Strategic Marketing Report: Nando's Entry into the Romanian Market

This report presents a strategic marketing analysis for Nando's restaurant chain, focusing on its potential expansion into the Romanian market. The executive summary highlights the importance of strategic marketing in facilitating business growth, particularly through the application of frameworks like PESTLE analysis. The report delves into a comprehensive PESTLE analysis of Romania, evaluating the political, economic, social, technological, legal, and environmental factors influencing Nando's potential success. The report identifies franchising as a suitable market entry mode and discusses market segmentation and Porter's generic strategy. It also examines opportunities and threats within the Romanian market, specifically considering the introduction of a new product, "Koffee." The analysis assesses the Romanian market's economic conditions, social demographics, and technological advancements, evaluating their impact on Nando's operations and future potential. The report concludes with strategic recommendations for Nando's to successfully establish its presence and achieve its objectives in Romania.

Strategic Marketing

EXECUTIVE SUMMARY
Strategic marketing is an important aspect which provides opportunity for small and large
businesses to expand their operations into new countries through the application of appropriate
frameworks. Primarily it has been identified through PESTLE analysis that venturing into
Romanian market will be profitable for company due to increase in the buying power of people
and favourable economic circumstances. Nando's is a restaurant in South Africa that is operating
its business functions in more than 30 countries therefore, it can be identified that Franchising
has been most appropriate tool for this business to venture into Romanian market. The alliances
which has been previously formed with suppliers will be assistive in fulfilling exclusive demands
of people in the cost conscious manner. Through these opportunities and threats are identified
which contributes in the early stage of planning and helps to determine appropriate solutions
through which desired results are attained.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................3
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
Overview of company.................................................................................................................1
PESTLE analysis.........................................................................................................................1
Market entry options ..................................................................................................................5
Market segmentation...................................................................................................................6
Porter's generic strategy..............................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Strategic marketing refers to creation of plan that expand organisational reach in the
market so that diversified needs of customers is catered in the right manner. This process is
basically employed by organisations to analyse customer's desire and requirement so that they
can be provided with unmatchable service experience (West, Ford and Ibrahim, 2015). This
report focuses on opening up Nando's restaurant in Romania. The main objective behind such
opening of restaurant to develop market share and generate higher amount of profits through
delivering up of a new product i.e. 'Koffee'. The report represents Macro environment factor in
order to analyse possible opportunities and threats. The various market entry modes through
which expansion could be carried out will be discussed as well. At last, it will be discussing
about STP strategy and Porter's generic model that aid to gain higher competitive advantages.
TASK
Overview of company
Nando's is a casual dining restaurant chain start their services in South Africa. This was
established in 1987 in Johannesburg, South Africa. It is well recognised restaurant which provide
their services in more than 30 countries around the globe. More than 1000 outlets are actually
present in different nations. They have specialisation in Mozambican-Portuguese style of chicken
dishes. This business is planning to expand their operations in the Romanian market, the entry in
the market will be further supported by the latest developed product named as 'Koffee'. This
product will be formed with the helps of hand chosen Kona coffee beans known to be the most
expensive in the world mixing with natural flavours.
PESTLE analysis
The successful introduction of restaurant in Romania it is required to analyse the factor
which are present in external business environment along with their positive and negative
impact. This analysis has huge importance in assessment of opportunities and threats prolonging
in the business environment through consideration of such factors such political, economic,
technological, social, legal and environmental (Dcosta and McDonough, 2015). PESTLE
analysis of Romania is defined below:
Political: The different factors which are considered under this are related to the impact
on business due to political conditions, government and trade policies, general taxation issues,
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regulatory bodies and their processes etc. Despite having independent constitution of Romania
the Federal structure is strong which aid in effective operation of activities by regulatory
authorities.
Opportunities: After having tense political situations in Romania, regulatory bodies build
appropriate regulations for the promotion of business functions of new venture. This will create
opportunity in front of Nando's Restaurant to easily enter into new market with the support of
regulations like linnet tax policies.
Threat: There is high instability in the political conditions of Romania. It effects the long
term planning of the firm as it has to modify same as per the external requirements. The solution
for this threat is that a business can sum up a team of legal experts who can identify ways
through expansion in the Romanian market could be carried out effectively.
Economical: In order to achieve the desired objective it is important that the economic
conditions of the place business is operating in are favourable. The cost of labour in Romania is
low which is a favourable factor for the referred organisation to expand its business. On the other
hand, the ratio of emigrants is continuously increasing in this country which show that to forecast
sales for a particular period of time is difficult.
