Analysis of Chipotle Mexican Grill: Internal and External Environment

This report analyzes Chipotle Mexican Grill's internal and external environment, including its current position, business strategies, corporate governance, sustainability, competitor analysis, and resources. The report discusses the company's mission, vision, and objectives, as well as its board of directors and top management. It also examines the natural, societal, and task environment, as well as the company's corporate structure, culture, and resources.

Introduction
The report brings out a discussion on chipotle Mexican grill. The report deals with the
analysis through internal and external environment. Initially, the report describes the current
position of the organisation in the market and its extensions. Further, it discusses business
strategies of the organisation in the form of vision, mission, and the objectives. The main
purpose of the report is to analyse the whole environment of the organisation from its culture,
power, macro-environmental, corporate governance, its sustainability report, competitor’s
analysis, and finally the resources of the company by analysing each of its department.
Current situation
Chipotle Mexican Grill is amongst the most famous fast food restaurants in UK, Canada,
France, Germany, and US. CMG was incorporated in 1993. Chipotle Mexican Grill offers a
diversified menu consisting of salads, soft flour salad, bottled drinks, kids menu, and burrito
bowls. While looking at the financial statements, it reflects the current situations of the
company-
Year Share price Percent change (%)
2015 659.13 -29.9%
2016 428.56 -21.37%
2017 377.79 -23.39%
2018 431.58 49.39%
2019 513.24 18.86%
(Source: Chipotle Mexican Grill, 2019).

The business strategies covers mission, vision, values and the objectives of the company that
orbits nearby food integrity and shifting of the consumer behaviour as their eating habits keep
changing. The mission of the company is to change the system of how people like and eat fast
food. The company aims to provide jobs. The company uses high-quality ingredients so that
it can make its food good in taste and greater access at such as reasonable prices
(Tutorialpoint, 2019).
The company aims to build a vision by bringing some considerable change in the future of
fast food and service philosophy related to culinary traditions of Asia, Naples, and Italy. The
organisation aims to promote the efforts of the local farmers in a sustainable manner.
(Coddington, 2016)
Corporate Governance
Sustainability is an part of organisation`s job at chipotle and the company have a clear
sustainability governance structures which can be revised on regular basis as every company
wants to grow. In 2016, the company focused on bettering the internal structure to achieve
long-term growth (Chipotle Mexican Grill, 2019).
In regards to ensure that, local farmers are not being affected negatively, the supply chain
team demands affidavits from the suppliers in order to confirm to their compliance with their
standards. The company maintains a team of auditors to put a check on the suppliers and also

the animal welfare (Chipotle, 2016). The ethical code of conduct requires engaging in an
ethical business. The employees must comply with the necessary standards. Sustainability
reports of the company ensures that the company has been executing its CSR activities
properly that benefit the society (Petersonoct, 2015).
Board of directors
The company has a considerable number of people in the board of directors that have paced
up the growth of chipotle Mexican grill. Each member played an significant role n the
success of the organisation. The director of the company is MR. Baldocchi who is an self-
employed person since 2000 and is a strategic advisor for huge variety of privately-held
companies as he has the specialisation in various unit restaurant companies (Chipotle, 2016).
The extensive involvement on the part of third director in the restaurant companies in the last
17 years, he has developed a depth knowledge regarding the finance of restaurant companies.
Another director is the private investor and an active partner of the investment team in an
capital management (Chipotle, 2016). Mr Namvar held positions in the Blackstone group and
he has a considerable experience with the concern of investments in regards to restaurant
industry. Another director is Mr Musk who is an entrepreneur who has incorporated many
non-profit organisation that includes a kitchen, Zip corporation, paypal inc, tesla Motors, and
ever dream corporation (Chipotle, 2016).
Top management
At the top level management, first comes the board of directors named Albert baldocchi, Ali
Namvar, Kimbal musk, Matthew Paul, Neil W. Flanzraich (as a lead director). Apart from
this the company also has CEOs and CFOs to plan for the near future so that they can expand
and overcome the uncertainties in the near future. Mr. Brian Niccol is appointed as a CEO in

