Analyzing International Marketing Channels & Equity Finance

This assignment involves analyzing two key aspects in business management: international marketing channels and equity finance. It requires examining the strategies suggested by Yang et al. (2012) and Akaka et al. (2013) for dealing with institutional distances and service ecosystems respectively, in international marketing. Additionally, it necessitates evaluating the benefits and disadvantages of equity finance, drawing insights from 'Benefits and Disadvantages of Equity Finance' by Online (2017). Furthermore, a value chain analysis will be performed using Jurevicius's (2013) method to understand the competitive advantage of Five Guys. Lastly, the assignment will consider how taxation affects businesses in Tasmania based on information from the Tasmanian Government's website.

INTERNATIONAL
MARKETING

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................1
INTRODUCTION...........................................................................................................................2
QUESTION 1...................................................................................................................................2
Macro and competitive factors that impact global fast food industry....................................2
QUESTION 2...................................................................................................................................4
Internal business environment of Five Guys Burgers............................................................4
QUSETION 3...................................................................................................................................9
Potential target markets of Japan, India, Singapore and China..............................................9
Question 4......................................................................................................................................13
Appropriate mode of entering into India..............................................................................13
QUESTION 5.................................................................................................................................15
Socio cultural factors and market mix..................................................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17
APPENDICES1.............................................................................................................................19

EXECUTIVE SUMMARY
Recently, many companies that have expanded their business overseas. Globalisation has
facilitated companies in achieving overseas expansion easily. It has also made it compulsory for
such companies to have a global marketing strategy so as to survive the cut throat competition.
The industry of fast food has a higher scope as there is a shift in the eating habits of people. This
has created opportunities for fast food companies to expand its business in many parts of the
world. Five Guys is a Hamburger company that has excellent business record in the past and a
very different style of doing business. This company wants to expand its business in some of the
selected countries like China, India etc. where the big competitors like McDonalds have captured
the larger part of the market share.
1

INTRODUCTION
In the modern business style and present global industry environment, it has become
important for organisations to have an excellent marketing strategy. Globalisation has increased
the competition now more than ever (Berthon et.al., 2012). It has helped companies to operate its
business worldwide (Czinkota and Ronkainen, 2013) and hence, increased the need of having
international marketing strategy. This concept evolved with the emergence of multi-national
companies and their expansion plans outside their origin market place. Five Guys Burger was
opened in the U.S. in 1986. This company wants to expand its business in many other regions of
the world. This report highlights the ways in which the company can expand its business in many
parts of the globe. This report also showcases competitive business that is present in the global
market as well as marketing strategy that is made by the company to expand its market share.
QUESTION 1
Macro and competitive factors that impact global fast food industry
Fast food industry is growing at a faster rate. This is due to the reason that eating habits
of society have shifted to eating fast foods. There are many big brand names in the fast food
industry across the world such as Macdonald’s, Burger King and Wendy’s. These companies
bring higher competition to potential new entrants into the market. The use of PESTEL analysis
will be use to evaluate the macro environmental factors that Five Guys Burger need to consider.
They are:
Political: For this company, it is important to understand that governmental policies are
changing all over the world and it is important for companies to comply with same (Cadogan,
2012). Political factors relate to tax laws, trade restriction, tariffs and law (Hollenson, 2012). The
escalation of taxes is an important political factor that will affect the bottom line of business and
the disposable income of individuals (Tasmanian Government, 2017). Lower taxes also means
that prices of burgers will remain low for customers and this will create a surge in demand for
burger products. Service tax has made fast foods expensive which can restrict many customers to
go to its outlets.
Economic: The instability in European market as well as the slowdown of American
economy has posed a serious threat to this industry as people are not willing to spend their
money on this fast food chains. Economic factors affects exchange rate, growth per capital and
2

