1. MBAD 271-Strategic Management

2. Opportunities Global Expansion Mass customization
Upscale “boutique” stores
Inter/intra-group mergers

3. Threats Commoditization Consumer concerns about nutritional data
Government action (Los Angeles)
Regional/Boutique Stores

4. External Factors Framework
Critical Success Factors
Importance Weight
(Percentage)
Performance Rating
(1-4)
Weighted Score
(% X Rating)
Opportunities
1. Globalization 20 3 .6
2. Mergers/Acqusitions 15 2 .3
3. Mass Customization 10 1 .1
4. Boutique Stores 5
.05
Threats
1. Health Concerns .2
2. Government Action
3. Commoditization 4 .4
4. Regional/Boutique Stores
Total
100%
2.05

5. Competitive Factors Framework
Critical Success Factors
Importance Weight
McDonald’s
Wendy’s
Burger King
Yum Brands
Rtg.
Score
Opportunities
1. Globalization
20% 4
.08 2
.04 3
.06
2. Mergers/Acquisitions
15%
.03
.45
3. Mass Customization
10% 1 .1
4. Boutique Stores 5%
.05
Threats
1. Health Concerns .6 .4
2. Government Action
.15
3. Commoditazation
4. Regional/ Boutique Stores
Total
100%
2.5
1.85
1.9
2.2

6. Recruiting, training, development
Value Chain Analysis
The Value Chain
Firm Infrastructure
Financing, legal support, general management, accounting, quality control
Human Recourses
Recruiting, training, development
Technology Development
Design of ordering/scheduling software, potential JIT delivery system for goods
Design of terminals, design of procedures, quality control procedures, wireless thermostat monitoring & control, card payment terminals
Back kitchen monitors, order timing, better equipment for drive through, remote call center for drive-thru ordering
Market research, new product introduction, sales & forecasting systems
Service manuals, training videos, customer feedback systems
Procurement
Transportation, local sourcing for fresh vegetables and salads, site maintenance contractors, restaurant supplies
Food, paper goods, real estate, cooking equipment, energy, eRestaraunt services & inventory applications
Restaurant supplies, computer services, waste disposal and POS operations
Advertising- Radio, TV, newspaper & internet
Replacement parts for equipment, service contractors
Storage of raw materials, inspection
Food creation, cooking, maintenance, cleanliness and hygiene controls, communications infrastructure and training
Order processing, drive through window, shipping
Advertising, brand marketing, cupons, store decoration, new item creation, media promotions
Customer call center for complaints, service cards, communications
Inbound Logistics
Operations
Outbound Logistics
Marketing and Sales
Service

7. What is the Key Component?
Operations?
Outbound Logistics?

8. The Value Net (-) (-) WENDYS (+) (+) Competitors Suppliers Customers
McDonald’s
Burger King
YUM Brands
Suppliers
Meat Suppliers
Veggie Suppliers
Restaurant Supplies Distributors
Equipment Manufacturers
Customers
Customers eating at fast food restaraunts
Families
Companies
(-)
(-)
WENDYS
(+)
(+)
Complementors
Coca Cola
Nestle
Hinez
Hasbro
Movie Studios
Government Regulators

9. Business Design Elements:
Value Analysis
Competitors
McDonald’s
Burger King
YUM Brands
Suppliers
Meat Suppliers
Veggie Suppliers
Restaurant Supplies Distributors
Equipment Manufacturers
Customers
Customers eating at fast food restaurants
Families
Companies
Company
Key Activities:
Outbound Logistics
Business Design Elements:
Brands/ Customer Selection
Complementors
Coca Cola
Nestle
Hinez
Hasbro
Movie Studios
Government Regulators

10. THREAT OF NEW COMPETITORS
Forces
THREAT OF NEW COMPETITORS
SUBSTITUTES
NEW ENTRANTS
RIVALRY
SUPPLIER POWER
CUSTOMER POWER
COMPLEMENTOR POWER

11. Forces: Threat of New Competitors
SUBSTITUTES
NEW ENTRANTS
DRIVER
Number, Quality, Availability- Wendy’s clearly has many substitutes in it’s industry
Price-Performance- Wendy’s must be aware of competitor prices in order to stay competitive
Switching Costs- This refers to costs associated with switching suppliers. As the only difference is the amount of gas necessary to drive to the restaurant, and all competitors have many locations, this is effectively zero.
RATING
Scale Capital required- This is clearly an important factor, as Wendy’s needs to maintain strong economies of scale. Efficiency production and cost reduction are crucial for Wendy’s competitive strategy.
Technology, Patents- This is another vital factor for Wendy’s as Wendy’s food preparation is unique from other competitors
Customer loyalty, branding- Customer loyalty will help Wendy’s retain a customer base and fend off competition.
Raw Materials- Wendy’s needs to secure the most cost-effective raw materials in order to maintain efficiencies and remain competitive.
Market Saturation- This factor may serve Wendy’s well as the market for fast food is clearly saturated, thereby increasing the barriers to entry.

