Analysis of Subway: Strategy And The Global Competitive Environment

The report provides a deep insight into the external factors affecting the Subway brand. It covers the PESTLE analysis, SWOT analysis, and Porter's five forces analysis to describe the competitive advantage in Trinidad and Tobago. The report also evaluates the strengths, weaknesses, opportunities, and threats of Subway and provides recommendations for the company to sustain its competitive advantage.

Analysis of Subway 0
Strategy And The Global Competitive
Environment
Danika Danny

Analysis of Subway 1
Executive Summary
The report will provide a detail discussion of the strategic marketing tools that help Subway
in analyzing in a competitive position in Trinidad and Tobago. It will cover the analysis of
the external factors that describe the factors which influence the brand image of the company
and further describes the strength and the weakness of the company. It covers Porter's five
forces to describe the competitive advantage in Trinidad and Tobago.

Analysis of Subway 2
Contents
Executive Summary...................................................................................................................1
Introduction................................................................................................................................3
The PESTLE analysis of Subway..............................................................................................4
A SWOT analysis of Subway....................................................................................................6
Strengths of Subway..............................................................................................................6
Weakness of Subway.............................................................................................................7
Opportunities for Subway......................................................................................................7
Threats of subway..................................................................................................................8
Five Forces of Subway...............................................................................................................8
Conclusion................................................................................................................................10
Recommendations....................................................................................................................11
References................................................................................................................................12
Appendices...............................................................................................................................14
SWOT Analysis...................................................................................................................14
Five forces of Subway..........................................................................................................15

Analysis of Subway 3
Introduction
Strategic analysis refers to the inquiry of the internal and the outward environment in which
the business operates. It helps the company to undertake effective strategic planning by
considering the opportunities and the threats in the external and the internal environment. It
guides the actions of the organization and helps in sustaining the competitive advantage of
the organization. The further paragraphs will provide a deep insight into the external factors
affecting the Subway brand (Mullins et al, 2013).
Subway is an American fast food restaurant chain which was opened in the year 1965 and is
well recognized for submarine sandwiches and salads. It is the second leading fast food chain
in the Trinidad and Tobago. It promotes the advertisement to eating fresh and always uses the
freshly baked ingredients for its products. It provides the opportunity to the customers to
customize their sandwiches and focuses on delivering value to the customers. The first
restaurant of Subway was formed in the year 1992 at Trinidad and Tobago. It is the second
largest quick serving restaurant in Trinidad and Tobago and consists of 43 restaurants in
Trinidad and 3 in Tobago. Subway provides food that is tasty and healthy (Subway, 2018).
The company adopts franchise methods and generates higher revenue. It is currently
operating in 113 countries with approximately 45000 stores. Due to the adoption of the
franchise method, it becomes imperative for the company to make the strategic planning
considering the external factors of the different countries to sustain the competitive advantage
and deliver value to the customers. Strategic analysis of Subway will include the analysis of
the external factors that affect the company, its threats, and opportunities, Porter's generic
strategy to analyze the changes in the dynamics in which the business operates (Subway,
2018)

Analysis of Subway 4
Analysis
The PESTLE analysis of Subway
PESTLE analysis refers to the marketing tool that helps the company is analyzing the
external environment of the country where the company operates. It provides a deep insight
into the trends in the market of the country. External factors are not in control of the company
(Drummond, Ensor and Ashford, 2010).
Political factors
The political factors majorly affect the functioning of the company. The company
adopts health and safety regulations. The company focuses on ensuring proper
packaging and distribution channels. Adoption of the franchise method makes it
imperative for the company to follow the guidelines of all the specific countries to
ensure that customers are satisfied. Such factors are considered to deliver the taste
according to the expectations of the customers. The company has developed a dealer
code of conduct that disallows human transferring and mandatory Labor actions. The
ministry of finance applies the value-added tax on the goods and the services created
in Trinidad and Tobago. It charges 12.5% tax on the goods and services (Greer,
2016).
Economic factors
The consumers at Trinidad and Tobago have high disposable income and do not
hesitate in purchasing expensive products. The company has the ability to adapt to
changing trends. It provides a healthier option to the customers and provides low-
calorie food to the customers. The impact of recession leads to a decrease in the
demand for the products as the consumers were not able to purchase high price
products (Claudiu, Anderei and Gabriela, 2011).