GDP of any economy (Hollenson, 2012). Five Guys Burger is having less amount of monetary
value as compared to its big competitors like McDonald’s who have large amount of resources to
capture market. Alongside this is the rise in inflation and the GDP in developed societies which
significantly impacts the purchasing power of people (Kotler and et. al., 2017).
Social: Most of the sections of society have moved towards Fast foods because of their
busy lifestyle. Some people do not have the time to cook their own meals from the scratch. As
fast food industry is providing a large variety of fast foods so, it is capable of luring many kinds
of taste buds which help in attracting many people to their outlets (Whitelock, 2013). Along with
this is the change in perception and taste of consumers which impacts on overall sale figures
Technological: Five Guys Burgers relies on technology to serve its customers across
their stores. They also rely on this to place their order from suppliers. Thee advancement of
technology in allowing customers to place their order online or at the store then collect their
order through drive in or from the service desks. Five Guys Burgers can apply or upgrade their
computer systems in order to improve its operational efficiency. It has also empowered the
marketing mechanism(Akaka, Vargo and Lusch, 2013).
Legal: All businesses must act in accordance with both international and domestic law
such as those that deal with competition. They need to meet employment standards and quality
requirements. Five Guys Burgers has the opportunity for growth due to import and export
legislation and regulations that support new trade agreements. The company has opened 41
stores in the UK and may be looking to open more stores in the UK. However due to current
Brexit talks, they may need to enter into dialogue with the UK government on how to operate its
stores to comply with the law. Five Guys Burgers can also enhance its performance on
sustainability to exceed what is expected and required by environmental protection laws.
Environmental: The demand of societies like generating less wastage and less usage of
plastics for packaging purpose have made companies to think in environmental friendly ways
(Yang, Su and Fam, 2012). In addition, scarcity of resources, climate change and economic
development causes there to be both regional and international policies to protect the
environment. Environmental factors lead to corporate social responsibilities with particular
reference to pollution, waste management or resources considered to be scarce such as waste.
3

QUESTION 2
Internal business environment of Five Guys Burgers
In order to understand internal business environment of Five Guys Burger, one of the
most important tools that can be used is Porter's value chain. Michel Porter defined Value chain
as a set of activities that companies perform in order that they can produce valued services or
products for the market. Value chain is a basic tool used to analyse the performance of any firm
and the interaction on all their activities. There is more profit and competitive advantage in the
market for firms that create valued product or services (Porter, 1985). These value activities are
divided into two types, Primary and Support activities.
Diagram 1 Porters Value Chain (Jurevicius, 2013)
Primary activities: These are directly related with the sale, maintenance, physical creation and
support for products and services.
Inbound logistics  These are related with granting, storing
and arranging resources within a firm.
They receive excellent quality of raw
materials from their suppliers. This has
helped the company in maintaining its
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quality standards. However, they have
to be seen to meet both national and
international Food Hygiene Standards.
Operations  The operations are smoothly working in
all its outlets. They have an excellent
management staff who are known for
their situational leadership skills which
has helped company in coming out of
its daily arisen issues related to
operations. In addition, they ensure that
all their products are manufactured and
sold in accordance with all regulations
and policies. They ensure that all their
franchises are up to the standard
required.
Outbound Operations  Five Guys Burgers have both domestic
and international stores. They have
stores in Canada, UK, Saudi Arabia and
the United Arab Emirates. Since 2006
the company has grown 792%. They
have 200 stores that they own and 839
that are franchised. Therefore outbound
activities will include the retailing of
finished products to all of their stores.
The delivery of products to the
customers are perfectly fine. The
distribution system has helped the
company in supplying the best quality
food materials to its clients. The
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products delivered by the company are
tangible and according to the customer's
expectations- fresh handmade burgers
that are not frozen.
Marketing and sales  This is one of the essential factors on
which the company success depends.
They have used many kinds of
marketing and advertising channels to
reach their target audience and improve
its brand image and increasing pre-sale.
Use of digital marketing strategy has
helped the company in reaching to
larger sections of the society.
Service  This is one of the most important
factors that adds value in the eyes of
consumers. Five Guys Burger deals in
the business of delivering excellent fast
foods to the customers.
Supporting activities: These are several activities that are conducted by company so as to
support its primary activities which help them in achieving their goals on time.
Procurement  Company is making many efforts to
find out new vendors in US and around
the globe (Douglas and Samuel Craig,
2011). This is to fulfil the demands of
the suppliers who are offering services
to its clients on time and as per their
6

