Wendy's International Market Analysis for Global Expansion

This case study analyzes Wendy's International's potential for global expansion, specifically focusing on market opportunities in Egypt and Ghana. The analysis examines various factors, including consumer behavior, economic conditions, political stability, and legal systems in both countries. It assesses the competitive landscape, considering established fast-food chains like McDonald's and Burger King. The study evaluates the impact of currency exchange rates, inflation, and tax rates on Wendy's potential profitability. It also considers the cultural preferences of consumers regarding fast food. The assignment concludes with recommendations for Wendy's, suggesting that expansion into both countries is viable, but should begin with a limited number of branches to establish a market presence and mitigate risks. The analysis is based on the provided case study and external research, to determine the viability of Wendy's expansion.

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WENDY’S INTERNATIONATIOL MARKET ANALYSIS
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Egypt
Introduction
Egypt’s economic growth has been poor and is ranked position 11 out of the 14 nations in
the Middle East and North Africa region. It has low economic freedom score of 53.4 and
according to the 2018 Index; it is ranked position 139 in terms of economic freedom. Its
economic growth score is less than the expected averages both at regional and world level. The
country’s economic growth is anticipated to improve in future (Abu-Bader & Abu-Qarn, 2017).
Discussion
Consumers
According to the cultural practices of the residents of Egypt, most of the foods which are
offered by Wendy’s International are acceptable and are highly consumed in the country. The
entire population has embraced modernization and hence consumption of fast foods is becoming
common. According to Nielsen Quest report, more than 21 percent of Egyptian consumers
consume restaurant meals. The report also shows that more than 55 percent of the Egyptian
consumers consume fast foods. This is due to the fact that Egyptian lifestyle is changing due to
influence by the western culture and consumer level of income is also rising. They include
hamburgers, chicken sandwiches and signature Frosty dessert (Ibrahim & Vignali, 2016).
Legal system
The legal system of Egypt is highly politicized and unstable. It involves complex
procedures in acquiring the title deeds of properties. This is due to corruption involved in the

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system and the mechanisms of investigating and eliminating it are very poor (Barton, Gibbs &
Merryman, 2014).
Political system
The political system of Egypt has improved to a greater extent and the government is
currently reforming the nation’s business environment and is gradually restoring its financial
stability.
Economic system
Considering the economic system of Egypt it has continued to lag behind in terms of
economic growth though it is improving currently. Egypt has been depending much on aid from
international bodies and other nations such as Saudi Arabia. Considering the three systems
namely the legal, economic and political systems of Egypt, Wendy can invest in Egypt but is
likely to face problems of protecting the property rights.
The currency exchange rate of the Egyptian dollar against the US dollar has been
increasing and is relatively stable. It does not increase with a great margin over a short period of
time. Currently the exchange rate stands at 1$ = 17.9088 Egyptian dollars. The rise in exchange
rates has resulted from the high inflation rate in the country. The inflation rate stands at 10.2
percent which is very high. This has led to rise in price of fast foods. As a result of this, the fast
food industry has lost many customers as they shifted to other food service industries (El-Ramly
& Abdel-Haleim, 2017). The rent in big malls such as the mall of Egypt also increased and as a
result only the bigger fast food companies such as McDonald’s, Cook Door, Mo’men and Burger

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King can only afford to operate in such big malls. The tax rates are relatively low at a rate of
18.2 percent considering the total domestic product.
The fast food industry in Egypt is very competitive. Some of the well established
companies include the McDonald’s, Cook Door, Mo’men, Burger King, KFC, Pizza Hut and
Prego among others. This calls for smartness in terms of business strategies formulation for
survival. The fast food industry of Egypt is not yet saturated.
Considering the above discussed points, Wendy’s can expand operations in Egypt but
start with a few branches to establish themselves in the market. Wendy’s is financially stable and
can afford to rent strategic popular places such as mall of Egypt. Also due to the growing
economy of Egypt and its large population, Wendy’s can easily establish itself and survive the
competition from the major rivals.
Ghana
Introduction
The economy of Ghana grows at a slow pace but it keeps on improving. It has poor
economic freedom with a score of 56.0 and according to the 2018 Index it is ranked position 122
out of in terms of economic freedom. The economy of Ghana is well above the expected regional
average but it is still below the world average. It is ranked position 19 out of 47 nations in the
Sub-Saharan Africa region (Aryeetey, Ernest & Augustin Fosu, 2017).
Discussion
Consumers

