Strategic Management and Business Expansion

The assignment provides a comprehensive overview of strategic management and business expansion, including Porter's five forces model, generic competitive strategies, and the impact of competitive strategies on organizational performance. References are cited from various books and journals, offering a detailed analysis of the subject matter.

STRATEGIC
MANAGEMENT

EXECUTIVE SUMMARY
Strategic management is process which includes various steps such as planning,
examining and assessment of operation process in order to meet organisational goals and
objectives. Strategic management aims at encouraging employees, analysing internal and
external environmental factors that affects operations of business. Following report explains
current strategic position of Five Guys organisation in EU market. Reports include pestle
analysis, porter's 5 force framework and Jay Barney's VRIO model. Study also contains strategic
recommendations to strengthen current position of organisation in EU markets.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Key challenges faced by Five Guys.......................................................................................1
External Environment.............................................................................................................1
Internal Analysis ....................................................................................................................4
Identification of Competitor strategies ..................................................................................6
Strategic Directions................................................................................................................8
CONCLUSIONS............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Strategic management make plans and strategies that encourages and motivates
employees and directs and controls operations and leads to accomplish business goals and
objectives. Five Guys business plan got success and then five brothers successfully opened
carry-out burger joint. European food industry Five Guys was founded in year 1986 and offers
food and drinks in European food market. Food and drinks sector is the biggest manufacturing
sector of world. The following study will cover expansion approach for Five Guys in order to
expand its business in global market. Study will analyse internal and external environment of
business in order to find out strength and weakness which can affect growth and development of
business.
MAIN BODY
Key challenges faced by Five Guys
History of Five Guys
Five Guys has recognised history in the world. It is one of the oldest restaurant in the
market of Europe. Jerry Murrell and Janie Murrell is the founder of the restaurant. The name five
guys is given by its five brothers. During the 1980 and 1990 the Murrell family perfected their
simple system. Five Guys was the place in order to get a fresh, juicy burger with all the toppings
that could stuff between fresh bakes buns. Early in 2009, Both brothers Five guys began offering
opportunities franchisee. In just under 18 months they sold options for more than 300 units. Now,
in present there are almost 1500 location across the world and another 1500 units are in
development.
Mission of Five Guys-To sell the fresh burgers to the customers.
Vision of Five Guys- To sell the best quality of food items to the customers.
Values and Objectives of Five Guys-
 Customer satisfaction
 Generating the traffic at restaurant
 Achieving Specific financial gaols
 Building the recognised brand across the world.
Strategic management involves formulation and implementation of plans and strategies in
order to take steps towards organisations development that considers both internal and external
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factors of business(Salavou, 2015). Five Guys Enterprises one of the American fast casual chain
of restaurant aim n hot dogs, hamburgers, French fries etc. i.e. headquartered in Lorton, Virginia
and Fairfax Country. Five Guys aims at analysing current strategic positioning of company in
order to find out industry structure and competitiveness of market in order to carry out suitable
strategies for expanding and strengthening its business in Sweden.
Five Guys is planning to expand its business in international market specially in Sweden
to improve their current position in marker. In regard of this, this is essential for company to
understand the present strategic position of company in context of specific company. For this
purpose, external macro and micro environment need to evaluate along with intrinsic
atmosphere. Here is discussed external macro environment of business:
External Environment
External environmental factors affects operations of business which can not be controlled.
The external factors influence business operations. Five Guys analyses external factors in order
to find out opportunities and threats of environment that can affect business and its expansion
approach. External factors are of two types, i.e. micro and macro.
External Macro Environment
External macro environmental factors are broad and large factors that affect business as a
whole. Five Guys uses PESTLE analyse to analyse current strategic position of company(E.
Dobbs, 2014).
PESTLE ANALYSIS- it is one of the best tool in order to track the impact of external
factors on the profitability and performance of the company. This model often used by company
to identify the factors infecting the business. There are six factors which are Political, Economic,
Social, Technological, Environmental and Legal factors.
