Developing Business Strategy for Wendy's: SWOT Analysis, Cost Leadership, Diversification and ROI

This report focuses on developing the business strategy of Wendy's, a fast food chain organization that mainly works in North America. The report includes SWOT analysis, cost leadership, diversification, and ROI. It also discusses ethical considerations and implications of competing in international markets.

Running head: BUSINESS STRATEGY (MANAGEMENT)
Business Strategy (Management)
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Author’s note:

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BUSINESS STRATEGY (MANAGEMENT)
Table of Contents
1. Developing SWOT Analysis of Wendy’s...................................................................................2
2. Business Strategy Report.............................................................................................................3
A. Executive summary.....................................................................................................................3
B. Vision, mission, and values statement of Wendy’s....................................................................5
C. Justifying the analytical tools used in developing a strategy......................................................6
D. Detailed SWOT analysis.............................................................................................................6
E. Discussing the plan for maintaining a competitive advantage....................................................7
F. Discussing the implications of competing in international markets............................................8
G. Discussing a diversification strategy..........................................................................................9
H. Discussing one ethical consideration........................................................................................10
I. Discussing planned execution of the strategy............................................................................10
J. Discussing ROI of business strategy..........................................................................................11
k. The conclusion of business strategy..........................................................................................14
Reference List................................................................................................................................15

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1. Developing SWOT Analysis of Wendy’s
Wendy’s is the restaurant chain with having more than 6,500 locations worldwide.
Wendy was established in the year 1969 and it has it headquarter in Ohio, the USA
(Wendys.com, 2018). Wendy’s is famous for the hamburgers, salads, chicken sandwich, French
fries, breakfast sandwich and frozen dessert.
SWOT analysis
Strengths
 Wendy’s strength is the organization’s
continuous development in the
restaurant industry as the organization
is trying to do international expansion
(at present it is present in 30 countries)
 High-quality products served
 The strong brand image in the industry
 Extensive experience in the industry
and heavy presence in the USA and
Canada area
 Use of technology in order to provide a
better consumer experience
Weaknesses
 Wendy can face issue due to
overdependence in the Western market
as it has its 93% market in the Western
markets
 It has been facing a steady drop in
revenue since there has been almost
40% drop in the revenue
 It has been planning to do international
expansion; however, the growth is too
slow
 Wendy’s is too much dependent on
franchisees as it has more than 90%
franchisee
Opportunities
 Wendy’s can find the growth in the
Threats
 Fast food restaurant industry is full of

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Asian market as India and China are the
fastest growing economy
 Economic growth has brought new
opportunity for the global brand
 Food choice innovation can bring
opportunity for Wendy’s
 The organization can use digital
technology and AI to improve the
customer experience
competition and the competitors are
Burger King and McDonald's
 Legal and regulatory pressure are there
due to food safety and labor
 Geopolitical disruption can hamper the
growth of the organization
 Rising cause of labor and raw materials
Table 1: SWOT analysis of Wendy’s
(Source: Self-developed)
2. Business Strategy Report
A. Executive summary
This report is strived to focus on developing the business strategy of Wendy's, a fast food
chain organisation that mainly works in North America. Wendy's is willing to expand the
business in Africa and Asian countries. The SWOT analysis of Wendy's has been developed in
this report. The strengths of the organization are to have its store in the USA and in Canada
mainly. It has been in the industry for a long time; therefore, it has experience in the industry. It
works to develop the technologies so that it can provide extreme customer satisfaction. In this
regard, cost leadership strategy has been prescribed to have a competitive advantage in the