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According to the culture of the people of Ghana, the main preferred stable foods include
cassava, plantain, millet, sorghum, yam, maize, beans, sweet potatoes and cocoyam. However,
due to modernization and western culture influence, the people of Ghana have started to embrace
fast foods which include fried rice, fried chicken, burgers, French fries and pizza (Nondzor &
Tawiah, 2015). More than 60 percent of the consumers of Ghana consume fast foods. The
economy is currently doing better and consumers’ level of income is increasing. With the
increased per capita income and the western culture influence, the fast food industry in Ghana is
doing great. Most of the fast foods consumed in Ghana are offered by Wendy’s and hence there
is great opportunity in Ghana.
Legal system
The legal system of Ghana is highly politicized. The judiciary is independent but the
judges are paid poor wages. This means that they may be tempted to accept bribes hence
compromising the integrity of the judicial system. The property rights are undermined and
acquiring of property titles is very complex. Entrepreneurs are subjected to bribes in order to
start their businesses.
Political system
The political system of Ghana is democratic and stable. The economy of Ghana has been
doing well despite its huge public debt.
Economic system
The currency exchange rate of the Ghanaian cedi against the US dollar has been rising
but it is relatively low and stable (Abor, 2015). The current exchange rate stands at 4.7892

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Ghanaian cedi against one US dollar. The inflation rate in Ghana is high at 17.1 percent. This
means that the prices of goods and services are higher. Despite the rise in prices, the market for
the fast foods in Ghana has been good and is anticipated to improve in future as the Ghanaian
economy grows. The tax rates in Ghana are relatively lower with personal and corporate taxes
being 25 percent.
The government of Ghana highly values foreign direct investment has minimum tariff
rates of 10 percent and below (Feglo & Nkansah, 2010). The Ghanaian fast food industry is not
much competitive as most of the world bigger fast food companies have not yet entered the
market. However new entry into the market may face competition from the already established
companies like Barcelos, Chicken Republic, Chick’n Lick’n, Food Rockers, Frankie’s, KFC,
Papa’s Pizza, Papaye, Peteran and Supreme.
From the above discussion, it will be okay for Wendy’s to enter the Ghanaian fast food
industry. The economy is currently growing, tax rates are favorable, the market is not yet
saturated, major world fast food companies have not yet entered the market and the government
is relatively stable. Also people are aware of the majority of fast foods offered by Wendy as they
are already being offered by the existing companies.
Summary and recommendations
Based on the gathered information about the two nations, it will be okay for Wendy’s to
expand and start operating in these two countries. The two nations are still growing with a large
percentage of their population being made up of young people who have embraced
modernization. More than 60 percent of each nation’s population is made up of youngsters. The
nation’s political systems have also realized the value of foreign direct investments and have

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started embracing favorable open trade policies to attract and maintain foreign direct investments
and foster their economic growth. In a nutshell, it will be okay for Wendy’s to expand in Egypt
and Ghana but begin with a few branches in order to first establish itself.
References
Abor, J. (2015). Managing foreign exchange risk among Ghanaian firms. The Journal of Risk
Finance, 6(4), 306-318.
Abu-Bader, S., & Abu-Qarn, A. S. (2017). Financial development and economic growth: The
Egyptian experience. Journal of Policy Modeling, 30(5), 887-898.
Aryeetey, S.K., Ernest, and Augustin K. Fosu. "Economic growth in Ghana: 2010-2017." Draft,
African Economic Research Consortium, Nairobi, Kenya (2017).
Barton, J. H., Gibbs, J. L., Li, V. H., & Merryman, J. H. (2014). Law in Radically Different
Cultures. Stanford University Law School.
El-Ramly, H., & Abdel-Haleim, S. M. (2017). The effect of devaluation on output in the
Egyptian economy: A vector autoregression analysis. International Research Journal of
Finance and Economics, 14, 82-99.
Feglo, P., & Nkansah, M. (2010). Ghanaian currency notes. African Journal of Economic
Research, 4(22), 2375-2380.
Ibrahim, Y., & Vignali, C. (2016). Predicting Consumer Patronage Behaviour in the Egyptian
Fast Food Business.". Marketing, 1, 2.

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Nondzor, H. E., & Tawiah, Y. S. (2015). Consumer perception and preference of fast food: a
study of tertiary students in Ghana. Science Journal of Business and Management, 3(1),
43-49.