CASE ANALYSIS 10
Fromthe Buffalo Wild Wings Case, BWW emerges as one of the fastestgrowing restaurant chains in the United States. The restaurant chainhas a plan of increasing the number of restaurants that it currentlyhas within the next few years. From the analysis of the BWW internaland external factors, it is possible for the restaurant to meet itsgoal of global expansion however, it needs to have a good analysisof its internal and external environment in order to have awell-organized plan of its projected plan.
Internaland External Analysis
BWWhas a good opportunity emanating from its capacity of attracting ahigh number of customers based on the quality of its products as wellas quality services. Observing of tastes and preferences of customersis another internal factor that can help in the growth of therestaurant. Apart from this, it has been indicated that therestaurant has a potential of earning 13% of its sales from takeouts,which presents an opportunity for growth of the restaurant sinceincreasing the revenue that comes from takeouts can offer resourcesthat can be used for global expansion within a span of few years.Besides, financial records of the restaurant indicate that franchisedstores outperform company-owned stores, in terms, of revenue earningand even growth. This is an indication that BWW can utilizefranchising in increasing its potential for global expansion. Forinstance, through increasing the number of its restaurants throughfranchising and building some new company-owned restaurants, in 2011,the restaurant was in a position increase its income by 13.6%. Inaddition, due to its growth prospects, the restaurant has manyinvestors that are purchasing its stock. The restaurant can use thisopportunity in promoting its revenues that may assist in its growthprojections.
DespiteBWW having the above discussed opportunities for global expansion, itexperiences some weaknesses and threats. One of the threats toexpansion is that the restaurant has two statements of ethics onefor executives and the other for regular employees. Having twostatements of ethics may tend to discourage employees from workingwith the restaurant because employees may feel as if they areconsidered different from the executives. Another threat that facesthis restaurant is that opening new stores especially in newcountries may pose the risk such as limited brand awareness, supplychain issues, and unknown competitors among others. Such risks mayhinder the global expansion goal. Besides, another threat that therestaurant may likely face comes from lack of considering takeoutbusiness as being important. Despite the revenues that come fromtakeout business, BWW does not compete in this area. Lack ofcompeting in the area may lead to drop of revenues that come from thetakeout business.
Onthe other hand, BWW has some weaknesses. A key weakness is that therestaurant is not in a position to control prices. This problememanates from the fact that the restaurant does not have futurescontracts that can influence its supply chain the restaurant dependson third party supplies. In case, it does not consider means ofcontrolling its prices, the restaurant is likely to face immensecompetition from its rivals that have control over their supplychain. Another weakness of the restaurant is that it does notconsider some businesses such as quick service restaurants likeMcDonald’s as a competitor. Failure to take such competitorsseriously may affect the revenues of the restaurants in the future amove that may hinder expansion.
Thestrategy of BWW to expand its business in the international market isfaced with different issues, but the restaurant still has differentopportunities that it can use in overcoming the issues that mayaffect its expansion policy. One of the issues that the restaurantfaces in its expansion policy is that it lacks control over itssupply chain. This is a problem because lack of control over itssupply chain implies that the restaurant cannot be in a position tohedge against the volatile chicken wing prices. Lack of control ofits supply chain is an indication that the restaurant cannot be in aposition to influence its supply chain in case there is a shortage ofsupplies and is also an indication that the suppliers of therestaurant are in full control of supplies and even prices that theycan charge for the supplies. In seeking an international expansion,the restaurant would be faced by the challenge of providing suppliesat a considerable price because the restaurant does not currentlyhave control over its suppliers. For instance, in its attempt toincrease the number of restaurants by approximately the same numberof stores it currently have, it will have to increase its supplies.However, since the restaurant does not have control of its supplychain, it may face shortages in supplies or even experience highprice charge.