Opportunities: The positive chance which is present in front of Nando's restaurant is
related to the per capita income stands at £8411.33 of the individuals of Romania (Romania
GDP per capita, 2018). Therefore, it can be identified that people possess decent disposable to
avail exclusive 'Koffee' which will be launched by the company for the Romanian market. The
growth rate of this country stands at 7% which makes it one of the potential markets for Nando's
to expand their operations and simultaneously achieve better economic results. (7% Growth in
Romania, 2018).
Threat: The major threat which is present in Romania is relating to volatile nature of the
tax legislation which has been regularly manipulated by the government. It is essential for
business to form contingency plans so that sudden changes in tax structure can be dealt
effectively by the business.
Social: Under this aspect the factors which are considered is related to number of
inhabitants, consumer attitudes and opinions, media views, buying access and trends, advertising
and publicity. Also related to age and level of education. From the assessment it has been
determined that the level of education is high in Romania due to presence of high literacy rate.
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Here, Nando's is going to open new restaurant in Bucharest city of Romania. The number of
inhabitants which are living in particular city is around 1.9 million which is highest in
comparison to other cities of Romania (Capital facts for Bucharest, Romania, 2018). Nando's
can form such a business model which assure that maximum sales can be achieved on the behalf
of business.
(Source: Romania Population Pyramid, 2016)
It is identified from the above illustration that major section of the Romanian population
lies in the age bracket of 15-50 years male as well as female. Therefore it is an opportunity with
an this organisation to capitalise of the preference of coffee of this demographic oriented division
so that improved economic results can be achieved.
Opportunities: The basic opportunity which is available to cited restaurant in Bucharest is
about presence of large number of inhabitants who are possessed with more disposable income
and preference for coffee (BUCHAREST, 2018). This opportunity could be availed by a business
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Illustration 1: Romania Population Pyramid, 2016

in selling more of their premium flavoured coffee product known as 'Koffee', facilitating more
income for the company.
Threat: One of the potential threat at initial stage of opening restaurant in new country is
about unknown preferences and attitudes of customers who does not have belief upon the quality
of food items of new restaurant. This threat could be countered effectively by business through
conducting regular market research so that their needs and preferences could be best served with
company's offerings (West, Ford and Ibrahim, 2015).
Technological: Romania is one of the most emerging and developed nation where large
number of new technologies are present to conduct their business activities. The different type
of factors upon which required to provide emphasis is about information and communication,
mechanisms and technology, innovation potential, global communications etc. The economy of
Romania provide more emphasis on development of innovative organisation which creates
opportunity to Nando's restaurant to successfully venture their operations in market (How
Romania became a popular tech destination, 2017). The best technical skills of individuals are
used in regards for development of advanced products and services. This will helps in processing
of Kona beans to make best flavoured coffee from the use of most expensive seeds in the world.
Opportunities: The major opportunities for business in context of technology is presence
of digital tools such as cloud technology, social media and company website. All these
mentioned tools can be best utilised for the purpose of promoting products and services of the
company in an cost efficient manner. Another opportunity is that this organisation is this
business can make use of E-commerce platforms to deliver services to target segment in an
convenient manner.
Threat: The threat is related to failure of new technology because rapid changes are
happen in this sector. This will bring uncertainties in the operations of restaurant in future. It is
essential for business to emphasize on R&D activities so that sustainable future could be
developed with discovery of right products and services.
Legal: It is important aspect which has relation with political factors which are being
practised in the country. The different factors which required to oversee in this aspect is related
to regulations and standards which are implied on particular sector, employment laws etc. It is
the duty of every business is to fulfil these regulations while performing their functions.
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Otherwise this will have negative impact upon their image. The employment law was provided
by the government of Romania for protecting the rights of employee.
Opportunities: The adherence to laws and regulation formulated in respect to a country
will make sure that there are minimum disruptions to operations of a country. Creation of
positive working environment will be helpful in improving potential of employees which can
further enhanced. This will enables the management of restaurant to optimally utilise their
resources serve best to their guests.
Threat: This factor is highly depends upon the political situation which is present within
country. The health and safety law formulated in the country is very strict and highly regulated
which may end up causing challenges for the company. The exclusive solution to this problem is
compliance which ensures that there is minimum disruption in the operations by governmental
bodies.
Environmental: The different factors which impacts the businesses if not considered at
early stage while operating functions is related to pollution, waste, recycling, ethical issues etc. It
is the duty of all organisations is to assess the negative impact of their operations on environment
and take appropriate measures which helps to reduce negative impact.
Opportunities: Nando's is a restaurant that offers variety of products made from products
that do not harm the surroundings in any way. Apart from this it also ensures that wastage is
disposed of in a way that do not harm environment. As the management of Nando's is motivated
and follow the guidelines of acts related to the environment it has a positive chance to earn
customer loyalty by using environmental friendly practices in its daily operations.
