Mba6115 Business In A Global Assessment Answer
Nowadays, businesses are seeing changes in the economic and country settings. The local market is not able to fulfill the needs and demands of globalized population. Businesses have emerged to make sure that it thrives in the era of globalization. This emergence has made various local businesses become a popular name all over the world (Bastié, Cussy & Le Nadant, 2016). In order to get success, a multinational company is expected to follow the rules and regulations, policies, business practices and customer preferences. The major objective of this report is to conduct a country research of New Zealand in context of Hungry Jacks.
Hungry Jacks is an Australian fast food franchise of Burger King Corporation. This organization is planning to invest in New Zealand market for which it needs to analyze the market and establish trade links with the foreign country. This report includes a wide description about the country and industry of Hungry Jacks. There is the discussion about 2x2 matrixes of international strategies which are the best suitable to the organization’s operations. Moreover, it discusses about the market entry modes which can be used by Hungry Jacks while expanding the business in New Zealand. The rightness of country’s choice is identified by using PESTLE analysis framework. Manufacturing strategy of this company is recognized and some aspects are taken into considerations in context of choosing the most appropriate location for subsidiaries. At the end, there is the discussion about the HR approach that can be used by the chosen organization to find workforce in new market.
Country and Industry Analysis
Hungry Jacks is running its business operations in Australian fast food industry. In Australia, consumer awareness about health has transformed the fast food dining and takeaway services industry over past few years. This enhanced awareness of nutritional ingredients of fast food and sensible effort by the customers to select healthier alternatives which have impacted the industry demands. The players in Australian fast food sector are responding by launching a wide variety of healthier and premium options with less sugar, salt and fat. Changes in the market trends and customers preferences have directed the industry to entry of new companies providing excellent quality fast food options. The revenues are raised at a yearly rate of 3.7% through 2017-18 to $19.7 billion. However, this revenue figure is expected to decrease by 0.4% because of decrease in disposable income of Australian population. As per Statista Report, a survey organized between April 2017 and March 2018 to know about the share of Australian customers who take the food from quick service food outlets in six months. It indicates that 52.7% of Australian customers consumed food from McDonalds. The major reason behind the growth of these industry players is the developed economy of the country. Moreover, it can be stated that this industry in Australia is totally focused on standardization. It implies that food outlets are very particular about the maintenance that outlets will be having (Schaper & Buchan, 2014).
Hungry Jack, officially known as Hungry jack Pty Ltd. is an Australia based fast food franchise that works under Burger King Corporation. It was established in the year 1971 and it is operating its business as wholly owned subsidiary of Competitive Foods Australia that is owned by Jack Cowin. This organization runs and owns or sub-licenses all the Australian restaurants of Hungary Jack and Burger King. As the chief franchise for the nation, Hungry Jack is liable for licensing new entrants, establishing its own stores and executing new standards of franchised locations in that nation. With more than 390 locations all over Australia, Hungry Jack has become the 2nd largest franchisee of Burger King across the world (Hungry Jacks, 2018).
Goods and Service Offerings
Currently, Hungry Jacks offers a wide range of products to its targeted customers in Australia. The main products of the company are such as chicken products, hamburgers, onion rings, French fries, salads, cold beverages, breakfast items, chips, desserts and kids’ meals. In addition to fast food products, it offers a functional breakfast menu for a limited time in morning that is very famous among Australian population. The primary trademarks of Burger King which are sold via Hungry Jacks include TenderGrill and Whopper sandwiches. The organization believes to run its business as large scale operations with limited product line that help in generating more revenues and profits (Hungry Jacks, 2018).
2x2 matrixes of international strategies
In order to expand and run business in New Zealand market, Hungry Jacks will formulate and implement effective strategies by using 2x2 matrices. Under strategic management, 2x2 matrix defines two different variables, which are relevant to give simple description of 4 alternatives which can be explored and arranged when making significant decisions for businesses. There are two major 2x2 matrixes i.e. BCG Matrix and Ansoff Matrix. While expanding business in international market, it is very important for the organizations to adopt one of these matrixes.
