International Market Analysis and Strategy for Five Guys Burgers

This report examines the international marketing strategies of Five Guys Burgers, focusing on its potential expansion into global markets. The report begins with an executive summary and introduction, outlining the company's objectives and the importance of international marketing in the current business environment. It then delves into the macro and competitive factors impacting the global fast-food industry, utilizing PESTEL analysis to assess political, economic, social, technological, legal, and environmental influences. The internal business environment of Five Guys is analyzed using Porter's value chain model, evaluating primary and support activities, along with a SWOT analysis to identify strengths, weaknesses, opportunities, and threats. The report further explores potential target markets in Japan, India, Singapore, and China, evaluating their attractiveness and challenges. An appropriate mode of entry into India is discussed, followed by an examination of socio-cultural factors and the marketing mix. The report concludes with a summary of findings and recommendations, supported by references and appendices.

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.
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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
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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.
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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
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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
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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.
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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).
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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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