requirement. The company also ensures
that there is seamless interaction
between their operations team,
suppliers, and distributors to maintain
the supply chain efficiency and help
them deliver on the promise of the
perfect burger for customers. Such
vendor was itradeNetwork which deals
with the whole supply chain
management, including pricing
compliance, repository for information
on trading partners and control of
product.
Human Resource management  Five Guys Burger has one of the
excellent human resources in industry
and hence, company is making total
efforts to retain them by meeting their
needs of personal and professional life.
 Five Guys Burgers employs
approximately 259 employees and
made an estimated $12.3 million dollars
in 2016. Many of their workers are of
diverse culture, religion and race as
they believe in diversity which brings
about creativity and innovation
(forbes.com)
Technological development
 Five Guys Burger uses ICT for making
internal and external communications.
This has helped the company in
marketing as well as managing
customer relations in a better way. The
7

technological developments related to
management of data has helped the
company in evaluating information and
hence, taking business decisions
carefully.
Infrastructure
 Cited Company has approx. 1039 stores
in US and Canada and is planning to
start 1500 more in the coming years. It
has 200 stores of its own and around
839 franchised store.
SWOT analysis of Five Guy's Burger
Strengths:
 Customised burgers.
 It has proved that it can compete with
the big competitors such as McDonald
as well as Burger King.
 This company franchises only well
qualified applicants.
 High customer retention level- voted
the best burger in 2012.
 It serves only fresh food and hence do
not use any freezers.
 It expends a lot on employees as their
pay scale is on the higher side.
 No trans-fat in their food.
 Strict brand control
Opportunities
 It has planned to open new stores in UK
and Canada.
 They can expand their menu items so as
to meet the needs of people who want a
healthy option such as salad.
 Possibility of global distribution instead
of just in the US.
 Can start advertising.
 Possibility of delivery.
8

Threats
 Bigger competitors have large variety
of foods to offer to its clients- e.g.
MacDonald’s, Burger King.
 Have high caloric intake.
 Weak economy.
 Changing rate of Tax and currency
convergence.
 An increase in competitor activity can
affect its market share.
Weaknesses:
 Resistant towards expanding food
portfolio.
 Cooking food in peanuts oils and hence
health standards are maintained
(Fletcher and Crawford, 2013).
 It uses strict suppliers which has
weakened the global sale.
 No global presence and low market
share compared to other giant players
e.g. MacDonald’s.
 Low advertisements on mainstream
media.
High start-up cost for franchises. They need to
have a net worth of at least $1.5 million and
liquidity of $5000,000.
QUSETION 3
Potential target markets of Japan, India, Singapore and China
This company is expanding its business in many parts of world. Some of the regions that
it has targeted is Japan, India, Singapore and China. One of the basic benefits of this market is
that they have highly dense population which ca become an excellent source of income for the
company (Griffith, 2010). This part highlights the market what India can offer for this company.
One of the basic advantage of doing its business in a country such as India is that they
have an extensively dense population especially in the urban areas. It’s market attractiveness can
be analysed using 12C's. The 12C’s is the most useful tool used to develop profiles of
international markets (Doole and Lowe, 2008).
9