12. Forces: Suppliers, Rivalry
DRIVER
Number, Size, Concentration- Plenty of suppliers. Wendy’s has plenty of options to switch from one supplier to another
Raw materials differentiation- This may be important for Wendy’s as the differentiation of supplies may help Wendy’s maintain a differentiated product line.
RATING
Number of Competitors- Wendy’s has formidable competition
Equality- Wendy’s tends to share certain similarities to other fast food chains, thereby increasing competitive pressures
Demand, pricing- High pricing pressures to remain competitive as well as high market demand.
M & A activities- This is crucial for Wendy’s as Yum brands (Pizza Hut) and McDonald’s (Boston Market) continue their M & A activities *UPDATE*- Wendy’s has merged with Arby’s .

13. Forces: Customer, Complementor Power
CUSTOMER POWER
COMPLEMENTOR POWER
DRIVER
Number, size, concentration- Customer concentration in a certain market segment will increase competitive pressures on Wendy’s.
Information- Customers are always smart shoppers, they always know what they are looking for. They are also well aware of pricing differences.
Differentiation- Wendy’s needs to differentiate its products to accommodate customers’ different tastes and preferences.
Customer Loyalty- This is crucial for Wendy’s as customer retention via differentiated product lines and competitive pricing will boost Wendy’s market position
RATING
Saturation of alliances- Many of the competitors have the same or similar alliances with the complementor (e.g. Coca Cola) or their rival (e.g. Pepsi). As it is relatively simple to obtain the product, the complementors have relatively little power in this respect.
Centrality, equality- Contracts between fast food restaurants and complementors are relatively simple and commoditized. There is little power here.
Scope differentiation- As complementor power rises, scope differentiation decreases. As such, Wendy’s needs to always maintain a certain level of differentiation to avoid increases complementor power.
National Diversity- A nationally diverse market makes it difficult for Wendy’s to maintain a uniform strategy. It will need to adopt different strategies to help compete with regional and local fast food chains.

14. Forces: Our ratings 1: Rivalry 2: Customer Power 3: Substitutes
4: New Entrants
5: Supplier Power
6: Complementor Power

15. Quality/Price Profile
Quality Profile
Quality Attributes
Importance Weights
Quality Performance Scores
Wendy’s
McDonald’s
Burger King
Yum Brands
Taste
30%
6.66 5
4.66
5.33
Quality of Food
Location 5%
1.9
8.7
3.2 10
Speed of Service
15%
4.33
3.66 4
Kid-Friendly
20% 6 8 7
100%
Price Profile
Price Attributes
Price Performance Scores
Meals
9.35
8.1
7.7
Sandwiches
7.6
Drinks
8.2
7.8
Sides
5.8
6.6
5.5

16. Value Map

17. Strategic Group Mapping Analysis

18. Customer Value Rating Customer Value Price Satisfaction Quality Rating
% Advantage
Firm
Ratio
Weight
(wtd ave)
(Disadvantage)
Wendy’s
1.13 x
45% +
1.14
55% =
14%
McDonalds
.99
1.07
1.03 3%
Burger King
.90
0.85 X
0.87
-13%
Yum Brands
1.05
1.01

19. SCM Sophistication

20. SC Design

21. Economic & Demographic Trends Political & Socio-Cultural Trends
What Matters
Technological Trends
Player Mapping Analysis
Life Cycle Analysis
Battle Analysis
Trajectory Mapping Analysis
Competition Trends
Industry & Alliance Evolution Analyses
4-Arenas Analysis
Strategic Inflection Point Analysis
Economic & Demographic Trends
Correlation Analysis
Demographic Analysis
Competitors
Company
Suppliers
Customers
Complementors
International Trends
Integration-Responsiveness Grid Analysis
International Evolution Analysis
Political & Socio-Cultural Trends
Player Mapping Analysis
Issue Mapping Analysis
Issue Saliency Analysis

22. Profit Zone Analysis Dimension Case Customer Selection
Single people under age 34
families with dependent children
working people under tight budget
students
Value Capture
Customers’ willingness to pay
Offer value menu to target the critical year-old customer
Establish beverages as a "destination" as well as a meal accompaniment.
Introduce a "Total Customer Feedback System" for improved customer service.
Emphasizing its use of fresh meats and salads
Focus on hamburgers, a specialization Wendy’s holds
Innovate and introduce new products
Involve more in local community events and charity work
Lower Operating costs
Offer choice of premium and low cost menu choices in the menu to compensate for lower margins
Elevate the customer experience by improving the hiring and retention of Wendy's employees while reducing turnover, improving training, and generating savings at the store level.
Improve the overall health of Wendy's system by re-franchising, as well as acquiring and re-imaging franchise restaurants with potential for future re-franchising.
Adopt more ‘green’ practices to reduce costs