2018 after Taco bell in power. Apart from this, another executive chairman is Steve Ells who
is also a CEO (Toebe, 2018).
(Source: Chipotlefoodwithintegrity, 2016)
External environment
Natural environment
Physical resources- until 2017, the store has opened nearly 2400 restaurant in the retail
ownership. The company is headquartered in US and is extended to Canada, Germany,
France, and UK. As the company do not operate in franchise system and have self-owned
outlets. Company`s staff is nearly 64570 in 2017 as the restaurant offers a quick services in
order to match the sophisticated fine dining (Robertson, 2018).
Wildlife- the company receives its meat and dairy products from seven suppliers who keep
processing their animals in North Carolina, Georgia, Ohio, Arkansas, Virginia, Minnesota,
and Pennsylvania. The chicken that the company uses is the boneless chicken. The company
is working with the suppliers in order to move them to use the non-GMO food, as the supply
of non-GMO corn is very limited. The company gets its beef from US, Australia, Canada,
and New Zealand. The process of transporting beefs from the farm houses to the restaurant
that is to be designed in a cost effective way to take responsibility of the environment and

also reduce the wastage of food by making proper purchasing decisions. Moreover, the
company purchases its pork from US, UK and Canada, which is approximately 9.7 million
pounds (Chipotle Mexican Grill, 2019). Company does not allow the pork suppliers to use
breeding and the gestation crates, which allows sows to move freely. In order to maintain the
standards of the porks, the company undertakes a therapeutic antibiotic treatment to diagnose
their illness (Shaw, 2014).
Climate- During natural disasters and uncertainties, the company close the restaurant in order
to support the employees within a period of time. The organisation pay the employees during
disaster emergencies (Whitten, 2018).
Societal environment
Economic- changes in economic factors lead to affect the financial performance of the
company. Personal disposable income, inflation rate, and also the interest rate are some of the
important factors that has to be considered. The industry is instable and volatile and due to
price changes of the raw material. For example- raw material and beef prices increases due to
inflation, scarcity and unavailability (Slidemodel, 2019).
Technological- In last few years, the industry has been undertaking huge transformation at
faster pace. Although, this factor is very much related to CMG as it is a food-based
corporation who focuses on one-to-one interaction which further also depends on
advertisement through online social network sites.
Political/ legal- this factor plays an important role in affecting CMG as it is exposed to
several political risks as the company operates in various countries. It is important to know
that for raw material, the company totally depends on organic products. FDA supports strict
regulations for fast food restaurant chains. Outbreak of rules regulated by FDA will lead to
great level of political and legal intervention. Moreover, the company will lose its image

above government and it will impose penalty if it affected the public health in a negative way
(Sridhar et al., 2016).
Socio-cultural- this factor includes trends and norms, which include stereotypes of different
segments of people at the market place. For example- the audience have become too
conscious in regards to health and also their intakes. This has emerged as an opportunity for
the CMG to provide transparency into their operations by making the restaurant is offering
more health conscious. The company targets younger generation or the “Y generation” rather
than the baby boomers.
(Source: Slidemodel, 2019)
Task environment
Threat of new entrants- some of the crucial barriers that affect the entry of new entrants are
encroaching competitors (both direct and indirect), legal problems, and economies of scale.
Chipotle Mexican grill suffers from moderate to high risk as fast casual industry have many
growing challenges. New entrants bring a plan to innovate its products and change its
offerings, which helps the organisation to bring and attract the new customers and on the
same side build some barriers that can restrict the footfall to the existing restaurants.

Power of suppliers- the bargaining power of the suppliers is low as the company is not
having much access to all the local farmers that produces quality raw material. If the
company identifies large number of farmers, then the bargaining power of the suppliers can
be lowered. It is important for the company to maintain the quality because it has a
considerable image in the market. These suppliers will help the company to maintain the
standardised food quality.
Threat of substitute goods- the company not only has substitutes as the other brands such as
Taco bell that serve Mexican food but also serves cuisine in the whole world. Companies in
this sector competes on different basis such as menu, quality, geographical reach, marketing
strategies, and the pricing. The company maintains a perfect combination of convenience and
affordability. Most importantly, it can be out from the game due to its 2017`s food quality
issues.
Power of buyers- With cut-throat competition in the industry, public have a lot number of
options in order to choose form cuisines. There are huge range of restaurants that can meet
their requirement with the quality food within a considerable price. Therefore, buyers enjoys
high bargaining power as ultimately it`s company`s obligation to meet the demands of the
customers and retain them in organisation.
Rivalry among the competitors- direct competitors such as Mswg LLC, rubio coastal grill,
MTY food group affect the market share of the company. The company also faces indirect
competition from burger king, KFC and the checkers. According to the nation`s restaurant
reporting news, the footfall for the casual eateries has been extended to every segment in
recent five years.
Power of other stakeholders- several stakeholders of the company are government, trade
unions, social groups, community groups, investors and the competitors. From employees,