Analysis of Subway 5
Socio-cultural factors
Changes in the millennials demographic and preferences of the customer affect the
business operations. In Trinidad and Tobago, there is a high demand for fresh food
because it adopts the culture of working women and people found their fresh food at
Subway. Subway is able to meet the changing demands of the customer and offers
fresh and healthy options to the public. The cultural diversity at Trinidad and Tobago
develops the need to develop a menu that targets the need for all the different religion
customers and expand the market share (Edwards, 2012).
Technological factors
The technical factor also plays a major role in the expansion of sales of the company.
Subway at Trinidad and Tobago adopts the latest technology to provide the services in
accordance with the expectations of the consumers. The company has a high presence
on social media platforms. It uses the technical apps to provide a clearer view of the
menu and provides the facility of customizing the menu choice (Edwards, 2012).
Environmental factor
Environmental degradation is a major issue faced by Trinidad and Tobago. It faces the
challenge of deforestation and risk of flood, fishing depletion, illegal dumping.
Subway works with IPC and focuses on delivering products that are safe and healthy.
It does responsible for farming and fishing for sustaining the natural resources and
adheres to gold standard food safety and quality control. It adopts sustainable
agricultural and manufacturing practices to protect the environment (Treadwell,
2019).
Legal factors
The ministry at Trinidad and Tobago implies various laws regarding quality standards
and food safety. The Public Health Supervisor of Trinidad and Tobago has the

Analysis of Subway 6
accountability of safeguarding that food presented for sale is healthy and safe. The
company has to adhere to various laws laid by the ministry of health. The company
requires attaining the certificate of sale of goods and services and sanitization prior to
the sale of the goods. The role of government is highly involved to assure food safety
and standards. (Learn Marketing, 2018).
A SWOT analysis of Subway
SWOT analysis describes the internal functioning of the company. A SWOT analysis helps
the company to analyze its position and can alter the changes required for sustaining the
competitive advantage (Refer to appendix 1). Such factors can be controlled by the company
(Treadwell, 2019).
Strengths of Subway
Many locations
Subway has 43 restaurants in Trinidad and 3 in Tobago to understand the diverse
culture of the country and meet the changing demands of the customer. It helps the
company to create a strong brand image and expand its sales by serving in the
scattered market (Jurevicius, 2013).
Many years’ experience
The company was developed in the year 1992 and is able to understand the changing
needs of the customer and deliver a better experience to them. The company is able to
make the innovations in its food menu and the services according to the preferences of
consumers at Trinidad and Tobago (Farrell, 2010).
Affordable pricing and quality
The involvement of government is high in Trinidad and Tobago. The company
adheres to all the laws and deliver a quality product for its customers. It delivers a

Analysis of Subway 7
fresh and customized menu to the customers. The population at Trinidad and Tobago
have high disposable income and the company sets the price considering the target
market (Farrell, 2010).
Weakness of Subway
Satisfaction and the level of service
Due to the adoption of the franchising method, it does not provide the same level of
satisfaction across the global and however hampers the brand appearance of the
company. The staff is not trained the same at all the locations (Liutu, 2010).
It does not gather information about competitors
The company is not highly responsive to gather information about the competitors and
make the changes accordingly which creates a challenge for the company to attract
potential customers (Liutu, 2010).
Opportunities for Subway
Diversification
The company has a wide opportunity to make its menu healthier because the
population at Trinidad and Tobago are getting health conscious. It can avail the profits
of natural, grass-fed and hormone-free meats to outgrowth consumer attention in
organic meat and poultry (Aliouche and Schlentrich, 2011).
Direct relationship with the suppliers
The company has the opportunity of maintaining the direct relation with the suppliers
and getting the raw material to provide quick services to the customers.
Expansion opportunity
In Trinidad and Tobago, the company has wide expansion opportunities because it is
becoming a greater tourist spot and has the cultural diversity which includes the

Analysis of Subway 8
following of wide religions. This provides the opportunity for the company to
reinvent its menu according to the tastes of the customers (Aliouche and Schlentrich,
2011).
Threats of subway
Increase in the operational cost
The government of Trinidad and Tobago has implied property tax act which indicates
to an growth in the rent of the company. However, the rent increases in every three
years which leads to an upsurge in the operational cost of the company (Digital
Journal, 2018).
Competition
The major threats for the company at Trinidad and Tobago are Kentucky Fried
Chicken and Pizza Hut because it adopts the continuous changes in the menu to
capture the market and increase its revenue (Digital Journal, 2018).
Five Forces of Subway
The company adopts the competitive strategy of creating differentiation in its services. It
focuses on providing unique products and services to sustain its competitive advantage and
expand its market. (Refer to appendix 2)
Bargaining power of customers
It refers to the influence of the customers over the firm. It is analyzed that the
customers at Trinidad and Tobago have medium force because the company provides
its product at the high and medium prices while the competitors adopt the low pricing
strategy. So the customers shift to the other brands. Subway provides a fresh and
healthy menu to its customers which lessen the chances to shift to other brands.