In order to expand business in New Zealand, Hungry Jacks will use the strategies under Ansoff Matrix which will help the company to establish the business in this new market. This matrix includes two dimensions i.e. market and product. These strategies for Hungry Jacks are discussed below:
Market development is the most suitable strategy in the business expansion of Hungry Jacks Company in New Zealand. By using this strategy, this company will introduce its well-developed fast food products among New Zealand’s population. In Australian market, company is successfully offering different food products like chicken products, hamburgers, onion rings, French fries, salads, cold beverages, breakfast items, chips, desserts and kids’ meals. Company believes that its most popular products are hamburger and chicken products which sales are the major reason behind its sales and revenues (Kelsey, 2015). Under this strategy, Hungry Jacks will offer its popular products among its targeted customers by identifying their needs and demands towards fast food products and beverages. It will be able to attract more customers while New Zealanders will find that Hungry Jacks is offering more quality products to them. This will assist the organization to increase its value.
Additionally, diversification is another strategy that can be used by Hungry Jacks in new international market. Under this strategy, the company can grow its business by using new products in new market. While entering into New Zealand, the company can diversify its business by introducing some new products. It is analyzed that the population in New Zealand is very conscious towards health and nutrition. Considering the preferences of customers, the organization will introduce a new range of healthy and nutritious products in this country. It will include juices, salads, healthy breakfast items etc. in its product range. However, the company may have risk and challenge under this strategy but it will be profitable for the establishment and growth of Hungry Jacks (Scott, Cavana & Cameron, 2016).
Thus, these two strategies will be the best suitable to the business and global expansion of Hungry Jacks in New Zealand.
Market Entry Mode
When any company plans to expand its business operations in another international market, it needs to make a decision on its market entry mode. Market entry mode is the strategy that is adopted by a company which determines how to enter in a foreign market (Akta? & Yeasmin, 2015). There are various strategies which an organization uses all over the world. In the process of entering into New Zealand, Hungry Jacks will look for the most appropriate mode that will have significant effect on the results. The recommended market entry mode for Hungry Jacks is stated below:
Franchising as a model for Foreign Direct Investment (FDI) in New Zealand
About the market entry mode of Hungry Jacks, it can be stated that Hungry Jacks can use franchising strategy as a model for foreign direct investment in the chosen country. In this new market, this organization can invest the funds by opening more franchises and stores. It can exercise more supervision and control over the franchises (Chan, 2015). Under FDI, franchising will be the best suitable model in the business environment of New Zealand. The country has not significant laws and regulations which regulate the franchisee business (Thomsen & Willerslev, 2015). As an outcome of this, franchise can be established by Hungry Jacks without the concern for registration, regulations and authorization. If company will use this mode, it needs to get a fixed amount and royalty on the basis of sales as the revenues from franchisee. The firm should use this mode as it will have various advantages for its business expansion. One of the biggest advantages is that it will minimize the risks and relevant operating costs on the franchisor as a huge portion of burdens which are put on franchisee. Moreover, this approach will help the organization to know about the culture and market customs of New Zealand market that will be very tough for Hungry Jacks to get if it will solely utilize FDI to enter in this market (Dalgic & Bloemen, 2015).
Thus, it is hereby recommended that Hungry Jacks should use franchising with FDI to make entry into New Zealand market.
Appropriateness of Country Choice
Before expansion, it is very important to conduct the market research and analyze that whether this country’s market is right to enter. Here, the appropriateness of New Zealand country can be analyzed by using a strategic theory/framework i.e. PEST analysis. In context of Hungry Jacks, the market of New Zealand is analyzed below:
The business operations of Hungry Jacks will be affected by the policies enforced by New Zealand government. The country does not have more laws and regulations for franchising business that can provide a profitable market for the company. The political system of this country is very strong and it provides equal opportunities to both males and female employees. In New Zealand, the stores of Hungry Jacks have to deal with the employment policies and tax obligations (Holler, 2015).