the company expects to fill the solicit feedback form in the town halls and submit it to the
senior leaders. Employees can contact ethical hotline, confidential and submit the complaints
about the business in the feedback form. Shareholders select the members of the board of
members through voting system and prioritising the corporate matters.
Internal environment
Corporate`s structure
Chipotle does not operate its business franchising by retaining the ownership of all the
location that help to set the tone for employee`s culture in order to maintain the sustainable
ingredients. The company always implemented such organisation structure that focuses
ownership, incentivise hard work, and limits the attrition. This structure allows the chipotle to
expand effectively and expand its scale through model beyond burritos. Entry-level employee
has been tasked in an assembly line. Moreover, they can climb the ladder to the service
manager, general manager, kitchen manager, and ultimately restaurateur. This is important
when the leaders think of expansion and its broader business model.
Corporate`s culture
The employees of the company has revealed that chipotle Mexican Grill provides a healthy
work culture. After the outbreak of quality issues in 2017, the company spoiled its image but
one of the vital component of the CMG`s brand is the strong employee culture. Apart from
this, other members in the restaurant crew told that the management of the company would
keep up the good work. The company`s work culture has been rated good enough for its
career opportunities, compensation, culture and values. As far growth prospects are
considered, the company provides educational assistance programs that have promoted more
than 11000 people (Phadermrod, Crowder, & Wills, 2019). Chipotle proves its dedication to
both professional as well as personal development for both part time as well as full time

employees. Moreover, the restaurant has been looking to hire more 5000 team members and
open new locations in New York, California and North Carolina. The executive team leader
commits to help the employees so that they can focus to grow their careers. The company`s
comprehensive training programs will teach the members with the help of responsibilities
form preparing the fresh ingredients to serve the guest at best (Vigna, Bianco, Goia, & Serra,
2018).
Corporate`s resources
Marketing-
In 2012, the company started its first commercial add on television that was a short film
known as “back to the start.” The company also gain publicity from the articles about the
food and service. Earlier, the company did not use social media as its promotional activity but
now the company is using effective marketing strategies and involving promotional activities
for it’s newly opened restaurants in order to aware the customers about new store opening.
One among the biggest objective of the organisation is to pace up its delivery towards its
customers. Quick service line tells the conversation of both customers and employees is
efficient and managed. Miscommunication will lead to brand spoilage by ruining the service
line-ups. This process not only helps the customers to have an easy access and quick
experience while ordering food. Moreover, it also allows the customers to focus on fresh food
and other ingredients uses to make it.
Research and development
The Company became popular because of concept of “food with integrity.” This mission
campaign involves researching regarding the use of organically grown ingredients. The
company undertook a research that states that the farming companies who practise animal

ethics and care about the environment. This endeavour on the part of the company ensures
that it will receive pure and fresh products, which will be healthier for the customers.
Operations and logistics- while undertaking the primary activities of the business; the
company can change its preferences when buying the food products form the local farmers
and other restaurant suppliers. The company can build strong and sustainable relationship
with reliable food industry suppliers. The company has an approved list of suppliers who can
actually meet their requirements in regards to pork and beef.
The company employs a quality Assurance department that ensures that the company
maintains food quality and safety. Operation department set a standard for the quality from
the suppliers they get it from to distribution centres to the restaurant to customers. The
company uses distribution centres to buy from the suppliers. In 2015, there were 22 self-
owned distribution centres, which are owned in various regions, and it supplies to all the
chipotle restaurants.
Human resources- In every store, the company employs general manager, service, and
kitchen managers for hourly services, apprentice manager and also a crew of members for
both full time and part time. The general manager generally hires and maintains other
crewmembers with a strong ethical work environment. Chipotle wants to hire only those
people who are team oriented and enthusiastic that can ensure positivity in the work
environment. Moreover, the company has a team of real estate managers who actually
undertakes research to find the potential location for new restaurants. It is reported that in
2011, the company opened 150 restaurants. The company is looking to expand globally in
order to open stores in several places such as France and Paris.

Information system- the company uses processing system outside the kitchen in order to
maintain transparency in the operations as the outbreak of E-coli has alerted the company to
make every effective step to ensure quality.
Conclusion
From the above discussion, it can be concluded that company is complying with the every
possible action that can meet the main mission “food with integrity.” This report has every
aspect of the organisation form its management to its influence g factors whether it is internal
or external. The analysis can be concluded by saying that chipotle suffers from fluctuations in
the local markets of food and raw material. Apart from a combination of indirect and direct
competition, the company also faces huge competition from local and street foods stalls.

References
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