Japan India Singapore China.
Country Having
population of
around 127
million. It
GDP is
around $ 5.4
Trllion
Over 1.3 billion
people,
world’s fourth largest
population. Increased
life expectancy
(World
Bank, 2017). GDP
increased to 7%
(Trading
Economics,2017)
This country has 3
highest GDP per
capita having a
population of 5.6
million residents.
This country is having
1.404 billion peoples.
GDP of around 23.122
Trillion.
Choices This is limited
here as their
love for their
own food is
higher.
Increased
employment,
incomes, connectivity,
convenience and
access
has been driving
consumer spending
(Ramkumar, 2016).
It is high. Due to large cultural
divergence the choices
are on the larger.
Concentration Its
concentration
is is average
but the cities
like Tokyo can
act as highly
dense markets.
Urban population is
32.8% (Worldometers,
2017) and New Delhi
(capital) has over 18.6
million people (I.O.P,
2016).
Concentration is
less than other
three.
It is the most populated
country of the world.
Hence there is highly
concentrated cities.
Culture Their culture is
that thy love
their own food
most.
Diverse culture in
language, religion,
class
and regional. Society
is
hierarchal (Asia
society, 2017).
They have a rich
culture that loves
food diversity.
The culture is that they
also loves fast food but
the dominance of their
own food is higher.
Consumption Consumption
capacity is
less.
Private consumption
increased at 10.1%,
public expenditure
also
increased
(FocusEconomics,
They have less
consumption
capacity.
Consumption capacity
is higher.
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2016). Demand for
licensed toys also
increased
(EmpoweredNews,
2017).
Capacity to pay There are
higher per
capita income
which result in
higher capacity
to pay.
Unemployment rate
4.80% and expected to
decrease to 4.60% by
2020
(TradingEconomics,
2017).
It is on the higher
side.
It is on the average
because there is mix
economic health.
Currency It is average.
1 Japanese yen
= 0.0090 USD
INR-Indian Rupee
1 INR = 0.0152725
USD
(XE , 2017).
Appreciation-increase
in
value, exchange rate
stronger (Trading
Economics, 2017).
One Singapore
Dollar equals 0.74
USD
1 Chinese Yuan = 0.15
Dollar
Channels of
Distribution
It is excellent Manufacturers use
three-tier system;
redistribution stockist,
retailers and
wholesalers
(Export.Gov, 2016).
It is good. There is very effective
distribution channels
Commitment It is excellent
in Japan
Companies have to
pay
corporate tax and
import taxes
(Export.Gov, 2016).
Commitment is
average.
Commitment is on the
higher side.
Communications It is best in all
four and has
best
technologies
implemented
there.
E-commerce platform
gaining importance
due to
increased number of
internet
and mobile users.
Media industry is
growing
promptly with firmest
growth of TV (largest
It is good. Communication is
better from India and
Singapore
11

growing sector). TV
growth
rate with comparison
to
BRIC have second
place.
Radio and digital
advertisement is likely
to
grow according to
forecast
in 2020 (IBEF, 2017).
1 billion telephone
users.
Internet users in
462,124,989. FB-
157.000.000 users.
Total
users-24.9% of Asia.
(IWS, 2017).
Contractual
Obligations
It is good for
doing
business.
Member- World Trade
Organization (WTO).
Legal system-common
English model system.
Reduced control over
foreign investment
and trade
(CIA, 2016).
Food product approval
by
FSSAI for ‘branded
food’
(Export. gov, 2016).
It is best in all four. It is slightly harsh.
Caveat It is somehow
developed and
hence is an
excellent
market for
entering.
Cultural differences
(WBC, 2016).
It is slightly stable
economy.
It is one of the fastest
developing countries of
the world.
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 Country: India is the country that is growing at much faster speed as compared to any
other Nation of the world. It has a large amount of young generation people that can be
an excellent target market for Five Guys.
 Concentration: India is one of the most populated country and has cities that have
millions of customers to offer to Five Guys.
 Culture and Consumer Diversity: In India there are very large diversity in the taste of
food. So many cultures exist in the same country offers such an population that have
diverse taste buds and hence can help company in their business. There is large diversity
in the economic conditions of the population which also helps in making different ranges
of products.
 Choices: The consumer choices are heavily impacted by the cultural differences in the
country. Traditional variances provides very different kinds of taste choices to the people.
 Consumption: This population has high consumption capacity as their love for variety of
foods is well known (Meissner, 2012). The business of McDonald in India is an prime
example that Five Guys has an excellent scope in this country.
 Contractual Obligation: India has a very lenient contractual obligations. The labour laws
and customer laws are far more lenient than many countries of the world.
 Commitment: This is related to the administrative system. Despite of many loop holes it
provides excellent administrative environment for the development of fast food chains.
 Channels: India has an excellent distribution channel when it comes to food industry.
They have low cost distribution channels which can help Five Guys in its operation
especially when there is constraints of resources.
 Communication: It is on the positive side as the communication industry in this country
is expanding at much faster rate as compared to any other nations. Even the cost of set
for communication channels is on the lower side.
 Capacity to pay: It is referred to as the customers ability to spend (Murphy, 2010). There
is very large amount of population that is having the ability to pay for the company's
product. Since the per capita Income of the population within the country is increasing
hence it will help company in making higher profits.
13

