Business Strategy Analysis: Subway Franchise Nanaimo Case Study

This case study analyzes the Subway franchise in Nanaimo, BC, evaluating its general and industry environments using PESTLE and Porter's Five Forces models. It examines the franchise's value chain, current strategies, and competitor value chains. The analysis includes a discussion of strategy alternatives, such as market penetration using the Ansoff matrix, and the selection and implementation of strategies like cost leadership and differentiation. The study highlights the importance of customer service, product offerings, and market positioning in a competitive landscape. The report explores the economic, social, technological, legal, and environmental factors influencing the franchise's performance, providing a comprehensive overview of its business operations and strategic considerations for success.

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MANAGEMENT

Contents
Introduction...........................................................................................................................................3
The General Environment.....................................................................................................................3
Industry Environment............................................................................................................................6
Competitor Value Chains......................................................................................................................9
Value Chain analysis.............................................................................................................................9
Strategy Alternatives...........................................................................................................................10
Strategy Selection and Implementation...............................................................................................11
Conclusion...........................................................................................................................................12
References...........................................................................................................................................14

Introduction
The report brings out a discussion on Subway franchisee in Nanaimo. The report will focus
on industry and different aspects by analysing marketing frameworks to have a better
understanding for subway franchisee. To check the market position of Subway franchisee, the
report will come up with external business environment includes technology, social, cultural,
economic, and environmental conditions. Porter`s five forces model analyses several factors.
This model can demonstrate threat of existing competitors, bargaining power of suppliers,
bargaining power of customers, threat of substitutes, and threat of new entrants. Value chain
analysis is the procedure through which the organisation can identify primary and secondary
actions, which can finally add value to final goods. It is important to know that franchisee
Subway Nanaimo will have to follow same rules and regulations, which are adopted by
headquarter of Subway (Fozer et al., 2017).
Subway is American restaurant franchisee, which sells salads and submarine sandwiches.
Subway is amongst the largest and fastest growing franchisee at global level. Furthermore, it
is leading single chain eatery, which is the biggest restaurant in world (Subway, 2018).
The General Environment
PESTLE analysis is abbreviated as social, environmental, technology, economic, legal, and
political factors.
Political factors-
Canada has good political stability, which is well known as one of the safest nation in world.
Canada has positioned itself in tourism and business. Canada focus on international peace,
which has earned as good global image. The tax rate is nearly 18-20 percent on the major
industries (Fozer, 2017).

Social factors-
Subway has started adding healthy options on menu as the public health plans.
(Source: Economic development of Nanaimo, 2020)
2016 census population indicates that 155698, which is the increased version of 2011.
Furthermore, RDN has expected to increase by 25 percent, which anticipates 812 residents by
2041. One of the major factor of changing economic and social level comes up with
migration level, work opportunities, and housing costs, which brings Nanaimo as driving
force. From the data of Nanaimo, it is seen that percentage of whole migrants from other
more provinces have been reducing. International immigrants move from outside Canada as
between 2017 to 2018, which continuously to capture significant share of total migrants
(Economic development of Nanaimo, 2019b).

(Source: Economic development of Nanaimo, 2020)
Economic factors-
In 2018, Canadian economy is 10th economy in world, which shows the membership for
(WTO) world trade organisation, commonwealth nations, and (OECD) organisation for
economic cooperation and development. The company has free trade agreements with
different companies. The statistics reflect that retail sector for Nanaimo avail for 7380 jobs,
which accounts for 14.1 percent of labour markets (Gheibi, Karrabi, Mohammadi, & Dadvar,
2018).
(Source: Economic development of Nanaimo, 2020)
This graphical representation bring distribution of income, which reflects ageing structure of
population. The economic conditions of Nanaimo are quite favourable, it is seen that median

household income in Nanaimo for 2018 was $62091, which represents 13 percent increase for
last five years (Racz et al., 2018). The average household income for 2018 was $85005,
which is again 17 percent increase. The per capita income for 2018 is nearly 17 percent
increase for the last five years (Gheibi, Karrabi, Mohammadi, & Dadvar, 2018).
Technological factors-
Nanaimo charges offset cost of processing the development applications and finally recover
the portion of new development. Subway is impacted by the technical factors, which includes
new software, online customer service, and online ordering. In last few years, technological
trailer has been rising and customers have been delegating more orders through online
platforms. This association with customers at online platforms in creating good relationship
with the customers (Racz et al., 2018).
Legal factors-
While imposing tax on company, it has to undertake corporate income tax based on federal
and provincial, which is 12 to 15 percent. Subway is affected by a series of legal rules and
regulations, which includes trading laws, foreign policies, laws, regulations, and immigration
policy by HM revenues. Subway will be affected by some legal factors, which is changing
price and creating impact on promotional activities (Adner, Aliseda, & Zemsky, 2016).
Environmental factors-
Subway is affected by the several environmental factors, which includes fluctuating
environmental protection rules by creating direct influence on transactions. These issues will
show growing level of customer`s attentiveness regarding the environmental protection acts,
recycling issues, hygiene issues, and the hybrid-food items. Furthermore, customers are
fascinated healthy food which is based on organic products and interested in issues related to