Political factors: Political factors include government's rules and regulations which affect
operations of business. Government's rules and regulations are related to trade regulations, health
and safety regulations, tax guidelines, employment laws etc. The regulations made by UK
government are replacing EU laws which are bringing changes in future trade arrangements. All
these aspects affect business of Five Guys in Sweden directly or indirectly. Five Guys aims at
expanding its business and in order to expand its business, organisation should follow and
consider rules and regulations UK government. Five Guys need to also consider anticipated
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future rules and regulations as it may affect the planning and strategies of expansion and business
operations as well.
Economic factors : Economic factors are interests or exchange rates, inflation situation,
economic growth of Sweden, disposable income of customers and employees etc. Five Guys has
already formed many successful branches in UK and is very stable and well-established business
but there are some economic factors of Sweden which may affect expansion process. Five Guys
most revenue are generated through low cost of labour of UK, whereas, Sweden's labour might
charge higher and Five Guys revenue may fall. Also, market collapse of big brands may affect
expansion approach.
Social factor: Social factors are factors which may affect working of business operations.
Social factors include social environment of company and it also includes emerging trends of
country. Five Guys need to identify social factors which may affect expansion of organisation in
country Sweden (Rothaermel, 2015). The analysis of social factor will make Five Guys to
understand needs and wants of customers, cultural trends followed, lifestyle of people, education
and income level, demographics of UK etc.
Technological factors: Technological factors includes aspects of technology which leads
to innovation and creation and it can also create barriers in working of business operations in
UK. Five Guys external analysis needs to consider technological factors as it affects business to a
large extent in UK. The plans and strategies for expansion approach includes digital technology
used, mobile technology, automation technology as it brings innovation and creation in business
process which may lead to development and expansion. Five Guys needs to adopt the advanced
technology such as robot waiters, online orders facility, etc. for providing effective and
innovative services to its customers.
Legal factors: It refers to various rules and legislation which affects operations of
business and it includes current and future legislation, consumer protection regulations,
international trade regulation, tax regulations etc. Expansion approach of Five Guys should
consider legal factors as it affects business to a large extent(Panwar and et. al., 2016). This will
help Five Guys to identify opportunities and threats available in current environmental position
of UK. Expansion approach of Five Guys is influenced by legal regulations in international trade.
These external macro factors affect operations of business and its strategies and plans of
expansion and development in country UK. Five Guys needs to consider all macro environmental
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factors and properly plan its strategies to increase number of business outlets in the global
markets.
External Micro Factors
External micro environmental factors also affects operations and planning of business.
The micro external factors are small general factors which influences the organisation's
operations and process. Five Guys adopts Porter's five force model or strategy to analyse micro
environmental factors. Porter's five force model describes five external micro factors that
identifies weakness and strengths of environment and also affects working of business. Porter's
five force model comprises suppliers, customers, competitors, new entrants and substitute
product or services while analysing business environment (Hill, Jones and Schilling, 2014).
Porter's Five Force Framework:
Porter's Five Forces Framework is a tool for analysing competition of a business. It
draws from industrial organization (IO) economicsto derive five forces that determine the
competitive intensity and, therefore, the attractiveness (or lack of it) of an industry in terms of its
profitability.
This model examines competitive rivalry of business as it affects working of business
environment directly. Five Guys must consider and analyse competition available in market in
order to make plans and strategies of expansion and development. The high competition in
global market will lead Five Guys to adopt strong distribution network in order to gain
competitive advantage. Five Guys should also focus on creating trust and build loyalty of its
brand so that it benefits company in order to gain competitive advantages and expand its business
in global markets (E. Dobbs, 2014).
Bargaining power of Suppliers: The Porter's five force model focuses on analysing
suppliers which are part of external environment that helps to identify power of supplier's
influences on business operations. This model also focuses on analysing number of suppliers as
high number of available suppliers will have low demand in market which will benefit business.
Five Guys have small number of suppliers of its products which leads Five Guys to depend on
available number of suppliers, this makes Five Guys to limit its power of supply.