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industry. In addition, horizontal diversification has also been focused in order to expand the
business. Wendy’s can bring the plant-based vegetarian burgers to attract the customers. A
financial plan and ROI has also been given in this report.
The mission statement of Wendy's stated about the delivering superior quality services
and products for the communities and customers through leadership strategy. This mission
statement has its relation to the innovation, leadership, partnership and focuses on communities
and customers. In addition vision statement of Wendy's talks about to be a quality leader;
therefore, the vision of Wendy is related to the quality leadership and holistic approach.
Strategy statement of Wendy is to create ‘red' character for the commercials and digital
marketing of the organisation is strong so that it can do digital promotion. The marketing
campaign is successful in Wendy as the customers are mainly millennials. Wendy's strategy
statement is to create a new menu for the food for the customers. The strategy of Wendy's is to
target the young customers mainly as they know the importance of gaining traction with
millennials.
Wendy is going to take the cost leadership strategy as cost leadership strategy helps the
organization to gain the customers' lead. Wendy will take the lean production strategy where
they can save the money by eliminating the waste. Just-in-Time (JIT) approach will be helpful to
reduce the numbers of leftover and waste. In addition, Wendy's can take horizontal
diversification strategy and it spends more money on Research and Development (R&D).
Wendy's will spend money to bring taste on a burger. Wendy's is going to take industry-wide
distribution to increase stock in the franchise outlets.

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Wendy is expecting good Return on Investment will be good as the organisation will be
using JIT. The organisation can use the JIT process so that it can reduce the waste and
manufacturing process will be easier. The organisation can keep contingency plan so that it can
eliminate any further issue. ROI reveals the benefit of the investment using the loss and gains
from the investment along with the cost of investment. The expenses of the organisation will on
project cost, TCO, Total O&M, Cumulative NET benefits. In this study, the breakeven point has
been calculated.
B. Vision, mission, and values statement of Wendy’s
Mission statement
Wendy’s wants to deliver quality products with superior services for the customers and
nearby communities through leadership, partnerships and innovation (Wendys.com, 2018).
Wendy’s mission statement is associated with the superior quality, leadership,
innovation, partnership and focus on customers and communities. Therefore, it is clear that
Wendy’s focuses on the quality of the services and food. The mission statement focuses on the
corporate social responsibility of the organisation. Wendy’s aims to satisfy the stakeholders and
are specific in detailing on innovation, leadership and partnership.
Vision
Wendy's vision is to be the quality leader in the industry taking a holistic approach.
Wendy's vision follows two basic features, one is quality leadership and another one is a
holistic approach. The company targets to provide quality food to the customers and the
organisation believes that high-quality food can bring good result in terms of customer

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satisfaction and revenue. Wendy's focuses are to have total quality management throughout
taking a holistic approach in terms of operation and products.
Values
Values of Wendy’s are:
 Animal welfare
 Quality food
 Nutrition and health
 Supply chain practices
 Environmental sustainability
 Corporate responsibility
 Dave Thomas Foundation for Adoption
C. Justifying the analytical tools used in developing a strategy
In order to identify the business strategy SWOT analysis has been done. SWOT analysis
helps to find out the strengths, weaknesses, opportunities and threats of the business. Porter’s
Generic strategy as it helps to find out the competitive advantage of the business. Ansoff Matrix
strategy has been used, however, only diversification strategy has been utilized to show the
business’ opportunity in the international market taking suitable strategy.
D. Detailed SWOT analysis
Wendy's strengths lie in the numerous outlets in the US and Canada. Wendy's has 5800
restaurants in the 50 states of US. Most of the revenue of Wendy's comes from the North
America part. Wendy's has been using technologies to provide customer satisfaction and the

