Challenges Faced by Five Guys in Italy: An Analysis of External and Internal Environment

Business Environment
and
Strategic Management

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EXECUTIVE SUMMARY
Business units of big MNC’s are facing challenges in their operations in various parts of the
world. This report analyses the case of Five Guys which has been one of the fastest
expanding companies in this industry. After its choice of selecting franchising as a mode of
expansion what challenges it is facing in the European region especially in Italy has been
elaborated. The change in the external and internal environment of the firm has been
elaborated with the help of analysis on various macro and micro factors. This report gives the
idea about the factors that are effecting the industry as well Since the changes in the
competitive environment has brought difficulties for the cited firm hence they will have to
ensure that they construct effective competitive strategies so as to ensure long term
development of the organisation. Use of strategies such as porter’s generic strategies will be
beneficial for the organisation. Franchising is the mode of expansion that this company has
made for itself. It is found that company will have to look at their external environment and
must add new suppliers and distributors in their pool.

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Contents
EXECUTIVE SUMMARY........................................................................................................1
INTRODUCTION......................................................................................................................2
Company’s background..........................................................................................................2
Industry background...............................................................................................................2
Key challenges faced by the company...................................................................................2
External environment analysis...................................................................................................3
Internal environmental analysis.................................................................................................5
Competitive strategies................................................................................................................6
Strategic Direction and method of expansion............................................................................6
RECOMMENDATIONS...........................................................................................................7
Conclusion..................................................................................................................................7
REFERENCES...........................................................................................................................8

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INTRODUCTION
In the last few decades, competition in different industries has increased to very high levels.
This has made it necessary for the organisations to understand the internal and external
environment. The analysis is also essential for understand their strengths and weaknesses as
well as the threat and opportunities that is present in front of them (Rabellotti, 2016). This
will help the firms in constructing their competitive strategies on the local and global level.
All the organisations have used different types of methods of expansion so as to ensure their
growth in the industry. In food industry Five Guys enterprise is one of the biggest fast casual
restaurant chain dealing in the business of selling of hot dogs, French fries and hamburgers.
This report analyses macro and micro factors so as to understand the actual internal and
external environment of Five guys in Italy. It also analyses the competitive strategies that has
been made by the companies so as to understand the competitive direction of the firm in the
Italy. This report also gives the idea about the method of expansion that this firm has chosen
for its growth in the long term.
Company’s background
Five guys is one of the biggest American fast casual restaurant chains. This is specialised in
the business of French fries, hamburgers and hot dogs. Along with this it also deals in the
business of milkshakes in multiple flavours. This company was established in the year 1986.
Till 2001, it was only operating in five locations of Washington DC. In 2003, company
started to expand at much faster rate by choosing franchising as their expansion strategy. Due
to this in 2016, it was operating in more than 1500 locations in world and further 1500
locations were under development (Owler, 2018). This is the reason that they become one of
the fastest growing fast food chains in United States. Its sale increased by 32.8% from 2010
to 2011.
Industry background
Fast food chain industry is one of the biggest industries in America. It is worth 198.9 billion
U.S. dollars. Till 2020, it will be reaching to 223 billion USD. There are many big
competitors in the market and hence ensuring large market share would be a challenge for
any company. McDonalds leading the industry in terms of market share (S&P Global Rating,
2018). Till 2016, there were around 186,977 franchised restaurants in US which were just 28
thousand just a decade back.