Anotherissue that the restaurant faces entails neglect of the takeoutbusiness. Despite, the restaurant focusing on selling a casual sportydining environment, most sports fan prefer watching games at home,tailgating at an event, or prefer enjoying a day at the beach orlake. The restaurant does not consider the contribution of thetakeout business to its overall revenues. This is a problem becausefailure to offer any marketing package to the takeout business maylead to the dying of the business, despite its revenue contribution.This may affect the expansion policy of the restaurant because partof revenues may be lost that could have otherwise been used in theexpansion plan. Because of lack of consideration of the takeoutbusiness for example, customers may tend to prefer other restaurantswhere the takeout business has an attractive marketing package.Besides, another issue in its expansion policy is that a typicalrestaurant requires approximately 4,000 and 10,000 square feet, whichrequires a cost of around $2 million in putting up building,purchasing land, and appliances. Since the restaurant is facing aninternational expansion, where it can have almost double the storesit has, putting up such buildings is a tricky affair given that thereare other options that the restaurant can consider instead of puttingup new buildings.
Oneof the opportunities available to BWW is that of growing the takeoutbusiness. Since takeout business has been indicated to bring revenueof 13% of the restaurant’s sales and the restaurant has not putmuch into the business, BWW has an opportunity of growing the takeoutbusiness through selecting and employing a marketing strategy thatwould grow the business. Through using this growth opportunity, it ispossible to increase the revenue that would come from the takeoutbusiness. This is a gold opportunity that the restaurant should notignore because it has the potential of boosting its expansion policy.
Anotheropportunity that the restaurant has entails growing its investmentthrough stocks. Investors would always tend to purchase stocks thatthey project high returns. This is usually through looking at thegrowth information of an investment firm. From the financialinformation of BWW, it is apparent that the restaurant is doingexceedingly well. This makes the restaurant be preferred by mostinvestors for stock investments. BWW can consider this as anopportunity that it can use in its expansion policy. When a firmseeks global expansion, customers and investors usually look for thefirm’s history, in terms, of its performance. In case theperformance is attractive, then the firm has a high probability ofwinning the market. Therefore, given that the restaurant has anopportunity of growing its investments through its stock, it iscritical to utilize this opportunity because the opportunity may helpthe restaurant in winning the global market.
Furthermore,information from the BWW Case indicates that BWW has an exceedinglygood performance in franchised stores compared to company-ownedstores. In fact, it has been indicated in the financial statementsthat franchised stores have always outperformed the company-ownedstores. This presents franchising as a good opportunity of expandingto the international market. Given the high cost of purchasing land,putting up a new store, and buying appliances, can be preferred sinceit can help in saving expansion costs, as well as performing betterthan company-owned stores. Thus, franchising is an opportunity thatcan help the restaurant in its expansion policy.
Oneof the alternatives available to the restaurant in ensuring that itattains its expansion goal is using joint ventures and partnershipsin its international expansion. Since there is a risk of limitedbrand awareness and poor knowledge of market information in countriesthat the restaurant desires to have presence, BWW has an alternativeof forming partnerships with the international companies, wheredesires to have presence. Forming partnerships with the internationalcompanies would give the restaurant an opportunity of using theinternational company’s customer database in marketing itsproducts. This would give the restaurant a customer base that it canuse in case it wants to enter the international market on its own.Besides, through the joint venture alternative, the restaurant wouldbe capable of having an increased access to new markets as well asdistribution networks.
Useof franchising instead of building new company-owned stores isanother alternative. As it has been indicated earlier, putting up newcompany-owned stores would cost the restaurant a lot of resources.Apart from this, franchised stores have been depicted to have betterperformance compared to company-owned stores. Since the primary aimof any business is to realize returns that can help in keeping abusiness as a going concern and realize profits, performance shouldbe the chief focus of the restaurant. Franchising would provide therestaurant with an opportunity of saving some revenues that it canuse for other business operations.
