Chilis and UK Bar & Grill Market - Essay Example

?Global Marketing-Strategy and Practice (Chili’s) Table of Contents Introduction: Chili’s and UK Bar & Grill Market 3 Market Entry Modes 3 Marketing Mix 8 Product 8 Price 9 Place 10 Promotion 10 People 11 Process 11 Physical Evidence 12 Standardisation or Adaptation 12 Logistics 13 Recommendation 15 References 17 Introduction: Chili’s and UK Bar & Grill Market This report aims at discussing certain significant strategic moves for expanding Chili’s Grill & Bar’s operations to UK. Chili’s Grill & Bar is a restaurant chain that was founded in the year 1975 by Larry Lavine. It is Located in USA and Canada. This restaurant is possessed and controlled by Brinker International Inc. It was first opened in Texas, but then it moved to a different location. Now the restaurant chain is located in 49 states in USA and 30 other international locations. The restaurant mainly serves Tex-Mex food, which means Mexican and Texan food. Other than this they also offer other menu such as burgers, and vegetarian and non-vegetarian menu. In this report the aim is to plan out Chili’s launch in UK. The process of doing so begins with a complete analysis of the strategic factors (Brinker International, 2013). Chili’s Grill & Bar is also located in Australia, Costa Rica, and Venezuela, other than USA and Canada. Now it is planning to expand in London, UK. Every country is different and so its business environment. There are certain strategic factors which influence the decision-making of the companies during expansion or internationalization. Chili’s Grill & Bar has to consider strategic factors like international competitiveness, international growth, trade blocks, macro business environmental factors on which supply chain, logistics, and marketing would depend (Grant, 1991). Market Entry Modes This section will evaluates the market entry modes of Chili’s Grill & Bar in details, but before that decision on the international trade framework in UK is necessary. According to the American Marketing Association, international marketing is a multinational process which involves planning and implementation of concepts of promotion, pricing, and distribution strategies which will assist in providing satisfaction to the customers, and meet the objectives of the organisation (Doole, and Lowe, 2008). Chili’s Grill & Bar has to analyse the trade framework, trade barriers if any, taste and preference of the customers, players in the market, and most importantly the appropriate market entry mode, for expanding to London, UK (Barney, 1991, 1997). There various feasible entry modes available, but adaptation of entry modes depends on the trade policies of the country. Moreover, when it comes to food habits, every country is different, and people usually do not keep changing or adapting them like their fashion for clothes (Barney, 2001). UK is specifically depended on foreign trade for economic development. This is the reason why government of the company support unrestricted and free trade, and this initiative has also assisted UK in achieving recognition from European Union and World Trade Organisation. They have very free trade barriers or restrictions on foreign trade, and this proved by the fact that among 600 organisations in UK, around 60 are organisations from America. For attracting the foreign investors, the British government has adopted various programs like establishing enterprise zones, where the companies would be exempted from property, and the compensation for cost that is incurred by the companies for new factory construction. Incentives would be provided for companies located in the economically depressed areas (Advameg Inc., 2013). This are called Assisted Areas. Apart from this seven free trade zones are also offer. The extent of competitiveness in the international market is an important strategic factor which is considered because there are existing market leaders and players (Bengtsson, 1998). In London there are innumerable numbers of restaurants serving different cuisines, and also Mexican cuisines. Chili’s Grill & Bar will have to grab market share by pushing their brand through strong promotion, and pull customers towards them. The trade blocs as already mentioned plays an important role in taking significant expansion decisions. If business is expanded with the trading blocs then it may assist in reducing the trading costs. Since UK comes under the trading blocs, so Chili’s Grill & Bar’s decision to expand in London, UK would be a good decision (Ferrell, and Hartline, 2010). Entering the international market for setting up new business or for expansion involves high risk and great amount of uncertainty. Market entry modes can be segregated into two parts, equity and non-equity modes. The equity modes include wholly owned subsidiaries and joint ventures, while the non-equity modes include exporting, the other contractual agreements. There are various modes of entry available for the companies on the basis of the global trade environment, but it is the company who decides the more of entry it wants to select for itself (Hisrich, 