Bargaining Power of Customers: Porter's five model includes main component of
business environment i.e. customer. Customer is the most important factor of environment and it
affects business to a great extent. Porter's force analyses bargaining power of customers, needs
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and wants of customers, culture followed by them as it influences business operations and it also
influences strategies of expansion and growth. Five Guys expansion strategies should consider
buying power of customers, their demand in fast food products, their expectations regarding
services etc.
New Entrants of Competitors: Porter's model also considers new entries of competitors
in future markets as it affects working of current position of business and it may also affect
expansion and development strategies. Porter's force model considers flexibility of entrance of
new businesses in environment as it also affect organisation. If current market put barrier for new
entrance of business, it will be beneficial for existing business. If Sweden has put barriers for
new entrance of businesses in environmental market, then it will be a problem for Five Guys to
enter in market, or vice-versa.
Substitute of Product or Services: porter's five forces framework analyses substitute of
products or services available in market environment as it may affect demand and supply of
product and also affects market share. Five Guys expansion strategy should consider substitute of
its products available in market as it affects business like McDonald, KFC, Burger King etc. Five
Guys should make its expansion strategies by examining competitor's strategy as they provide
substitute of its product and it affects demand and supply of products and services of business
(Hitt and Duane Ireland, 2017).
By properly analysing micro external factors, Five Guys is able to find opportunities and
threats available in business environment and factors which can boost or slow down growth of
business. External micro factors also helps to make Five Guys expansion strategies of a business
in Sweden and by analysing environmental factor, Five Guys should focus on increasing its
numbers of suppliers to provide products on large scale in new markets. It should also consider
the competitors strategies in order to gain competitive advantages.
Internal Analysis
Internal analysis is done to identify strengths and weakness of business. Internal factors
also affects working of business operations. Internal analysis of Five Guys is done to identify
available strength and weakness of company which needs to be considered while making plans
and strategies for expansion and growth of business for Sweden markets. Internal analysis of
Five Guys is done by using Jay Barney's VRIO framework which uses analytical techniques
while evaluating internal resources of company(Doz, 2017). Evolution of various internal factors
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is done to identify strength and weakness and it helps business to gain competitive advantage.
VRIO framework identifies and analyses four basic components of business environment
(Wheelen and et. al., 2017).
Value: First components of VRIO is a value which refers to evaluation of available
resources of company and its capabilities in order to sustain and gain competitive advantages.
Resource is considered to be valuable when it has capability of providing opportunities to
business and to face threats. Five Guys analyses internal resources effectively and results in
implementing expansion strategies. Five Guys have valuable human resources who are capable
of increasing efficiency of business operations and also effective leaders who encourages and
motivates other employees and results in bringing innovation and creation (Rothaermel, 2015).
Rare:Second components of VRIO is rare which refers to rarity of resources. These
resources are not available to all and results in innovation in business process. Rare resources
uses its potential and brings innovation and creation which facilitates organisation to grow and
develop in global markets. Five Guys uses VRIO framework to analyses internal business
environment in order to find out available rare resources. Rare resources of Five Guys are its
human resources who helps the company in gaining competitive advantages through its skills in
managing operations.
Imitable: Imitable is third component of VRIO model framework which means available
resource of company which are not easily imitable. Resources which are not easily imitable or
copied bring potential and efficiency in working of business(Hill, Jones and Schilling, 2015).
Five Guys imitable resources are skills and knowledge of its employees in serving the customers
and making them happy and satisfied, and this is difficult for competitors to copy it. Five Guys
should also apply strategies to implement technological resources which will bring innovation
and will result in expansion of business.
Organisation:Last component of VRIO framework is organisation which refers to that
business itself needs to be capable of taking advantages of all other components. Jay Barney's
model states that system also should have potential to utilize other beneficial components and
gain competitive advantages in competitive world. Five Guys needs to make its expansion
strategies by considering and analysing all internal factors (Pucciarelli and Kaplan, 2016).
Successful strategic analysis of internal environmental factors of Five Guys will benefit
company in identifying strengths and weakness and help business structure to gain competitive
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advantage and grow in global markets. Five Guys should hire valuable human resources and
implement advanced technologies to expand its business in global markets and also itself should
be capable of taking all benefits of its valuable, rare and imitable components.