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technologies included mobile payment, mobile ordering and self-service technologies. In
addition, operating margins of Wendy are high. On the other side, Wendy's is very much
dependent on the western markets and this brand is highly depended on North America. The
organization has been facing the steady drop in revenue.
2011 2012 2013 2014 2015 2016
$2023.67
million
$2129.30
million
$2102.90
million
$1700 million $1400 million $920 million
Table 2: Decrease in revenue of Wendy's
(Source: Moran, Ramirez & Block, 2017)
In addition, the slow international expansion can be dangerous for the organization as
there are lucrative markets waiting outside the western world. More than 90% of the business is
depended on the franchise. Moreover, Wendy's has an opportunity in the market to grow in
China and India market as growth in this Asian section can be profitable for business. Global
economic growth will eventually increase the disposable income of the customers and customers
will increase the spending (Stowell, Moore & Schumacher, 2017). Wendy's needs to do
innovation in their food offering and it will eventually increase the chance of accelerating the
footfall in stores. On the contrary, Wendy's threats are the competitors in the market like
McDonald's, Burger King and KFC. Wendy's can face threat regarding economic fluctuations
and rising costs of raw materials and labor. In addition, geopolitical disruption can cause an issue
in the business in North America.

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E. Discussing the plan for maintaining a competitive advantage
Wendy’s can increase the market creasing the market share through cost leadership
strategy. There are many small and large organizations present in the market and Wendy can
gain the competitive advantage through cost leadership strategy. Less pricing will automatically
attract the customers if the quality of the good products is good. This cot leadership strategy will
help to achieve the objective of increasing the footfall into the stores on a large scale to exploit
the economies of scale (Wicker et al., 2015). Cost leadership can be possible when Wendy’s will
use high levels of productivity, high capacity utilization, lean production method, access to
highly efficient distribution channels, effective use of technologies and production process.
Wendy's needs to use bargaining power in order to negotiate the lowest prices offer from
suppliers.
Wendy’s can opt to take the differentiation focus strategy where Wendy’s can shift to
their tradition target market and target the different customers’ segment. In order to follow this
strategy, Wendy’s needs to focus on classic niche marketing where Wendy’s can offer unique
products in the market to add the value for the customers.
F. Discussing the implications of competing in international markets
Wendy's mainly does its business in North America section and it has its stores in more
than 30 countries. Cost leadership strategy will eventually increase the numbers of customers in
the stores in the global market as the customers will get quality products at low prices. Cost
leadership strategy will help the organization to penetrate in the global market. Cost leadership
will help the organization to increase the market share and get higher profitability (Tansey,
Spillane & Meng, 2014). Differentiation focus will help to target new customer segments in the

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global market that can increase the revenue and customer base of Wendy’s. Resources of the
organization can be unique as it provides USP to make the organization which does not have a
substitute in the market.
Advantages of international market are the foundation of the international growth of the
organisation as the company just not only focuses on the domestic market. Therefore, this allows
the brand to get the opportunity to gain the sustained revenue from the diversified portfolio.
Another advantage of an international market that Wendy's can have is the performance of
finance. The organization's financial performance will be increased. In addition, international
trade will automatically provide the benefit of having the exchange rates to soar. On the contrary,
Wendy's has to fall into the high competitiveness as the market will increase. It will have to do
competition with McDonald's, KFC and another small brand of fast-food restaurant chains.
Wendy's may face the issue of cultural complication. Different cultural complications can arise
from the attitudes, expectations and standards through brand and business (Vu et al., 2017). In
international business, the organisation can face the issue of credit risks as it can be managed by
gaining insurance credit.
G. Discussing a diversification strategy
Wendy’s can take the horizontal diversification strategy by offering plant-based burgers
in order to make global food system to be sustainable. According to Swadesh (2014), horizontal
diversification is developing new products that can appeal to the organization's existing
customers groups or for the global expansion. The plant-based burger is the new concept for the
vegetarian and these burgers will have proper nutrition and less water than ground beef. Plant-
based burgers will have iron, protein and fat compared to tradition 80/20 chicken or beef burgers.

