The History Of Strategic Management Marketing Essay

For assignment help please contact at help@hndassignmenthelp.co.uk or hndassignmenthelp@gmail.com 

This report is evaluating the competitive environmental analysis based on subway which is one of the leading fast food restaurants in UK. With the help of Porter's five forces model this will analysis the competitive factors and some additional theories which can develop the porter's idea. External environmental factors can create big challenge for the organisation and it may decrease the revenue level of the organisation. Companies need to make appropriate assessment of the competitive factors for generating more revenues (Johnson et al., 2008). The following section is applying the Porter's model into Subway and the activities it can take to achieve the competitive advantage.

Main Discussions

Company Analysis:

Subway is an American brand which is good for making sandwiches and salads and known as the fastest growing fast food restaurants operated by the Doctor's Associates, Inc. (DAI). Subway has more than 37,500 restaurants in more than 98 countries in the world and known as the largest single branded restaurants in the international markets (Sabway, 2012). Head office of Subway is located in Milford which is also connected with five regional level offices in Europe like Amsterdam, Netherlands, Australia and New Zealand. Asian region of Subways is operated by Beirut, Lebanon, Malaysia, India or Singapore (Subway, 2012). Subways are good for making submarine sandwiches, salads or pizzas in several locations and considering cultural factors for achieving the competitive advantage. For example, in recent years, it has added several numbers of Indian dishes or Halal items for Muslim clients (Subway, 2012).

Explanation of Porter's five forces model:

Porter's five forces is an effective model for analysis the competitive position of the organisation which is explaining five sections such as competition among the rivalries is finding out the competitive positions in the organisation and threats of new entrants is looking at the threats from the new entrants into the new markets (Mullins, 2009). In addition, power of buyers and the power of suppliers are identifying the competitive strengths and weaknesses of the Subways. Finally, threats of the substitute products can also determine the level of threats from the substitute product and the reasons why customers can move into the substitute product items (Slack et al., 2010).

http://hbr.org/hbrg-main/resources/images/article_assets/hbr/0801/R0801E_A.gif

(Fig-1: Porter's five forces model, adapted from, Johnson et al., 2008)

Rivalries among the existing competitors: It is determine the competition level among the rivalries such as looking at the diversity of rivals, corporate stakes, industry growth, switching costs, intermittent overcapacity or exit barriers can increase the competition level of the organisation (Johnson et al., 2008). In order to achieve the competitive advantage companies need to look at the factors of product differences, adding more value to the products or changing the fixed costs and switching costs (Wysocki, 2009).

Bargaining power of the buyers: Bargaining power of the buyers can also create impact on the organisation such as price sensitivity, availability of the substitute products, buyer's incentives, buyer information, bargaining leverage or buyer information is also creating demand on the bargaining power of the buyers. It is also creating direct impact on the sales (Slack et al., 2010).

Threats of new entrants: Threats of new entrants is also increasing the level of competition in markets. It is also depending on the access to the markets, government policies, and brand identity, economies of scale, capital requirements or switching costs, access to the distribution channel which can also create impact on the business activities of the organisation. Low investment costs, lower level of trade barriers can also influence the organisations to enter into the markets which can also create impact on the organisations to enter into the markets. Threats of new entrants are increasing the competition level into the markets and impact on the marketing policies of other organisations (Palmer, 2008).

Bargaining power of the suppliers: Bargaining power of the suppliers can also create problems in the competition level such as it can create differentiation of the inputs and increase the distribution costs. Suppliers can control the distribution costs and volume of suppliers can improve the performance level of the organisation. Companies need to create good relationships with their suppliers for reducing the operations costs of the organisation (Slack et al., 2010).

Study of the organisation by applying the model (Porter's five forces model):

On the basis of Subways the following section is applying the Porter's five forces model such as:-

Rivalry among existing competitors:

Subways has high level of competition among their rivalries such as several numbers of fast food restaurants like KFC, Pizza Hut, Burger King, McDonald's is providing similar kind of services. Increasing competition in the markets can also create direct impact on sales such as it can decrease numbers of sales and Subways need to apply various numbers of promotional strategies for attracting more customers (Johnson et al., 2008). Many small fast food restaurants can also enter into the markets and increase the competition level into the markets for Subways. For competing these restaurants Subways need to invest more on their promotional strategies which can increase their costs (Slack et al., 2010).

Threats of new entrants:

High level of threats of the new entrants is taking place for the Subways which may create the challenges for Subways. New entrants can enter easily into the fast food markets because of having lower level of investment costs. It is also increasing the competition level at the markets and brings varieties of product items into the markets (Mullins, 2009). For reducing the competitive strengths of the new entrants Subways need to improve their sales promotional activities or need to change the pricing policies for meeting the demand of their diversified customers (Palmer, 2008).

Bargaining power of buyers:

Subways have higher level of bargaining power of their buyers and that is the reason why Subways need to apply several types of promotional strategies for meeting the demand of their diversified buyers. High levels of buyer's power can also impact on the pricing or promotional strategies of Subways and creates various types of expectation in terms of different kinds of taste or preferences towards their food items (Slack et al., 2010). In order to overcome the challenges of the bargaining power of the buyers Subways need to take consideration of the cultural factors and diversified level of customer's expectations (Palmer, 2008).

