graphicdetail/2015/09/daily-chart-9
Thompson, Arthur, Peteraf, Gamble, M. J. & A.J. III. (2012). Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. (20th ed.). McGraw-Hill Learning Solutions. VitalBook file