23. Profit Zone Analysis, continued
Dimension
Case
Value Capture
Decrease Input costs
Push for green purchasing with eco-friendly suppliers whose products have reduced environmental impact in any part of their life cycle
Reduce water and energy consumption, automate transaction processing, lower product testing costs, legal and professional fees and bonus expenses
Conserve energy costs by using renewable sources such as wind, solar, hydroelectric
Recycle of paper, cardboard, metal, and plastic
Upgrade kitchen equipment and introduce new ovens to increase efficiency and lower operating costs
Establish buying alliances with preferred suppliers to consolidate purchasing and benefit from volume discounts
Increase the size of the pie
Grow share of the premium hamburger market
Re-energize Wendy's Late Night business and capture afternoon and evening snack opportunities
Continue to leverage the Wendy's brand and optimize our facilities by offering a new day-part to consumers who exhibit a demand for a better, high-quality breakfast.
Re-image restaurants by using a systematic capital reinvestment process and disciplined approach.
Launch marketing campaigns to create awareness about measures taken to address significant health concerns to labor, environmental, and ethics violations
Use complementor products to attract new business
Get into real estate opportunities as part of franchisee building
Limit Direct Competition
Offer store promotion discounts and launch ad campaigns to lure customers away from new local competitors
Get into exclusivity agreement with suppliers to gain competitive advantage

24. Profit Zone Analysis, continued
Dimension
Case
Strategic Levers
Innovation Leadership with respect to hamburgers
Control of costs & Improving Operational efficiencies
Customer relationships
Product development lead
Quality leadership
Environmental and social responsibility
Scope
Offer fresh, high quality ingredients for hamburgers
Utmost customer service and satisfaction
Increased efficiency and operational excellence
Business Design Outcomes
Return on Sales
Profit Growth
Asset Effeciency
Strategic Lever Rating
Market Value/ Sales
McDonald’s
18%
40%
.68 9
30X
Burger King
14%
36%
.65 8
23X
Yum Brands
12%
30%
.76 7
20X
Wendy’s 9%
28%
.60
14X

25. Industry Evolution Maturity Stage Stable industry, clear boundaries
Vigorous competition
Not much collaboration

26. Four Arenas Analysis
Hypercompetition taking place vigorously across all four Arenas
Price/Perceived Quality has reached ultimate value
Timing/Know-how tends to take advantage of “first follower” status (lowers risk)
Potential for Vertical Integration

27. Four Arenas- Continued
Strongholds-Oligopolistic bargain, strong barriers to entry, potential in non-core market
No hesitation to throttle entrants (McDonalds/Chick-fil-A)
Deep Pockets- Primarily reliant on driving out other firms, costs/scale used.

28. Strategic Inflection Point Analysis
Potential strategic inflection points regarding:
Potential increase in customer concern for better nutrition (change in substitutes)
Race to gain market share/brand equity in overseas markets (change in group rivalry)
Potential need to lobby government to avoid damaging legislation (change in complementors)

29. Technological Trends
Potential use of internet for order-ahead (JIT delivery)
Increasingly sophisticated SCM software to cut costs
Otherwise technology is relatively stable (Specific Stage)

30. International Trends
Key Triggers- Domestic Market Saturation, Movement overseas of domestic customers, Sourcing opportunities
IR-Grid Analysis- Group = International companies (Low Pressure for local responsiveness, Low Pressure for Global Integration)

31. Political & Socio-Cultural Trends
Competitors
LA Government
Supersize Me
Suppliers
(Policy Makers)
FDA
Congress
Customers
(Social Actors)
Activists
Community Groups
(-)
(-)
Company-
Offers corporate social performance and political activities
(+)
(+)
Corporate Political Advantage Process
(Political)
Complementors
Pro-Business Legislators
Lobyists
Social Legitimacy Process

32. Political & S/C Trends, Cont.
Salient/Probable issues:
Potential for necessity of food labeling (FDA) (Low Priority)
Potential spread of Los Angeles ruling to other cities/communities (Medium Priority)
Increasing customer demand for healthier food (High Priority)

33. Critical Success Factors
1) Pursue Vigorous Overseas Expansion
2) Continue to pursue/market healthy fare
3) Maintain market research w/r/t new menu items
4) Maintain vigilance for merger/vertical integration possibilities

34. Threats and Opportunities, Redux
Global Expansion
Commoditization
Mass Customization
Consumer concerns about nutritional data
More upscale “boutique” stores
Government Action (Los Angeles)
Inter/Intra group mergers
Regional/ Boutique stores