Identification of Competitor strategies
Five Guys are planning to expand their food and beverages market in Sweden. For this
they need to establish strategies in order to achieve competitive advantage. Company can make
use of porters generic competitive strategy. It includes:
Cost leadership- In order to enter a total new market, Five Guys need to be the lowest
cost producer in industry. Competitive advantage will only be gained by them when low price
food and beverages are been offered in Sweden market (Wheelen and et. al., 2017). Company
also needs to make sure that with cutting their price, they are not hampering quality of goods and
services offered by them. For increasing sales of products' system can also be involved in giving
discounts to their customers or clients. The cost leadership strategy is followed by the the
competitors of Five Guys Restaurant by which they are also leading in the market and giving
touch competition to Five Guys. It is fact that customers are majorly attracted by this company
who is providing products at low cost. Thus, Five Guys should use this strategy.
This strategy will assist Five Guys in delivering standard items with little differentiation
in cost. It supports structure in saving cost. For implementing this tactic, firm needs to
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Illustration 1: Porters five forces model
Source: (Porters generic competitive
strategy, 2018)

collaborate with every functional unit of department. To achieve cost leadership strategy, Five
Guys will need to start spending less and increase their quality of food and beverages. In this
way, they would be able to establish their market in Sweden.
In order to achieve cost leadership strategy, Five Guys they need to make sure that high
level of productivity has been achieved. The capacity has been utilised highly so that they can
gain competitive advantage. Company also needs to undertake effective channel of distribution
so that they can reach out wide range of consumers. Also, they need to make their product
according to taste and preference of customers.
Cost focus: In cost focus strategy, company focuses on using cost advantage in target
markets. In this strategy, company does not always cost low, but charges low price than its
competitors in order to gain competitive advantage. In order to establish food and beverage
industry in Sweden, Five Guys needs to lay their keen emphasis on cost of product which they
will deliver. Company make sure that technology is been utilised effectively (Hill, 2017). Also,
company needs to adhere that effective utilization of resources are done by company. To gain
competitive advantage, lowering price would provide them with a keen benefit. Cost advantage
should be keen target segment of firm. Only this way, they would be successfully able to launch
their food and beverage industry in new market.
Differentiation: In this strategy, company focuses on to provide unique products and
services in order to attract customers. Five Guys should focus on differentiating its product from
that of competitors(Wheelen and et. al., 2017). This can be only achieved by company when they
are making use of unique technologies while launching their product. Also, firm needs to set up
their target market while launching goods. This method is basically related with charging a
premium price for different product offered in market.
Differential strategy can be achieved by Five Guys through several ways that includes
food offered should be of superior quality with low price (Hill, 2017). Distribution channel
selected should be appropriate and must create relationship base with consumers. Also, they
need to create brand awareness in mind of customer in order to gain competitive advantage. To
achieve this strategy, Five Guys must be involved in doing effective promotion of their products.
This can be done via social media marketing, advertising, online or direct marketing.
Differential focus: In order to achieve differential focus, Five Guys need to make
strategies that fulfil unusual requirements of consumers (Moon and et. al., 2014). Company
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needs to lay emphasis on that different style of food and beverages have been delivered to
consumers and also cost should be low than competitor's product. Firm also needs to focus on
providing high quality of food and beverages. Also, food prepared should be of different style
from that of competitors. Five Guys need to focus on advancing technology for successful
launching of their industry in new area or regions. By using differential focus, company will be
able to expand their market share. This will also help in increasing their revenue plus profitability
(E. Dobbs, 2014). The competitor of Five Guys having some food dishes which are completely
different and unique. Thus, Five Guys should also develop the dish which makes them entirely
unique in the market as well as they can acquire a good position.