2009). This is done keeping in mind various factors such as the foreign trade policies of the country it wants to expand, barriers, company’s ability to fulfil such criteria, organisational structure of the company, and its financial strength or stability. Moreover, companies also analyse a general trend that is followed in the industry (Jeffs, 2008). In case of food and drink industry, restaurant generally go for licensing, joint ventures, which is also called strategic alliances, franchising, or establishing company owned stores (Farjoun, 1998). Licensing agreements developed by the firm allows the foreign firm to either develop or market the product of the company for a specific time period. In this case, the licensor is the home country provides limited resources and rights to the licensee to the host country. These rights include managerial skills, patents, technology or trademarks for making it possible for the host country to manufacture or market the products (Kachru, 2009). The licensor may take onetime payment, royalty payments, or technology fees. Since this is considered as the mode of entry, so the transference of information in between the licensee and the licensor is strong and the decision of developing the license also strongly depends on the government of the home and host country’s governments (Andexer, 2008). Licensing would not be preferable because it results in lower income, loss of control, and risk of ruining the reputation. In case of licensing, the licensee does not hold the authority to use the trademark or symbol of the licensor. In this case Chili’s Grill & Bar might have a different look in London, UK than the original Chili’s Grill & Bar. The customers would not be able to recognise the original one and treat it like any new local restaurant (Markides, and Williamson, 1994). The next option that can be discussed in this case is the Strategic alliance. It signifies different types of cooperative agreements in between the companies, such as joint venture, shared research, or minor equity participation. This is a modern form of market entry mode which is becoming popular nowadays due to its three distinguishing characteristics. Firstly, these are frequently used by those firms which who trade between the industrialized nations. Secondly, these firms focus on developing new products and technology rather than selling the old ones. Thirdly, this mode is utilized for generally short durations. There are five objectives of getting into a joint venture (McDonald, Burton, and Dowling, 2002). They are related to technology sharing, development of new product jointly, sharing the risks and rewards, market entry, and establishing a distribution channel. The major issues that are to be considered in joint venture are the ownership, pricing, technology, resources, capabilities, government norms and intensions, etc. In joint venture two companies come together and develop a deal to manufacture and sell or just sell products or services with their joint names, but this does not means that their own individual products would also be sold with the same name (Mcfarlin, and Sweeney, 2008). Those will be sold with their individual names as before. However, in case of joint venture products sold by the joint venture might sometime overshadow the company’s individual products. Strategic alliances like this often lead to fierce competition after the alliance is over. Unbalances might occur between the two parties in alliances. Moreover, there are not such strict trade barriers in UK against foreign direct investment, so getting into a joint venture with another company is not necessary. It will not only divide the profit of Chili’s Grill & Bar, but also eliminate their individuality and brand image when they have in other countries (Vermeulen, and Cur?eu, 2008). Franchising is the market entry mode suitable for Chili’s Grill & Bar (Makadok, 1998). The semi-independents proprietors pay fees to the patent company for using the trademark, and also sell their products or services in the business format of the parent company. Franchising is easy mode of market entry because the political risk is low, cost is low, and expansion in different countries can be done simultaneously. If the partners are good then they also bring in financial investment and the managerial capabilities. The parent company is not making any investments in the establishment of the restaurant, and the franchisee owner would be local and efficient enough, so he/ she can handle the political issues if any. The theme of the menu will remain the same, but with minor alterations (Mahajan, Sharma, and Buzzell, 1993). Franchising would be also preferable because taking into account the economic environment of UK, it would not be feasible to either get into a joint venture or directly invest in a company owned restaurant in London, UK. Organisational structure includes the business framework, control system, and organisational culture. It is a formal planning for managing roles, relationships, and responsibility that lies in the organisation. The organizational structure of Chili’s Grill & Bar is segregated