Bargaining power of suppliers:

Higher level of supplier's power is also present for Subways which is also change the pricing level of the food items for Subways. In some cases, bad services from the suppliers can reduce the stock level and creates customer's dissatisfaction (Hill and Jones, 2009). Suppliers can also create delays in the delivery process and creates negative image about the organisation. Subways need to create good relationships with their suppliers and making good relationships with the suppliers can also reduce the level of operations costs for the organisation (Boddy, 2010).

Threats of substitute products or services:

In case of Subways they have higher level of threats from the substitute products which can also create impact on their sales. Customers can buy the substitute products in any time or they can go for cheapest products. Prices of the products for Subways are comparatively higher than the chicken shop. Customers can get chicken wings or chips with fewer prices than the Subways which can be a big challenge for them (Subway, 2012). In order to reduce the threats from the substitute products Subways need to sell good quality products with lower prices. They need to add more varieties of products which can create higher level of sales within short time period (Hill and Jones, 2009).

Additional theories which develop porter's idea:

There are some additional models or theories which can be useful for analysing the factors which can create threats for the organisation such as:-

External environmental model (PESTEL):

External environmental factors can also be important for evaluating the competitive factors of the organisation and Subways need to consider about these factors for creating the competitive advantage:-

Political: Subways are affected by the political factors such as exchange rate policies, trade barriers, foreign government policies, export-import system; VAT rates changes, franchising regulations etc. Political factors are affecting the organisation when it is going to enter into the new markets such as duty charges, local laws and regulations of the countries etc. (Subway, 2012).

Economic: Subways can also be affected by the economic factors such as the economies of scale, recession, inflation rate, income level of the customers, supply and demand of the products or raw materials etc. Economic factors are changing dramatically over the time period and they need to measure the buying capacity of the customers at Subways (Mullins, 2009).

Social: Subways are also being affected by the social factors such as the buying habits of the customers including social networking, family sizes or family relationships, cultural or ethical factors, religious factors like Halal food issues etc. Changing nature of the social factors is also creating various types of taste or preferences. In recent year, Subways is adding several numbers of food items from different cultures like Indian food items, Halal food items, Chinese or Pizza. Subways are also adding more product items which can also create increase their sales (Subways, 2012).

Technological: Subways are also affected by the technological factors such as new technology, new software, online ordering or online customer services. In recent years, digital advertisement is growing higher and customers are giving more orders via online. Subways are also using subway cards for increasing the level of online ordering or creating good relationships with the customers by creating good relationships with the customers (Wysocki, 2009).

Legal: Subway is also being affected by some legal factors such as trading laws and regulations, foreign policies, immigration policies, laws and regulations by the HM revenues, VAT policies etc. These laws and regulations can create direct impact on prices and changing prices of the products. For example, Subways is also affected by the EU laws and regulations and creating direct impact on the pricing and promotional activities (Johnson et al., 2008).

Environment:

Subways are also affected by the environmental factors such as the changing environmental protection policies are creating direct impact on sales. Environmental factors are also increasing the level of customer's awareness towards environmental protection, hygiene issues, recycling issues, hybrid food products etc. (Subway, 2012). Customers are also interested on eating environmental friendly product items and interested on environmental protection issues and they want that the fast food restaurants will also take care of these issues carefully (Slack et al., 2010).

Key Findings:

From the above discussions it was found the Subways have diversified numbers of customers which is also increasing high competition in the markets. Subways are operating in a competitive market where there is high competition among the rivalries and power of buyers and suppliers are high. It is also creating impact on their pricing and promotional policies and impact on sales. Subways need to take the following steps for improving their service quality such as:-

Subways can improve their marketing planning for reducing the competitive challenges such as they need to make appropriate level of market research and segmentation policies for entering into the new market. They can also change their product varieties, features or designs for generating more sales from the existing markets (Boddy, 2010).

Subways need to use updated technology for improving their customer's service performance such as they can create good level of communication with the customers and looking at small market segments for making more sales. Effective customer service policies or online customer service policies are also improving the quality of the customer service plan for Subways (Slack et al., 2010).

Subways need to use diversification or differentiation strategies for creating more sales. It can also increase the demand by reducing the costs of the products and creates market penetration by selling more products into the existing markets. With the help product development strategies Subway can develop new products into the new markets (Palmer, 2008).

Subways can also create the market development strategy for selling the existing products into the new markets which can also generate more sales. With the help of market extension policies or looking at the new market segments can also increase more sales. Before entering into the new markets it is important to make the market analysis and need to focus on the demand of the customers to create new opportunities (Boddy, 2010).

Subways need to make the analysis on the internal and external factors which can create challenges in the competitive markets. It is important to look at the challenging factors which can improve their service quality. Effective technology can also be useful for improving the service quality and it can also takes effective ways for reducing future challenges of the organisation (Hill and Jones, 2009).

Subways can also increase the skills of their staff for increasing their service performance. It can also make them more competent and creates them more challenging in the competitive market. Subways need to take care of the continuous monitoring and effective assessment of the employee's performance for providing high quality services (Palmer, 2008).

Conclusion:

Finally, this report is evaluating the competitive strengths and challenges based on Subways which can identify the potential strengths and looking at the options for generating more revenues. Porter's five forces analysis is showing that, Burger King has higher level of competition in the markets and they need to take considerations of the possible challenges for entering into the new markets. Subways need to consider the cultural, social or environmental factors carefully because these are creating direct impact on the sales and make more opportunities for revenue maximisation.