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MBAD 271-Strategic Management. Opportunities Global Expansion Mass customization Upscale boutique stores Inter/intra-group mergers.

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Presentation on theme: "MBAD 271-Strategic Management. Opportunities Global Expansion Mass customization Upscale boutique stores Inter/intra-group mergers."— Presentation transcript:

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 203.6 2. Mergers/Acqusitions 152.3 3. Mass Customization 101.1 4. Boutique Stores 51.05 Threats 1. Health Concerns 201.2 2. Government Action 152.3 3. Commoditization 104.4 4. Regional/Boutique Stores 52.1 Total100%2.05

5 Competitive Factors Framework Critical Success Factors Importance Weight McDonaldsWendys Burger King Yum Brands Rtg.ScoreRtg.ScoreRtg.ScoreRtg.Score Opportunities 1. Globalization 20% 2. Mergers/Acquisitions 15% 3. Mass Customization 10% 4. Boutique Stores 5% Threats 1. Health Concerns 20% 2. Government Action 15% 3. Commoditazation 10% 4. Regional/ Boutique Stores 5% Total100%2.51.851.92.2

6 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 Suppliers Meat Suppliers Veggie Suppliers Restaurant Supplies Distributors Equipment Manufacturers Customers Customers eating at fast food restaraunts Families Companies Complementors Coca Cola Nestle Hinez Hasbro Movie Studios Government Regulators Competitors McDonalds Burger King YUM Brands (-) (+)

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


11 Forces: Threat of New Competitors SUBSTITUTES NEW ENTRANTS DRIVER Number, Quality, Availability- Wendys clearly has many substitutes in its industry Price-Performance- Wendys 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. RATINGDRIVER Scale Capital required- This is clearly an important factor, as Wendys needs to maintain strong economies of scale. Efficiency production and cost reduction are crucial for Wendys competitive strategy. Technology, Patents- This is another vital factor for Wendys as Wendys food preparation is unique from other competitors Customer loyalty, branding- Customer loyalty will help Wendys retain a customer base and fend off competition. Raw Materials- Wendys needs to secure the most cost-effective raw materials in order to maintain efficiencies and remain competitive. Market Saturation- This factor may serve Wendys well as the market for fast food is clearly saturated, thereby increasing the barriers to entry. RATING

12 Forces: Suppliers, Rivalry SUPPLIERSRIVALRY DRIVER Number, Size, Concentration- Plenty of suppliers. Wendys has plenty of options to switch from one supplier to another Raw materials differentiation- This may be important for Wendys as the differentiation of supplies may help Wendys maintain a differentiated product line. RATINGDRIVER Number of Competitors- Wendys has formidable competition Equality- Wendys 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 Wendys as Yum brands (Pizza Hut) and McDonalds (Boston Market) continue their M & A activities *UPDATE*- Wendys has merged with Arbys. RATING

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 Wendys. Information- Customers are always smart shoppers, they always know what they are looking for. They are also well aware of pricing differences. Differentiation- Wendys needs to differentiate its products to accommodate customers different tastes and preferences. Customer Loyalty- This is crucial for Wendys as customer retention via differentiated product lines and competitive pricing will boost Wendys market position RATINGDRIVER 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, Wendys needs to always maintain a certain level of differentiation to avoid increases complementor power. National Diversity- A nationally diverse market makes it difficult for Wendys to maintain a uniform strategy. It will need to adopt different strategies to help compete with regional and local fast food chains. RATING

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 WendysMcDonalds Burger King Yum Brands Taste30%6.6654.665.33 Quality of Food 30%6.6654.665.33 Location5% Speed of Service 15%54.333.664 Kid-Friendly20%61087 100% 100% Price Profile Price Attributes Importance Weights Price Performance Scores WendysMcDonalds Burger King Yum Brands Meals30%9.358.17.74 Sandwiches30%8.787.610 Drinks20% Sides20% 100% 100%

16 Value Map

17 Strategic Group Mapping Analysis

18 Customer Value Rating Customer Value Price Satisfaction QualityRating % Advantage FirmRatioWeightRatioWeight (wtd ave) (Disadvantage) Wendys1.13x45%+1.14x55%=1.1414% McDonalds.99x45%+1.07x55%=1.033% Burger King.90x45%+0.85X55%=0.87-13% Yum Brands 1.05x45%+1.01x55%=1.033%

19 SCM Sophistication

20 SC Design

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

22 Profit Zone Analysis DimensionCase 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 18-34 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 Wendys 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 DimensionCase 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 DimensionCase 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 McDonalds18%40%.68930X Burger King 14%36%.65823X Yum Brands 12%30%.76720X Wendys9%28%.60714X

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

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