Strategic Management: Case Study Analysis

Running head: STRATEGIC MANAGEMENT: CASE STUDY ANALYSIS
Strategic Management: Case Study Analysis
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STRATEGIC MANAGEMENT: CASE STUDY ANALYSIS
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Mini-case Analysis
Is the world’s largest food franchise safe and free from strategic management issues
or there are threats that questions their managerial functions?
Subway is a privately owned American food franchise company, known for its
submarine sandwiches and salads (Subway 2019). It is one among the few fastest growing
restaurant franchises in the world and the largest single-brand food chain. Primarily located
all over United States, it had around 42,000 outlets in near about 112 countries all across the
world (Narishkin and Cameron 2019).
However, it is a matter of concern that even the largest of the franchises in the world
suffer from various strategic management issues that negatively affect their operational
systems and the way they function (Dabbene, Gay and Tortia 2014). In the past few years,
Subway has been caught up in such similar organisational issues.
Strategic issues faced by Subway
The major crisis faced by Subway at present is internal rivalry and weak leadership. It
began when, long time spokesperson of the company Jared Fogle was charged of possessing
child pornography and child molestation (Phillip and Larimer 2015). It was in 2015, that he
was considered guilty of all charges and subjected to 15 years of federal imprisonment.
Subway broke all ties with Fogle and had to undertake an entirely new marketing campaign
post his removal. In 2017, Subway hired Karlin Linhardt as their vice president. This was one
of the major hires on the company’s part as Linhardt was a big name, known for his
association with McDonalds. The big blow arrived when he suddenly resigned from the
position within a span of 8-9 months of his arrival. The marketing strategies were expected to
experience a major positive boom after he ascended the position but with the news of his
resignation, it continued to remain stagnant. There were also reports of conflicting ideas
related to establishing new changes in the company between Linhardt and CEO Suzanne
Greco.
A major decline in sales has been noticed since 2017 along with a decrease in the
number of outlets. According to reports, 2017 marked the fourth year of the food chain’s
declining state of sales. The United States outlet count fell by 909, which is a three times
larger loss than what the company accounted the previous year. The Subway franchisee war
began during the $4.99 deal which was a new version of the $5 Footlong deal. Various
franchisees started protesting against the deal by signing a petition as it was considered to be
Linhardt’s idea. According to the New York Post, that was one of the reasons behind
LinHardt’s departure Kosman 2017). Many outlets also complained that the profit and traffic
margin of the company was going down as the food and labour cost went on rising. In an age
when most of the consumers are conscious about the products, the franchisees also expressed
grievances regarding food supply. Due to the company being completely franchised, food
supply is controlled by the corporate offices. Therefore, the restriction of food supply only
from Subway recognised suppliers often caused a hindrance in making profit as the company
fail to meet up to the demand s of better quality products from the franchisees.
Another issue faced by Subway has been in terms of its products. There has been a
considerable lack of creative menu options as compared to competitors. The only noticeable
change in Subway’s menu has been the removal of artificial components. Back in 2014, food

STRATEGIC MANAGEMENT: CASE STUDY ANALYSIS
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blogger Vani Hari collected nearly 50,000 petitioned signature pointing out and protesting
against the use of Azodicarbonamide chemical in Subway’s bread (Babe 2014). The chemical
has been certified in the United Kingdom as a substance that can cause asthma. In another
occasion, CBC’s TV Series Marketplace ran an investigation in 2017 by putting chicken
products from Subway under a lab-test. It was pointed out that 50% of the DNA was
composed of Soy products (News 2017). There was also a controversy regarding the size of
the sub sandwiches which was considered to be less than that of the advertised size. It was
Australian teenager Matt Corby who took to his Facebook to post a picture of measuring a
footlong sub sandwich that was less that 12 inches, the size that was advertised. The post
soon went viral and people started complaining about the size of the subs. Moreover, the
constant expansion of the number of outlets have increased the quantitative output but the
quality of the food has often been compromised with. More focus have been intended
towards the number of stores rather than the quality of the products.
It can be considered that though the restaurant industry has experienced a boom all
over the world in the last few years and the demand for food chain service has been high
among consumers, they have repeatedly been a part of numerous strategic issues. Though
Subway has been used as a case in the paper, the issues mentioned have been a matter of
concern for food franchisees and the industry as a whole.
The identified strategic issues of Subway can be analysed and understood using
strategic frameworks like PESTLE Analysis and Porters Five Forces (Mishra n.d). These
frameworks would help to understand the threats and risks that the company can face in long
run due to the different issues it is currently facing.
The PESTLE analysis framework will give a complete idea about the macro-
environment of the market Subway is catering to. It will also analyse the different political,
economic, social, technological, legal and environmental factor that influence the business of
the company and how the issues can cause an hindrance to the regulation of such factors. It
can also be analysed that what are the scopes for the company to resolve their issues in the
given sectors.
However, the PESTLE framework would only provide an idea about the state and
scope of the external environment of the company (Dockalikova and Klozikova 2014). It is
also essential to understand the competitive environment of the company. When a given
company is undergoing any critical strategic issue, the majority of benefit is drawn by the
competitors in the market. Hence, having a detailed idea about the competitive market is as
essential for a company as resolving its strategic issues.
Porter’s Five Forces can be considered as the ideal framework that can help
understand the competitive market and what are the measures Subway need to undertake to
keep a check of the competition and not act up to their advantage (Dobbs 2014). Therefore, it
can be considered that strategic issues does not necessary fit into any specific or singular
strategic framework. Most often a combination of two or more strategic frameworks becomes
appropriate to understand and analyse the strategic issues faced by any company.
Looking at the issues that Subway is currently facing it can be questioned if the readers feel
if-
Do you think there is an immediate need for change in the core management of Subway?