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This type of burger will provide the same taste and same aroma; therefore, this diversification
will attract the more vegetarian customers.
H. Discussing one ethical consideration
Ethical consideration is the morals of goodness or the right and wrong prior to doing any
actions (Ponisio et al., 2015). These business strategies of cost leadership and the diversification
strategy of offering plant-based burgers must incorporate society’s standards. Wendy's will
definitely advertise on the market regarding the plant-based burgers. However, this
advertisement will not share any false communication and there will not be any secrecy.
Therefore, high ethical standards will bring customer loyalty and high employee retention. The
organisation always wants to do business through providing consistent values as well ethics into
an organizational culture that starts with strategic planning (Guidry et al., 2015). Wendy's can
follow the code of ethics that offer a structural addition to planning to ensure the values of the
organisation. The management of Wendy's can set the set of values, mission and vision to build
new ethics and they need to align with existing strategy. The organizations can develop a code of
ethics and they can provide ethical training to the employee and stakeholders.
I. Discussing planned execution of the strategy
Cost leadership strategy can be executed by taking the lean production approach like Just
in Time (JIT). This lean production will help Wendy's to reduce the numbers of leftover and
waste. Wendy’s can achieve cost leadership by gaining the market share through reducing the
prices. JIT approach will help Wendy's to smaller the investment cost as JIT inventory
management will be helpful to have a huge amount of stock. Faster turnaround of the stock can

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prevent the products to become obsolete and damages while sitting in storage (Gozgor & Can,
2016).
Horizontal diversification strategy can be executed through spending more money on
Research and Development department where the nutritionist and employees will taste and bring
out the best recipe in the market to make plant-based burgers. This burger will attract more
customers if the products are superior quality in tastes, benefits and features. At first, Wendy's
can advertise on social media pages and then in the billboards. The customers will come to the
stores to taste the plant-based burgers and word-of-mouth publicity will bring extra customers.
At first, Wendy can keep premium pricing of the plant-based burgers as it is new on the market.
Industry-wide distribution will automatically increase stock in the franchisee outlets. As stated
by Novais et al., (2016), horizontal diversification will be helpful to gain economies of scale,
increase the manpower and economies of scope. It reduces the production cost and reduction of
competition. Wendy’s will do the synergy in various level of operation in the same industry to be
stronger.
J. Discussing ROI of business strategy
Cost-Benefit Analysis: Wendy's
Period of Analysis = __8__ years
Do
Nothing
Horizontal Diversification JIT Vertica
l
Project Cost $
-
$ 5,036,355 $
2,285,9
$
4,736,2

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BUSINESS STRATEGY (MANAGEMENT)
02 17
Total O&M Cost $
7,200,0
00
$ 3,840,000 $
5,100,0
00
$
5,864,5
00
TCO: Project + O&M $
7,200,0
00
$ 8,876,355 $
7,385,9
02
$
10,600,
717
Cumulative benefits $
5,500
$ 7,085,000 $
3,440,0
00
$
6,025,5
00
Cumulative NET
benefits
$
5,500
$ 2,048,645 $
1,154,0
98
$
1,289,2
83
ROI:
(benefit-cost)/cost
0% 41% 50% 27%
Breakeven: n/a Year 2 Year 2 Year 1

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Figure 1: Return on Investment
(Source: Self-developed)
The above graph depicts that return on investment of the organization is on the higher
side in case of JIT. It can be also inferred that the ROI in horizontal is second best after JIT
process. Therefore, it can be recommended that the organization should consider both these
options while evaluating its prospective strategies. The organization also needs to keep a
contingency plan as well if the above two strategies do not work. With the help of contingency
plan, the organization can attain its desired aims and objectives.

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k. The conclusion of the business strategy
Wendy’s is in dire need to do international expansion as the revenue of the organisation
has been decreasing. In order to penetrate the global market, Wendy’s can take the cost
leadership strategy of the existing products. Cost leadership will automatically increase customer
base. In addition, Wendy’s is recommended to take horizontal diversification where the
organisation can make plant-based burgers for the vegetarian customers. This new food item
offering shows the social and environmental responsibility of Wendy’s. Diversification of the
business with differentiation of the products will automatically minimize the risk as this
investment of the business has high chance to perform better.

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