Analysis of Subway 9
However, the bargaining power of the customers is medium because the company
targets the niche market and provide healthier choices to the customers. The company
is famous for providing a fresh and healthier menu to satisfy the emerging needs of
the customer (Mind Tools, 2018)
Threat of substitution
It refers to the degree with which the customers can shift to the other brands. It is
analyzed that Subway at Trinidad and Tobago face a high degree of substitution
because the main competitors of the company such as Kentucky Fried Chicken and
Pizza Hut develop continuous innovations in its product and provide the product at
the lower prices. The needs of the customer are getting satisfied at the other brands
which create a major threat for the company to sustain its competitive advantage.
However, the company faces a high degree of substitution which hampers the brand
image of the company (Keisha, 2018).
Bargaining power of the suppliers
It is analyzed that Subway suffers low bargaining power of the suppliers because it
has a strong brand image. The suppliers do not want to lose their market for the
company who has a very strong brand image. The company ensures to maintain good
relations with its suppliers so that the company does not face the shortage of raw
material and have the availability of the fresh materials. It makes continuous efforts to
adhere to the quality standards and provide the best product to the consumers
(Siriwardena, 2009).
The threat of new entrants
It refers to the degree with which the new entrants can capture the market. The threat
of new entrants is medium because the government of Trinidad and Tobago applies
various laws which create high operational cost. However, it becomes difficult for the

Analysis of Subway 10
new entrants to operate in the country. Subway is the second largest food chain in
Trinidad and Tobago. The company is successful in the country and enjoys a strong
brand image, therefore, it becomes difficult for the new entrants to develop a strong
market and sustain its competitive advantage over Subway (Keisha, 2018).
Rivalry
The power of rivalry is high in Trinidad and Tobago because the company faces
strong competition with Kentucky Fried Chicken and Pizza Hut and has a strong
brand image in the market. It is analyzed that the Kentucky Fried Chicken and Pizza
Hut adopts the continuous innovations and different pricing strategy to capture the
mass market and develop its competitive advantage. However, the company faces
strong rivalry competition because the other companies also provide the food that is
fresh and brings a healthy menu to fulfill the needs of the customers (Malone, 2017).
Conclusion
From the above discussion, it is analyzed that Subway has a strong brand image at Trinidad
and Tobago and is famous for its fresh and healthy menu. The company focuses on
maintaining its market share by developing innovations and providing wide healthier choices
for its customers. The ministry of Trinidad and Tobago has developed various laws to ensure
the product quality and delivery of safe products. However, Subway adheres to all the laws
and delivers a quality product to its customers. It effectively contributes towards the
sustainable environment by practicing the principles of responsible fishing and farming. The
company works with IPC to share the vision with the partners who are socially responsible
and reduce the harmful impact on the environment.
From the above analysis, it is evaluated that Subway has a strong brand image and makes
continuous efforts to deliver value to its customers. It helps in evaluating the factors that can

Analysis of Subway 11
hamper the growth of the business and creates the bottleneck in sustaining the competitive
advantage of the company.
Recommendations
To expand the target market the Company must focus on adopting the different
pricing strategy in relation to its competitors. It must not only target the niche market
but must focus on the diverse income group population to develop a strong brand
image at Trinidad and Tobago.
It is analyzed that there is an emerging need for the company to scatter its market
because Trinidad and Tobago focus on getting local and provides the mass
opportunity to satisfy the diverse needs of a diverse cultural population.
The company must focus on providing the franchise to the partners who are socially
responsible and provide the training to the staff to deliver constant service all over the
globe and creates strong brand recognition.
The company must focus on using the resources efficiently to effectively contribute
towards the sustainable environment and must involve in adopting the practices that
adopt the principles of responsible farming to address the major environmental issue
of Trinidad and Tobago.
Subway must increase its technological presence to create strong brand recognition
and providing ease to the customers. It must develop the options of customizing the
menu to provide higher satisfaction and increase the profitability of the company. It
must evaluate the methods to create strong brand awareness.

