OUTBACK STEAKHOUSE: GOING INTERNATIONAL
Overview: The advent of globalized business has brought new and interesting opportunities to companies all over the world. Chris Sullivan, chairman and co-founder of Outback Steakhouse, noted that many internationally based American restaurants have “average unit sales [that are] way, way above the sales level they enjoyed in the United States.” (Grant, 2010: 753) For fast-food franchise giants like McDonald’s, Burger King, and KFC, up to one half of total sales stem from international chains. (Grant: 757) “Casual dining” restaurants, such as Denny’s, Applebee’s, and T.G.I. Friday’s, have had very little history and presence within international markets. This presents the possibility of never before seen challenges that could affect the success of international expansion for Outback Steakhouse. Some of these challenges include identifying where a company’s product is going to create market demand, lack of infrastructure, availability of raw materials, different national regulations, and the presence of trade restrictions. (Grant: 758-9) While these are common problems witnessed by other international restaurant chains, the issues faced by Outback Steakhouse are more specific and will be discussed further in an analysis of the corporation. Also included at the end of this report are personal recommendations for Outback Steakhouse regarding how to go about expanding abroad. These recommendations will be based on the resources and capabilities that Outback Steakhouse currently employs and how they are best suited for foreign markets. Developing an international strategy that will take consideration into the issues mentioned previously will help Outback succeed outside of the United States. Identification of Strategic Issues and Problems
Since its opening in 1988, Outback Steakhouse has become one of the biggest restaurants of its kind in the United States. However, tapping into international markets is a very challenging task. The complexity of foreign expansion sheds light on issues unforeseen in domestic business. International Market Demand
For Outback Steakhouse, locating the ideal international markets to expand into is challenging. The lack of globalization among American “casual dining” restaurants brings forth a tough question: Will foreign markets accept this business practice as openly as fast-food franchise chains? Also, what kind of market will generate the most demand for a specialized restaurant such as Outback Steakhouse? This all depends on a number of important factors, such as levels of disposable income, urbanization, and demographics (among others). (Grant: 758) Cultural and Social Factors
One of the biggest aspects of Outback Steakhouse’s strategy is its emphasis on quality food, service, and facilities. (Grant: 754) Within international markets, customer preferences are vastly different from country to country. Outback must address these issues when deciding where to locate its international restaurants. Another issue that needs to be faced is the breakdown of Outback Steakhouse’s management and ownership structure. Currently, there is little room for franchising within the corporation’s tightly knitted “managing partner” and “joint venture partner” management strategy. General employee selection is also a strict and demanding process. (Grant: 755-6) In order to continue these practices, Outback must choose their foreign locations wisely. Challenges of Infrastructure:
Outback Steakhouse’s commitment to quality and dedication to suppliers requires a readily available supply of products and equipment. Their current strategy is built around the American infrastructure, and may be hard to implement in other, less developed countries. Transportation, communication, utilities, and the availability of supplies are all factors to be addressed when looking into expanding internationally. (Grant: 758) Without the capability of getting supplies and equipment to...
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