In New Zealand market, economic position and unemployment rate can influence the fast food companies. There are various healthier options which are costlier than fast food which cannot be afforded by New Zealanders. Currently, economy of this country is emerging that may have many positive impacts on Hungry Jacks’ business. Moreover, it is analyzed that disposable income of New Zealanders is increasing that enables them to consume fast food. It can also have positive effect on Hungry’s business (Farrell, Warin, Moore & Street, 2016). Economic state of this market will offer various benefits and business opportunities to Hungry Jacks.
As mentioned above, there is an increase in the disposable income of New Zealand’s population. People love to consume food outside their house and they are not much concerned about their health. This can increase the sales and revenues of Hungry Jacks. In this market, it is very important for the company to provide quality fast food products so that it can entice more customers. Moreover, it is important for this organization to target the younger crowd in New Zealand as they like to eat fast food like burgers, French fries, chicken products etc. They will show loyalty to the customers (Devi, et al, 2014).
It is one of the important factors which can have negative impact on the business operations of Hungry Jacks. Till now, the country has not upgraded its technologies used in the food market. For the business of Hungry Jacks, it is very important to have new technologies to connect and manage the suppliers of raw materials. This factor may affect its business adversely (Food & Council, 2014).
Pros and Cons of Entering into New Zealand Market
From the above country analysis, it is found that there are both pros and cons of expanding the business in New Zealand market (Turner, Klerkx, Rijswijk, Williams & Barnard, 2016). It is identified that one of the major pros of this expansion is that it offers an emerging economy to Hungry Jacks where it can establish a larger customer base. Political environment of the country is very strong that is also profitable for the growth of this business. Most of the people in this country like to eat fast food that can increase its sales. As mentioned above, the organization will be operating the business by using market development and diversification strategies which will help the organization to create a new customer base of healthy food lovers (Jell-Ojobor & Windsperger, 2017). Apart from this, one of the cons is that the country is not technologically developed and it lacks in the context of infrastructure. This can impact the business of Hungry Jacks adversely. However, the pros are very strong as compared to cons so it will be good to expand business in this international market.
By looking at the operations of Hungry Jacks, it can be stated that in the beginning stage of expansion, it should adopt centralized strategy of manufacturing. The firm should establish a single facility which will produce and offer the food products to final consumers. With this, it can provide its customers with the option of home delivery in which its delivery partners will deliver the products to end consumers (Luo, Shi & Venkatesh, 2018). After successful establishment, the organization should go with the decentralized manufacturing strategy and it should open more outlets for food offering. It will assist the organization to increase its sales and customer base in New Zealand.
There are various considerations which Hungry Jacks will take while opening its subsidiaries in New Zealand. One of the major considerations will be that it will search for the most crowded areas and shopping centers where more population visit for different purposes like shopping or other entertainment purpose. Moreover, it needs to identify the neighboring competitors so that it can differentiate its services and products. Additionally, other factors are such as sufficient space, accessibility, affordability, safety, parking and visibility (Lees-Marshment, Elder, Chant, Osborne, Savoie, & van der Linden, 2018).
Apart from strategies and market entry modes, Hungry Jacks will pursue an effective HR approach so that they can find a talented and skilled workforce for its business in New Zealand (Xi, Block, Lasch, Robert & Thurik, 2018). The organization will use effective processes and approaches of recruitment and selection to hire restaurant staff. One of the best approaches is the use of digital sources like online job portals, social media sites etc. Nowadays, people are very much updated on these job portals and online sites which can provide the information about candidates with the required skills and capabilities. On these online portals, Hungry Jacks will post its job advertisement and job description where candidates will be aware about jobs (Madanoglu, Alon & Shoham, 2017). This approach will assist Hungry Jacks to find the most appropriate workforce for its business.
From the above analysis, it can be concluded that the country environment of New Zealand can provide a profitable business environment to Hungry Jacks. It can be recommended that this organization should expand its business in this country by using franchising entry mode with FDI. The above report states a research about New Zealand market where Hungry Jacks is planning to expand its business. There are various factors which will be beneficial for the future growth of this organization. There are both pros and cons of expanding its business but it can use pros to overcome the cons in this country.
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