Analysis of Subway 12
References
Aliouche, E.H. and Schlentrich, U.A. (2011) Towards a strategic model of global franchise
expansion. Journal of Retailing, 87(3), pp.345-365
Claudiu, C.S., Anderei, P. and Gabriela, P.M. (2011) Internal environment analysis
techniques. Annals of Faculty of Economics, 1(2), pp.731-736
Digital Journal. (2018) Trinidad and Tobago PESTEL Analysis, SWOT Analysis and Risk
Analysis Market Research Report Launched [Online]. Available from:
http://www.digitaljournal.com/pr/3597678 [Accessed 20/2/19]
Drummond, G., Ensor, J. and Ashford, R. (2010) Strategic marketing. London: Routledge
Edwards, L. (2012) Capitalism in Disguise: A Critical Investigation of the Recent Influx of
Fast Food Chains in Trinidad and Tobago and Its Socioeconomic Effects [Online]. Available
from: http://ncurproceedings.org/ojs/index.php/NCUR2012/article/view/642 [Accessed
20/2/19]
Farrell, T.M. (2010) A tale of two issues: nationalization, the transfer of technology and the
petroleum multinationals in Trinidad-Tobago. Social and Economic Studies, pp.234-281
Gonzalez, O. (2012) Trinidad and Tobago Food Service Sector Report [Online]. Available
from: /Users/System04092/Downloads/20120513184838932%20(1).pdf [Accessed 20/2/19]
Greer, A.A. (2016) Fast Food Nationalism: Culinary Politics and Post-colonial Imaginaries in
Trinidad and Tobago. Sociology and Anthropology, 4(2), pp.99-105
Jurevicius, O (2013) SWOT analysis of Subway [Online]. Available from:
https://www.strategicmanagementinsight.com/swot-analyses/subway-swot-analysis.html
[Accessed 20/2/19]

Analysis of Subway 13
Keisha, F., (2018) Subway PESTLE Analysis [Online]. Available from:
https://pestleanalysis.com/pestle-analysis-of-subway-restaurants/[Accessed 20/2/19]
Learn Marketing (2018) Competitor Analysis [Online]. Available from:
http://www.learnmarketing.net/competitoranalysis.htm [Accessed 16 February 2019]
Liutu, R. (2010) Subway Market Research [Online]. Available from:
https://www.theseus.fi/bitstream/handle/10024/23519/Liutu_Riina.pdf [Accessed 20/2/19]
Malone, D. (2017) Subway updates restaurants, a brand with fresh design and improved
customer experience [Online]. Available from: https://www.bdcnetwork.com/subwayfrch
[Accessed 20/2/19]
Mind Tools (2018) Porter’s Five Forces: Understanding Competitive Forces to Maximize
Profitability. [Online] Available from:
https://www.mindtools.com/pages/article/newTMC_08.htm [Accessed 16 February 2019]
Mullins, J.W., Walker, O.C., Boyd, H.W. and Larreche, J.C., 2013. Marketing management:
A strategic decision-making approach. New York: McGraw-Hill
Siriwardena, T. (2009) Marketing Plan for SUBWAY. Marketing, pp.16-17
Subway. (2018) About us [Online].Available from: https://www.subway-tt.com/about/
[Accessed 20/2/19]
Subway. (2018) Sustainable sourcing [Online]. Available from: https://www.subway.com/en-
TT/AboutUs/SocialResponsibility/SustainableSourcing [Accessed 20/2/19]
Treadwell, L., (2019) The Role of Macro Environment in the Retail Industry [Online].
Available from: https://smallbusiness.chron.com/role-macro-environment-retail-industry-
33419.html [Accessed 20/2/19]

Analysis of Subway 14
Appendices
Trinidad and Tobago have wide cultural diversity and is becoming a tourist spot. It has wide
culture presence and varying needs of the population. The population at Trinidad and Tobago
are getting more health conscious which leads to fluctuations in the demands of the
population. Per capita GDP was estimated at USD 15342.18 whereas purchasing power parity
(PPP) based per capita GDP was estimated to be at USD 31870.29. The population has high
disposable income and does not hesitate in paying prices for the value. The ministry of inland
adopts laws to provide food security to its population.
Appendix 1 SWOT Analysis
Strengths
 Many locations
 Many years of experience
 Affordable pricing and quality
Weakness
 Satisfaction and level of service
 It does not gather information
about competitors
Opportunities
 Diversification
 Direct relationship with
the suppliers
 Expansion opportunity
Threats
 Increase in the operational cost.
 Competition
Appendix 2 Five forces of Subway
Bargaining power of customers Medium
Threat of substitution High
Bargaining power of the suppliers Low
The threat of new entrants Medium
Rivalry High

Analysis of Subway 15