Five Guys can use differentiation strategy and expand its product and services in Sweden
markets. As this strategy will bring result Five Guys in capturing the market through its quality
product at low price. This is more suitable among other as other strategies would lead Five Guys
to focus on lowering the production or cost price, whereas, differentiation strategy will make
Five Guys to make unique products and allow company to make its brand name and image in the
minds of customers in new markets.
Strategic Directions
Strategic Directions provides a direction which should be followed by company to
accomplishing structural objectives, gaining competitive advantage and expanding its business in
global markets. Strategic planning guides Five Guys in developing its businesses strategies
regarding expansion of its business in Sweden (Burns and Dewhurst, 2016). Strategic direction
of Five Guys includes various factors such as markets, products, services and other expansion
methods which needs to be considered in order to grow and develop in global market.
Five Guys operates its business in food and drinks industry which is a growing industry,
therefore, company should first focus on future markets. Five Guys should focus on target market
while making expansion strategy in order to open its outlet in Sweden. The proper segmentation
or selection of market will benefit system to concentrate on targeted market and achieve its
objectives and also gain competitive advantage (Indiatsy and et. al., 2014). Five Guys can focus
on expanding its business in Sweden through concentrating on young age group as they tend to
have more fast food products than any other age group.
Five Guys should focus on good and services which are provided in current markets. Five
Guys should focus on bringing innovation and creation in business process or operations which
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can benefit in gaining competitive advantages and increases in profits. It should also focus on
competitor's strategy so that it can provide better goods and services than competitors which will
benefit company structure in future markets. Effective techniques and process should be in
business operations in order gain competitive advantage in global market. It may also provide
wide range of products or services which can attract customers and gain their trust and loyalty
which can benefits company to sustain and expand more in future markets in world-wide
(Panwar and et. al., 2016).
Different methods of expansion can be used by Five Guys to expand in markets of
Sweden (BUSINESS EXPANSION, 2018). Direction strategy guides which expansion strategies
or methods needs to be followed to gain competitive advantages. While selecting expansion
method, system must consider various factors such as availability of human resources and funds,
technological changes which needs to be adopted, competitor's strategies etc.
Expansion can be done through establishing brand in new market by acquiring another
existing firm or by establishing agreements with dealers, partnership or joint ventures with
established brand etc. Five Guys can expand its business in Sweden by coming in joint venture or
partnership with reputed and well-established brand McDonald's (Salavou, 2015). This will
benefit Five Guys, as McDonald has already earned and gained trust and loyalty of its customers.
Expansion methods
The various expansion methods are product expansion, market penetration,
diversification strategy, acquisition strategy etc. Market Pent ration: The market penetration strategy allows a company to enter in new
markets and capture the high market share through its products and services. Product Diversification Strategy: Product diversification strategy means a company
diversifies its activities, expands into new markets with its existing products.
 Acquisition: Acquisition strategy allows a company to enter into new markets by
capturing or acquiring or merging with a new company.
The above various methods, one strategy can be adopted by company to expand its
product or services in new markets. Five Guys can adopt market expansion strategy and establish
its own brand in new targeted market. This will benefit in establishing its own brand in new
market and gain more competitive advantage by providing quality products to its customers. But
market penetration method may also bring challenges as it has to face various issues. It has to
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manage its business operations effectively and efficiently invest in more human resources,
implement innovative technologies etc. and there's a risk of high competition available in new
market. Five Guys company can also come in agreement with its dealers and distributor which
can benefit in to having license of distributing product in target market (Pulaj, Kume and Cipi,
2015). Dealers and distributors supplies products to customers. They are also called as product
franchisers, as they provide end products to customers.
Expansion of business brings different opportunities as well as threats which needs to be
faced in order to sustain and gain competitive advantage. Expansion method should be selected
by properly analysing current strategic situation of company as well upcoming or future
strategic expansion.
CONCLUSIONS
The above study states various strategies adopted by company in order to expand
business and gain competitive advantage. Strategic positioning of organisation is analysed to
assess external and internal environmental factors. This report concludes that a company should
properly analyse all internal and external factors and then make its expansion strategies
considering all the elements. Expansion strategy should also consider competitors strategy and
make strategic decisions for its expansion approach.
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