Anotheralternative for BWW entails the use of social media platforms such asFacebook and Twitter in making its business and productsinternationally recognized. In the current age of technology, it ispossible to advertise through the use of the social media platforms.This is because the internet has been in a position to reach almostevery part of the globe. Since the restaurant advertises all-yearround, but tend to increase its advertisements during the peakseasons, it can use the social media platforms in advertising itsbusiness and products regularly without paying attention to peakperiods only. The regular advertisements on the social mediaplatforms may help the restaurants in identifying the areas that itcan expand globally instead of just storming the markets. This wouldbe indicated by the by the responses that the restaurant wouldreceive from the social media platforms.
Onthe other hand, in attempt to solve the supply chain problems thatmay offer the restaurant with an expansion problem, BWW needs to havefutures contracts while dealing with its supply chain. This wouldhelp the restaurant in controlling its prices. Besides, therestaurant may opt not to deal with outsiders and supply for its ownsupplies in different stores. This would aid the restaurant inpreventing the issue of suppliers having control over what issupplied and shortages that may come in.
Irecommend that BWW should come up with a marketing strategy, whichwould promote the takeout business of the restaurant. For instance,the restaurant can offer discounts to buyers that purchase a certainamount of goods. Offering the discount would make more customers flowinto the takeout business a move that would create more revenues forthe restaurant. These revenues can help in the expansion policy ofthe restaurant. Growth of the takeout business can also help inmaking the restaurant acknowledged in different areas, where therestaurant desires to expand. For a period of three to four yearsthat the restaurant is seeking expansion, revenues from the takeoutbusiness would have increased to higher levels that would allow theexpansion plan. Another recommendation is for the restaurant toconsider franchising as a means for international expansion as wellas considering joint ventures. This would allow the restaurant tohave an international expansion in the areas that it desires.
Oneof the reasons for these recommendations is that through consideringjoint ventures in entering the international market, BWW would becapable of slowly learning about the different aspects of theinternational markets the restaurant desires to enter. This wouldmake the restaurant adapt to the market and succeed in itsoperations. Also, through the joint ventures, it would be feasiblefor the restaurant to capture the international market since therestaurant may end up retaining some of the customers of theinternational companies that form partnerships with the restaurant.This emanates from the reasoning that the restaurant can have anaccess to the database of the international companies, which therestaurant can utilize in marketing its products as well as itsbusiness.
Besides,the recommendation for the use of franchising as a mode ofinternational expansion is because it has different benefits. Onesuch benefit that would be accrued to the restaurant for embracingfranchising as a way of realizing international expansion is highprofit margins and low investment costs. Compared to building newcompany-owned stores, franchising would be easy to manage and lowercosts would be used in setting up the business operations in aninternational market. In terms of operations, it would be exceedinglyeasy to operate franchise stores in different locations compared tocompany-owned stores.
Onthe other hand, the reason behind the recommendation of BWW coming upwith a marketing strategy that would promote the takeout business isbecause the takeout business looks promising, and in case a goodmarketing strategy is used, the business may grow the revenues of therestaurant to vast heights. The restaurant currently receives 13% ofits sales from the takeout business without involving muchconsideration into the business. Therefore, within a span ofapproximately three years, it is possible to raise a lot of revenuefrom the takeout business in case a marketing strategy is welcomed.
Thesituation of BWW comprises of different internal and externalfactors, which are critical in establishing the course that therestaurant should consider taking within a span of about three years.Since the restaurant desires to have an international expansionwithin a period of around three years, internal and external factorswould be significant in determining the feasibility of the plan. Therestaurant has an opportunity of increasing its revenues throughtaking seriously the takeout business. The revenues may be criticalin realizing the expansion plan. Besides, the restaurant can eitherbuild company-owned restaurants, or consider franchised stores orhave both. However, franchising has been indicated as being moreprofitable compared to company-owned stores due to the costsinvolved. Therefore, in considering an international expansion plan,it is important for the restaurant to consider franchised stores.Finally, consideration of joint venture in the expansion plan is alsocritical since it helps in mitigating risks associated withinternational expansion.