into three sections, in which the first department is under the CEO, the second is under the CFO, and the third is the control department. Under the CEO is the board of directors of Chili’s Grill & Bar, while under the CFO is the administration and legal department, supply chain, communication and affairs, development, property management, executive development, etc. The control team has the legal and audit department, and training and learning segment under it (The Official Boardroom.com, 2013). This is the original organizational structure of the company, but when the company is expanding the other countries, a division handling the international segment has to be there. In case of self expansion or setting up own restaurant, or getting into a joint venture, Chili’s Grill & Bar will have to establish their offices in those countries too, where it wants to expand, which will add to cost (Pehrsson, 2006). Franchising as well as licensing in such a case would be helpful because it would save Chili’s Grill & Bar’s establishment cost. However, due to the drawback as discussed in case of licensing, franchising would be the best possible mode of entry for Chili’s Grill & Bar. Marketing Mix The marketing mix of Chili’s Grill & Bar has to be designed keeping in mind that restaurant industry is not solely based on products that is food, but it also involves serving food, which includes services. When services are also marketed along with products, extra elements need to be added to the marketing mix. The basic ingredients that are included in marketing mix are product, price, place, and promotion, but in case Chili’s Grill & Bar, people, process, and physical evidence would be also included. People are those who provide the service, process would deal with the way service is provided, and physical evidence will describe the environment of the service. The marketing mix elements are described in details below: Product Chili’s Grill & Bar offers menu which mainly includes Tex-Mex dishes, pizzas, soups, salads, sandwiches, seafood, steaks, combo dinner and lunch packs, desserts, etc. They also have an array of dishes for kids, parties, and beverages. Similar menu can be even launched in UK with minor alterations such as fish and chips are a favourite dish in London, UK. The most preferred dishes in London are barbecue, grills, street food like hot dog, burger, etc, one-bowl dish such as salad or soup, and many more. Most of them are already included in menu of Chili’s Grill & Bar, so setting up right menu for the diners in London would not be difficult for Chili’s Grill & Bar. Due to certain government norms and economic crisis, the prices of dishes in full-service restaurants have increased. This has made full-service restaurant costlier than take-away restaurants. Chili’s Grill & Bar will promote sitting and dining again by offering delicious Tex-Mex platter at a reasonable price, which will attract customers to prefer full-service restaurants again for its variety in menu (TimeOut, 2012). Price Pricing is a difficult task when it is done for selling products in international market because detailed analysis has to be done regarding the standard of living of people, their purchasing power, and probability of people to spend in eating outside. Chili’s Grill & Bar can go for competitive pricing, in which a research regarding the price of restaurants in London can be done. After identifying the average price of similar restaurants serving similar menu, Chili’s Grill & Bar have to also ascertain their own operating cost, and procurement cost in order to ascertain the price of menu. It has to be kept in mind that raw materials have to be procured from the local wholesalers or farmers in order to control operating cost. The customers would only pay the price for food, but the owner will also have to include the price for offering good music, and ambience. All these have to be considered, because Chili’s Grill & Bar have to maintain the price, as the purchasing power of UK and the present economic scenario of UK does not put forward a welcoming picture. Place In case of business in restaurant industry, where services also play a vital role, place indicates the location where the product and service is going to be offered. The best place to open a restaurant is in the crowded areas of the city, such as in shopping malls, market place, where the footfall is high. Chili’s Grill & Bar has a significant brand image, with a large chilli hanging in the entrance of the restaurant. The customers visiting these shopping places will initially visit Chili’s Grill & Bar out of curiosity and appearance, and when they like the service and food, they will visit again. This indicates that in order to attract people in the initial stage, selection of right location is necessary. Location is also necessary from distribution and supply chain perspective. It has to be kept in mind that the wholesalers will supply raw materials easily to those places which are accessible and regularly visited by them. These shopping centres and places have many other dinning joints and restaurants, so wholesalers