 Currency: The value impacts on the investment for the company In India it is one the
lower side which can help company in having higher profits even after investing low
amounts. Since the margin Between American Dollar and Indian Rupee is very high
hence it ensures that this company can make large profits.
 Caveats: India is growing at much faster rate as expected by the world but there are
certain economic hiccups that can pose threat for the company. There are many market
variables that may support the type of business Five Guys has been maintaining over the
years.
Apart from all these Market attractiveness for the company is high in India as compared
to Japan, Singapore and China as this country has a very large amount of population that are
under the age of 35 which can be an excellent market for the company.
Question 4
Appropriate mode of entering into India
There are modes of entering into any market namely Equity and Non-equity. These both
modes are appropriate but depends on the type of Market Company is opting to enter. In the
country like India where the currency is on the lower side the mode of entry that would be
suggested will be Equity. As the fast food industry is not as such where partnerships can be
profitable (Benefits and Disadvantages of Equity Finance. 2017). Especially in term of creating a
brand image as well as serving the quality of food. Hence Five Guys can open its own stores in
India and can attract a large number of customers towards its outlets. People in India love to
spend their evening time at fast food chain hence this can be beneficial for the company to invest
in this market (Paliwoda and Thomas, 2013). This mode has following advantages:
 It ensures autonomy of the company in its business and hence can model their business
model in the as per their requirement and capabilities.
 It helps company to utilise all its profits as per their demand in the country.
 Since the cost of investment in India is low hence it can be beneficial to make 100
percent investment and challenge its bigger competitors in the market.
 It will help company in making its brand image in the market.
 Equity mode ensures that Five Guys do not have to compromise with the standards of
services it is determined to serve.
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 It also ensure that quality of the food products is also maintained.
 If the company chooses to go for the joint ventures then it can take help of the partners
for understanding the local market. It also helps to understand the working culture of the
country.
QUESTION 5
Socio cultural factors and market mix
There are various socio cultural factors that effect while operating business in India.
Some of them are as follows:
 Hierarchy: People of India follows practice where the eldest member in the house takes
decisions regarding the food habits.
 Diverse society and beliefs: This country has lot of cultural variances as well as there are
different kinds of beliefs that are existing in the country (Papadopoulos and Heslop,
2014). They have different eating habits that will help company in reaching to the taste
buds of the masses.
 Characteristics of society:
 Prefers low cost products.
 Higher use of Spices.
 Per capita income is average.
15
Diagram 2 Brand Equity Model source: Equity model, 2017

 Love eating in the evening.
Marketing mix for the company Products: This company needs to have large variety of food products that will help Five
Guys in attracting more number of customers. Place: Since the cost of investment is low hence company can open large stores in the
mega cities and smaller outlets in smaller towns and urban areas. Price: The price range that this company can offer must be on the lower side as the
society of India loves cost saving (Ringle, Sarstedt and Straub, 2012). There is some
sections of the society that has higher incomes, company can produce its premium
products for them. This diversification in the income of the society helps company in
producing variable price ranged products.
 Promotion: Since this company has adopted a no promotion policy. They have to change
it if they have to enter into the markets of India and make their brand name. This can be
done through holdings and banners as well as promoting through the mediums such as
TV.
CONCLUSION
From the above based report it can be concluded that in order to expand in the
International market it is important for the Five Guys to make proper marketing plans. It is
helpful in tackling competition in the global market as well as ensuring that there is sustainable
16
source 1: Five guy's Burger, 2017