Threats: The major threat which can be faced by the referred institution is the
intervention of government in business to control the activities that may harm surroundings. As
the selected organisation is dealing in food business it uses plastics for the packaging purpose
which are not eco-friendly. It may create pressure on Nando's to search for another alternative for
the services which may ultimately increase the overall cost of the firm. The approach to counter
this threat is that business needs to be employ lean production system and avail inventories i.e.
coffee beans and additional flavours of mint, chocolate and strawberry when required so that
there is minimum wastages of resources.
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Market entry options
In order to start a new business in another country it is important that decision regarding
mode of entry is taken with great efficiency (Netter, Stegemoller and Wintoki, 2011). Strategic
alliance, merger and acquisition, franchising etc. are the different options which can be adopted
by Nando’s. The different options which are available for the expansion of Nando's to Romania
are as follows along with their pros and cons:
Strategic alliance: In such type of expansion, two companies combine their resources,
capabilities and core competencies to attain synergy effect which helps in the achievement of
desired results (Albers, Wohlgezogen and Zajac, 2016). The situation of strategic alliance would
be achieved because through strategic alliance the conditions regarding economies of scale,
ability to learn from partners and risks are shared between partners. In the present scenario, it is
not the beneficial option for Nando's restaurant because it will be difficult for this business to
find a partners who will be delivering same products and services. This approach possess a
higher risk of falling out due to decline in the communication between the two organisation.
Merger and Acquisition: This is another option which help company to enter into
Romanian market. Merger and acquisition both are different concept, Merger includes the
activities related to combination of two firms and formation of new organisation which is not
suitable option for Nando's restaurant to adopt. The justification is that this business possess
distinct identity with which it can definitely help in venturing in the market successfully. On the
other hand, Acquisition is different concept which includes the activities related to takeover one
organisation majorly for the purpose of expansion in the market (Netter, Stegemoller and
Wintoki, 2011). This is also not beneficial option for Nando's restaurant as this will requires the
involvement of large amount of funds after that there is no guarantee of success is provided by
this option as this company possess limited knowledge of the market.
Franchising: It is one of the best method which is majorly used by the organisation for
expanding their business operations in new countries. This will refer as the situation where one
party provides right to another party to use their trademark, technology and manufacturing know-
how (Khan, 2014). It can be said to be one of the cost effective approach for a business
considering international expansion.
After evaluating the above options, it is identified that franchising is the best option
which can be adopted by Nando's restaurant for opening a franchise in Bucharest city of
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Romania. The reason for opting for Bucharest for expansion of business is that cost of operations
in this nation is comparatively less and well connected with European values on economic as
well as cultural grounds (WHY START A BUSINESS IN ROMANIA?, 2018). The primary benefit
which can be availed by a business is that it would be able to adapt to culture of Romania
through utilisation of the local talent (Dant, Grünhagen and Windsperger, 2011). This approach
provide capital for expansion which can be further utilised to improve business operations. In
adoption of this method least risk is associated with business activities along with fixed income
provided in the nature of royalty fee. The potential of local manager can be utilised for the
purpose of expanding into Romanian market in a rightful manner. The strategic alliances with
the suppliers and logistics service provider will be helpful in delivering inventories to create
premium flavoured coffee beverage known as 'Koffee'.
Market segmentation
It is an process of subdividing a large homogeneous market into clearly identifiable
segments having similar needs, wants, demands and characteristics (Wedel and Kamakura,
2012). The four type of segmentations are used which are known as demographic, behavioural,
psycho-graphic and geographic.
Geographic: It can be considered as one of the crucial approach of segmentation of the
target market. The people in this approach are sorted out on the basis of nation, states, regions
and cities which are to be targetted with products and services of the company. The geographical
division could be well employed by the company in order to identify target market which in this
case will be Bucharest. On geographic analysis it has been identified that people in capital are
more habitual of eating outside their home which is termed as “on the go” meals and possess one
of biggest food market in the country(BUCHAREST, 2018). Therefore it is beneficial for this
organisation to opt for this urban market as there are higher chances for a business in attaining
success.
Psycho-graphic: This categorisation of population is carried out on the basis of human
characteristics. The personality, attitude, lifestyle and values are taken as major grounds for
segmentation according to which suitable market is selected. The people who possess a lavish
lifestyle are to be targetted with product named as 'Koffee'.
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Behavioural: It is considered as marketing strategy based on actual consumer buying
behaviour. Here, market is divided as per the different behaviour, usage and decision making
pattern so that their crucial needs and experience are identified and delivered.
Demographic: Market is segmented on the basis of age, gender, family size, income,
occupation, religion and nationality. Demographic is one of best segmentation option which is
adopted by Nando's Restaurant in Bucharest, Romania. The income can be taken as primary
grounds of demographic segmentation as people with more disposable income will be targetted
to avail premium flavoured coffee beverage known as 'Koffee'. The differentiation on the basis
of occupation can be profitable as well reason being they have been observed to consume coffee
higher when compared with other geographic regions in the country.