and suppliers regularly supply raw material in these places. Online medium such as the website of Chili’s Grill & Bar would be there for the customers to place their orders and book seats, so that when they visit the restaurant they get their orders ready. Moreover for better inventory management software packages would be implemented. Promotion Promotion is a critical factor because customers need to know about the products and services that are being offered by the marketer. Chili’s Grill & Bar would be launching their first restaurant in London, UK. Promotion does not only mean advertising or selling, but it means pulling the customers in a cost effective manner. It is done to spread awareness, which will drag them to the point of sales. Chili’s Grill & Bar can go for advertisements on television and in newspaper. Even the food and lifestyle magazines can be targeted for advertisement. After from this hoarding in few major places, and leaflet distributions are good options of promotion. Other than this social media can be used to publicise the brand name of Chili’s Grill & Bar. It can also offer happy hour discounts and offers for celebrating parties at their restaurants. People People provide the services and if these people are not well-trained, inefficient, and rude, then the experience of the customers will get spoilt. They not only visit the restaurant for food, but also for the ambience and service, which is offered by the employees. Chili’s Grill & Bar is well- recognised in USA and Canada, so in order offer similar dining experience, the employees has to be trained in line with the culture and functions of Chili’s Grill & Bar. Recruitment of local people would be helpful because they would understand how to deal with customers and offer excellent services. Special focus should be paid towards training and continuous learning of the employees. Process Process includes strategies for ensuring that the team would be able to deliver reliable services and good products to its customers every time they visit the restaurant. There are periods were demand is high and at other times it may be low, but it is important to encourage the staffs and assist them during pressure by following routines. They need to be trained at regular interval, new recipes should be taught and regular brainstorming session will help them to understand the objectives of Chili’s Grill Bar, and the restaurant management would also be able to receive new ideas through this process. Physical Evidence In order to create a solid brand image among the customers, it is important that the restaurant must have an attractive appearance. Chili’s Grill & Bar is remembered for the large chilli that hangs at the entrance of the restaurant, or inside the dining area. This provides the place a vibrant look which lifts the mood of the customers. The decor and interior of the restaurant is designed in such a way that customers can come along with their family and relish tasty and tangy Tex-Mex dishes, and also have healthy salad, and sandwiches if they wish to. The uniqueness lies in the vibrant red interiors and the uniform of the employees has been also designed to match the interiors. These entire evidences can be seen in the Chili’s Grill & Bar at London too. Standardisation or Adaptation If any company offer the products and services similar to the home country in the international markets too, then it is called standardisation, while if the product or service is offered on the basis of the taste and preference and culture of the international market, then it is called adaptation. In this case the question is that whether Chili’s Grill & Bar will follow standardization or adaptation. As already mentioned, that Chili’s Grill & Bar will go for Franchising for expansion. In case of franchising, the basic theme of the franchisee, policies and norms, even the uniform of the employees remain same worldwide (Pehrsson, 2004). In this case if each element of marketing mix is considered, then the decision of standardisation or adaptation is explained below: Product/ Service: The core menu will be offering the standard Tex-Mex cuisines, but apart from this, other dishes which are preferred and popular in London would also be served. It can be said that in case of product, a mixture of standardisation and adaptation would be relevant. Price: Pricing should always be done on the basis of the business environment of the country where the company is expanding. An adaptation of the pricing strategies and prices would be helpful for Chili’s Grill & Bar. Place: The location will off course differ, but Chili’s Grill & Bar should look the same in London, UK as it looks in Australia, or Canada. This helps in creating brand image, so a standard approach is preferable. Promotion: Spreading awareness means to let people know about you, and this has to be done in the way people understand, which means adapting the promotional techniques is desirable. People: The employees for the restaurant should be recruited from local places, but Chili’s have to maintain a standardized framework of training employees worldwide. Process: The service methods, and operational functions should be standardised, but the way of serving customers should be adopted because the culture of every country is different. Physical Evidence: As discussed customers in Canada when travels to London should quickly get to recognise Chili’s Grill & Bar’s decor, which is colourful and vibrant. This is possible only when standardised physical evidence is followed, which can acquire a value spot in the minds of the customers (The Times 100: Business Case Studies LLP, 2013). Logistics Most of the diners have no idea regarding the toil that is related to supply chain and the complex logistics system, that assist in bring tasty meal to their table. Behind every plat of dish served in a restaurant, there is a complicated and dynamic supply chain that links the growers, farmers, restaurant supply vendors, logistics providers, transporters, etc. The food safety, prompt supply, and satisfaction of the customers are largely depended on supply chain and logistics. The economic situation of the country is also not favourable for the customers to dine out (Partridge, 2011). The restaurant industry has to focus on their logistics and supply chain to redesign it, so excessive cost can be eliminated (Partridge, 2011). According to the vice president and owners of Brinker International Inc., and Chili’s Grill & Bar, traditionally logistics and supply chain function were ignored, but it is not the case now. He says purchasing is just one part of this process. The supply chain of restaurants has to link all the functions right from procuring raw commodities for processing, carefully store them, so that they do not get wasted, as most of them are highly perishable, and finally cook and present it to the tables (Partridge, 2011). In order to look for fresh products, Chili’s Grill & Bar has to check for the right maintenance of cold chain. The storage place of the raw materials throughout the transit, and condition of the bread and other items when delivered has to be also monitored. Chili’s Grill & Bar do not compromise to spend on supply chain, because they know it will reap high returns for them. Similarly, in London too, things like food safety, supply continuity, quality has to be kept in mind during delivery of food as well as service. This will assist in enhancing the dining experience of the customers (Partridge, 2011). The restaurant has to design their supply chain in such a manner that activities of the suppliers, vendors, partners, growers, distribution channels, and transporters are clearly visible. Chili’s Grill & Bar will include specific Mexican menus such as burritos, tacos, nachos, or quesadillas, and also UK staples such as salads, sandwiches, or soups, which will be able to serve many customers. In order to increase the customer base, it will have to focus on management of supply chain, so as to eliminate certain exceptional logistics challenges (Partridge, 2011). In this case working in close union with the suppliers and the distributors in order to transport the food material faster and in a cost-effective way to Chili’s Grill & Bar’s location in central part of London, would be desirable. Even this utilisation of IT framework to monitor and manage inventory would reduce challenge in a cost-effective way. It will assist in receiving electronic feeds from the third party supply and distribution network (NetCom Systems, 1994). This will give Chili’s Grill & Bar the ability to examine the expenses, and manage them effectively. Even managing the procurement cycle and integrating consistency and transparency in the supply chain would become a part of Chili’s Grill & Bar, London. Technology implementation like other restaurant of Chili’s Grill & Bar would be also done in London. This will give a better view of the inventory, at supplier, distributor and restaurant level. In addition to this, it will also assist in sharing and viewing data on real time basis. In will be able to offer an insight regarding the actual amount of the product used, with the help of which the franchise owners would be able to craft their procurement strategies effectively. Even measurement of supply chain performance would be possible through this tool. Recommendation The recommendations have been stated below keeping mind the above discussed facts, aspect, and macro environment of UK. 1. Chili’s Grill Bar should maintain a standard identity, with few adaptations in menu, ambience, and serving pattern. 2. The recruitment of employees should be strictly done from UK. 3. Franchising would be the best option for expansion; however, it can also go for launching restaurants themselves when there is no trade restriction in UK. 4. Price will be the most important factor, comprehensive research and analysis should be done before determining the rates for the menu. 5. Though Tex-Mex will comprise of the core menu, but the local taste and preferences should be given priority. References Advameg Inc., 2013. United Kingdom - International trade. [online] Available at: [Accessed 9 April 2013]. Andexer, T., 2008. 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