growth in the company's performance. As fast food industry is growing at a faster rate due to
changing habits of the people hence it is an excellent opportunity for the company to expand its
business outside America. There are many countries where this company can expand its business
one such nation is India which provides excellent market for the Five guys.
REFERENCES
Books and Journals
Berthon, P.R., 2012. Marketing meets Web 2.0, social media, and creative consumers:
Implications for international marketing strategy. Business horizons. 55(3). pp.261-271.
Cadogan, J.W., 2012. International marketing, strategic orientations and business success:
reflections on the path ahead. International Marketing Review. 29(4). pp.340-348.
Czinkota, M.R. and Ronkainen, I.A., 2013. International marketing. Cengage Learning.
Doole, I. & Lowe, R., 2008. International Marketing Strategy: Analysis, Development and
Implementation. 5th ed. London: Cengage Learning EMEA, 2008.
Douglas, S.P. and Samuel Craig, C., 2011. The role of context in assessing international
marketing opportunities. International Marketing Review. 28(2). pp.150-162.
17

Fletcher, R. and Crawford, H., 2013. International marketing: an Asia-Pacific perspective.
Pearson Higher Education AU.
Griffith, D.A., 2010. Understanding multi-level institutional convergence effects on
international market segments and global marketing strategy. Journal of World
Business. 45(1). pp.59-67.
Hollesen, S., 2012. Essentials of Global Marketing. 2nd ed. Harlow: Pearson.
Meissner, H.G., 2012. Strategic international marketing. Springer Science & Business Media.
Murphy, P.E., 2010. Marketing, Ethics of. Wiley Encyclopedia of Management.
Paliwoda, S. and Thomas, M., 2013. International marketing. Routledge.
Papadopoulos, N. and Heslop, L.A., 2014. Product-country images: Impact and role in
international marketing. Routledge.
Porter, M.E., 1985. Competitive Advantage. New York: The Free Press.
Ringle, C.M., Sarstedt, M. and Straub, D.W., 2012. Editor's comments: a critical look at the use
of PLS-SEM in MIS quarterly. MIS quarterly. 36(1). pp.iii-xiv.
Yang, Z., Su, C. and Fam, K.S., 2012. Dealing with institutional distances in international
marketing channels: Governance strategies that engender legitimacy and efficiency.
Journal of Marketing. 76(3). pp.41-55.
Akaka, M.A., Vargo, S.L. and Lusch, R.F., 2013. The complexity of context: A service
ecosystems approach for international marketing. Journal of Marketing Research.
21(4). pp.1-20.
Whitelock, J., 2013. Editorial. International Marketing Review.
Kotler, P. and et. al., 2017. Principles of Marketing, an Asian Perspective. Pearson Higher Ed.
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Online
Benefits and Disadvantages of Equity Finance. 2017. [Online]. Available through:
<https://efinancemanagement.com/sources-of-finance/benefits-and-disadvantages-of-equity-
finance>. [Accessed on 4th November 2017].
Jurevicius, O., 2013. Value Chain Analysis. [Online]
Available at: https://www.strategicmanagementinsight.com/tools/value-chain-analysis.html
[Accessed 09 11 2017].
Tasmanian Government, 2017. Taxation affecting your business. [Online]
Available at: https://www.business.tas.gov.au/finances-tax-and-insurance/taxation-affecting-
yourbusiness
[Accessed 16 11 2017].
APPENDICES1
PESTLE analysis of Five Guys
Political: The political policies have changed in many parts of the world and there have been
many new treaties that have made by the governments all around the world. It has effected food
industry as well.
Economic: Despite of poor performance of most of the economy it is favourable for the fast food
companies to do there business.
Social: Society have shifted towards having fast foods as people do not have time to cook food
for themselves hence it is good sign for the companies like Five Guys.
19

Technological: There have been many technological advancements that are going in the industry.
Which needs to be applied by the companies like Five Guys to do business in a better way.
Legal: Legalities of doing business have changed and hence it has become important for the
companies to operate in a better way so as to safeguard from legal compliances.
Environmental: Demand of doing environment friendly business have increased in the market
and hence Five Guys needs to reduce the wastage in the in their operations.
20