environmental factors, which they want these fast food restaurants in taking care of issues
properly (Schwab, Ring, & Song, 2019).
Industry Environment
Competitive Analysis
Porter`s five forces analysis
Bargaining power of consumers-
It is the influence on the customers over the company. For the subway franchisee in
Nanaimo, bargaining power of clients face medium force. Subway deals a wide range of fresh
items from medium to high price, which permit customers to give options. For less price with
high quality, clients can get food in a mile through the subway franchisee (Meyer, & Cohen,
2018).
Threat of substitutes-
Threat of substitutes refers to presence of alternate items and until how is accessible to the
customers. For Subway, threat of switching product is quite high. Subway will face high
danger because customers can satisfy with other alternatives such as Popeye, McDonalds,
dominos, Chipotle, and other local restaurants (Hafezi, Akhavan, & Pakseresht, 2017).
Bargaining control of supplier-
The bargaining power of dealers is low, as majority of the dealers will not prefer to lose
subway because it promotes freshness (Subway, 2018).
Threat of new entrants-
The danger of new players comes up with exposure in this industry, which is entrance to new
opponents. For subway, the threat of new participants is medium because local food

restaurants have been developing new items and food lines to compete (Adner, Aliseda, &
Zemsky, 2016).
Competitive rivalry-
Competition calls the effect of existing opponents, which they have on one another in the
industry. The control of competition for subway is quite high, as subway has not only food
restaurant, which proposals fresh elements in sandwiches. Organisations such as Jimmy
Johns and Jersey to implement organic and healthy system in catering food chain (Izquierdo,
Rodríguez, & Ribes, 2016).
Competitive strategy-
Focusing differentiation- The Company exercises competitive strategy of the focus
differentiation. The company values the customers and focuses on service and product
differentiation. The unique capability of the company is to avail unparalleled the customer
services in the industry, which has differentiated the products from the competitors and
gained control of market segment for future (Hafezi, Akhavan, & Pakseresht, 2017).
Current Strategies
The strategies is based on 4Ps, which are well known as Product, Price, place, and promotion,
which plays an important role in accomplishing maximum profits and place in the market.
Subway adopts activities with an aim to promote the activities. Subway`s advertisement
depends on television and radios. Sponsorships with moviemaking and toy manufacturing
company can create more space in market. Subway is well-known for the additional bread,
where the business will focus on maintaining standards to fresh product (Izquierdo,
Rodríguez, & Ribes, 2016). This strategy can play an important role for business, as there are
few reasons for which the company needs explosive growth. It aims to have its retail outlet in
nearby area. Subway is efficient in creating less square footage in average to McDonalds. For

the clients who needs fresher and lighter than the fries, it is seen that subway is easy choice
with range of vegetables with cold cuts to the broader perspective of Subway. The aim is to
weaken McDonald’s sales; subway can accomplish it by establishing it at more locations.
Customers today started preferring customised meal as per the customer`s preferences
(Zhang, Chong, Li, & Nie, 2020).
Competitor Value Chains
Value Chain analysis
Value chain of subway Nanaimo can allow the organisation to follow low costing strategy
model, which ensures that the company is highly competitive in the industry. First business
operation will consist of transforming meat to shipped and collect vegetables. The process is
completed at subway factories and farms in the world. Subway has started to distribute its
products to its franchisees as the subway outsource shipping procedure to US local food
chain, which will bring out operational costs. Subway Nanaimo allow them to keep the prices
low and focus on manufacturing items at high at organisational standards (Zhang, Chong, Li,
& Nie, 2020).
The operations will notify distributors of Nanaimo where certain products in menu are low. It
is because it allows the distributors to restore menu items before the franchisee becomes short
of goods. Menu goods of Nanaimo are created orders, which make process quickly and
effective for franchisees and customers. Technology will continue to change rapidly as
subway Nanaimo continues to come up with sales and the marketing strategies in a creative
manner (Mount, Pandza, Majchrzak, & Pitsis, 2018). For instance- social media and phone
applications can easily notify promotions and discounts. As far as the customer service is
concerned, subway Nanaimo trains employees to become friendly and helpful for customers
as well as the team. Every employee is trained to exactly maintain quality, same procedure,

and dedication to handle the customers. Business procedures for Subway during interaction
with people needs to follow seven steps-
Customer service-
Employees’ gets in subway restaurant of Nanaimo where employees are made learnt to say
“Hello.” Further, one have to ask the bread they need. The company can have different choice
of baked bread for the customers (Asgari, & Jin, 2020). The selection includes Italian bread,
cheese herbs, flat breads, and honey oats bread. While cutting the bread, flavouring is
important where customers can select from menu that are eggs, veggies, and different meats
(Schwab, Ring, & Song, 2019).
Strategy Alternatives
Strategy alternatives will include development team working with new entrepreneur to avail
assistance in operating subway restaurant. While selecting the model to examine the strategy
alternatives in Nanaimo, pestle analysis has helped to grab the attention of youth (Mount,
Pandza, Majchrzak, & Pitsis, 2018). Ansoff matrix is an attempt through which business
growth depends on the marketing of new or existing products. It avails a mix of proposed
growth strategies to set the trend for approach-

(Source: Hanlon, 2019)
From the above presentation, it is seen that subway franchisee Nanaimo lies in market
penetration when an organisation increases the share of the market in Nanaimo. Subway must
focus on marketing strategies in penetrating markets, which they have been operating. One
operating division, it is the franchisee sales for which the group is dedicated to find
individuals to have the leadership and entrepreneur spirit and their way to open SUBWAY
franchisee (Hafezi, Akhavan, & Pakseresht, 2017). As far as the Nanaimo market is
concerned, the earnings and per capita is quite high where Subway can establish more outlets