Targeting: This will refer as the strategy where particular segment is selected which are
target by organisation in future period of time. It is important to decide particular segment as this
will helps in formulation of strategies through which objectives are achieved by organisation.
The major prospects for this organisation are people who are capable of availing premium
offerings of this organisation and families who wishes to avail some quality time with their loved
ones. The future target for this brand will be people who are perceive themselves as coffee lovers
and are frequents with their visits to the restaurant so that more market share and economic
benefits could be availed.
Porter's generic strategy
This strategy was founded by Michael porter who developed three generic strategies, that
a company could use to gain competitive advantage, back in 1980. It is an effective strategy
where organisation uses their internal capabilities to attain competitive advantage in market
(González‐Benito and Suárez‐González, 2010). The different type of factors which are included
under this are related to cost leadership, differentiation and focus. The best part of this strategy is
applied by Nando's restaurant after analysing all factors which are defined below:
Cost leadership: This strategy includes the process of reduction of costs and become
leader in market. The two ways which helps to attain the objective of competitive advantage
includes reducing costs through charging average prices which results in increasing profit and
improve market share through charging low prices (Littler, 2015). This approach is adopted by
Nando's restaurant in Romania because their existing target is families with decent income and
families who wish to spend some time with family and friends. Adoption of this strategy helps
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cater the needs of premium buyers who prefer exclusive taste through 'Koffee' and encourage
social gathering with friendly and family. The justification for the same is that this business is
being carried out on a larger scale which assures that economies of scale is achieved resulting in
lowering cost of inputs as well as process for production. The organisation is planning to source
raw materials such as coffee beans and natural flavours in bulk which will be helpful in selling of
products at a competitive price.
Differentiation: This strategy includes the process of making products or services
different and attractive from competitors. For effective implementation of this strategy, required
to carry on different aspects such as good research, development and innovation and adoption of
effective marketing and sales techniques to spread the benefits about their differentiated
offerings. This is not appropriate for Nando's restaurant because it includes involvement of large
amount of cost which leads to improvement of their operational cost and reduces their profit
margin. It is essential for a business to venture in the market to form a differentiation strategy for
which a business needs to incur heavy capital expenditure (Dirisu, Iyiola and Ibidunni, 2013).
The concept of flavoured coffee is relatively newer to the market as no other organisation have
thoughts of delivering coffee in mint, chocolate and strawberry flavours.
Illustration 2: Porter's Generic Strategies
(Source: Porter's Generic Strategies, 2018)
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Focus: As per the concept of this strategy more focus is provided on particular niche
market after assessment of the needs of customer and dynamics of market. It provides the
opportunity to develop low cost and well specified products for the market. This is further
classified into two types which are known as Cost Focus and Differentiation Focus. This will
include the activities related to providing something extra to only particular market segment. It is
not much appropriate for Nando's restaurant at initial stage because they are new in Romania and
not having much information relating to culture and buying pattern of target population. This
organisation have been aiming to fulfil requirement of niche premium market with its distinct
flavoured coffee range, therefore opting for differentiation focus (Dirisu, Iyiola and Ibidunni,
2013).
CONCLUSION
It has been concluded from the above report that PESTLE analysis is the important
framework which helps in determining the impact of macro-environmental factors upon business
activities. Application of this framework improves decision making of management as they are
aware of driving forces for business. There are modes which helps the restaurant to enter into
new country which are known as strategic alliance, merger and acquisition, FDI etc. out of which
franchising is preferred as it results in lower risk based expansion for the company.
Segmentation and targeting helps to know the behaviour and attitude of customers through which
their needs are effectively accomplished. It is essential for a business to employ cost leadership
approach so that competitive edge could be achieved in the Romanian market.
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REFERENCES
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foundations (Vol. 8). Springer Science & Business Media.
Dirisu, J.I., Iyiola, O. and Ibidunni, O.S., 2013. Product differentiation: A tool of competitive
advantage and optimal organizational performance (A study of Unilever Nigeria PLC).
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Littler, D., 2015. Cost leadership strategy. Wiley Encyclopedia of Management, pp.1-1.
González‐Benito, J. and Suárez‐González, I., 2010. A study of the role played by manufacturing
strategic objectives and capabilities in understanding the relationship between Porter's
generic strategies and business performance. British Journal of Management. 21(4).
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Albers, S., Wohlgezogen, F. and Zajac, E.J., 2016. Strategic alliance structures: An organization
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Khan, M.A., 2014. Restaurant franchising: Concepts, regulations and practices. Apple
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acquisition analysis: A large sample study of mergers and acquisitions from 1992 to
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