Background
Since 1993, when its first restaurant was opened in London, Chipotle proved its clients that high-quality food can be served fast. By using only fresh ingredients and adding no artificial flavors, Chipotle managed to create trustful relations with its customers and even expand its business to other countries.
Chipotle has opened their stores in few countries such as the UK, the US, Canada, Germany and France. It is now time for the corporation to follow the lead from other companies like Yum. Brands such as KFC and Taco Bell as well as McDonalds expand their footprint in the Asian market like Japan. For example, Chipotle operates less than 2,000 restaurants in only 5 countries, while McDonalds operates more than 35,000 restaurants in 119 countries, and Taco Bell, another Mexican restaurant, operates 6,500 restaurants in 20 countries which shows that Chipotle could do better if it expands its business.
Annualy Chipotle is experiencing increasing revenues with overall sales boosting to $ 4.57 million by the 3rd quarter of 2015 compared to $ 1.84 million in 2010. However, Chipotle is facing numerous challenges due to the E. coli outbreak which required the corporation’s key stakeholders to keep it under control and apply the new food safety protocols which can help to bring the regular customers back.
Although the main cause remains a mystery, Chipotle’s E. coli outbreak has been authoritatively declared officially over by the experts. However, since the poisoning outbreak, the impact of the reduced number of customers affects the profit which the company used to enjoy before this accident (Scholes 27). Reportedly, Chipotle’s year over year sales growth has slightly droped from 31% in the 3rd quarter 2014 to 12% in the 4th quarter 2015.
Nonetheless, after Chipotle has been faced by the closure of its main premises, its main responsibility is to allocate the funds to those countries which indeed require its products, examples of ripple effects of export as well as other industries. It is necessary to analyze the conditions of content industries in all member countries, dependent on the interviews, which were taken across the board in all member countries coupled with the market data and regulations in the current area of interest, namely Japan, and promotion policies which they have as measures of regulations.
The role of the manager in any strategic planning usually involves the preparation of operational data in order to assess the company’s internal capabilities. This can be done by the SWOT analysis. The SWOT analysis enabled to analyze strengths and weaknesses of Chipotle’s business in Japan as well as opportunities and threats for content industry which might affect Chipotle externally were put into consideration before rolling in a new move on new location of Chipotle to Japan.
Before relocating its business to Japan Chipotle should consider the following factors: comparatively extensive domestic market, high planning, established production capabilities, an established production environment including related industries and technologies, plenty of attractive content to the customers wishing to consume the products. Another benefit is the global popularity of the Japanese content. However, the sophisticated market with slow the company’s growth. This should be considered together with some other challenges: high production costs, different approaches and business customs in domestic and overseas markets, ineffective attempts to receive benefits from the interest in Japanese content abroad which Chipotle is considering as its place for surviving in terms of business. When fully looking for full settlements in Japan, Chipotle must ensure that there is standard price regulation in their products in the extent that it will not undermine the price system of the commodities in Japan.
Taco Bell is a Mexican restaurant that seems to be doing well in Japan. For instance, there was a huge crowd when Taco Bell reopened, and Chipotle could be added to Japan to expand the Mexican food that is being offered in Japan (Chui 19). Chipotle also recently raised its menu prices for steak and barbacoa items. Due to the exchange rate between the Yen and the dollar, the corporation should keep it in mind to make their food affordable to the Japanese market.
On average, Asian food is more complex than Mexican cuisine since it requires more ingredients and different spices, which could present a problem for the business model of Chipotle.
The company has to make sure to adjust its food to be appropriate to the Japanese taste and keep the expense for the ingredients in the profitable margin while in Japan. This will not only benefit the company but also will ensure that the company enjoys the public relation with the general public in Japan. Nevertheless, there are numerous restaurants in the same location where Chipotle is looking forward to relocate its operations, this on the other hand, creates competition. This can only be countered when Chipotle also adopts the moderate price of its commodities (Scholes 14).
Micro factors in business
Usually, a domestic business strategy differs from the international business strategy by discrepancies in the marketing environment. However, as we look at some of the various difficulties that businesses are facing when trading internationally, we are mainly considering Chipotle in Japan as its new destiny for business (Kokemuller 16). So, international marketing is famous for the following challenges.
Cultural differences
It would be not right to presume that domestic markets are free from cultural diversities. However, in the international marketing, cultural differences constitute the paramount problem, like for instance for Chipotle which is intending to move its business to Japan. In the first few days, it is going to be a nightmare for the industry to fully adapt there and cope up with various circumstances in the region.
Political and legal environment
First of all, it is necessary to note that political and legal environment is not the same in all the provinces of many home markets in Japan (Chui 30). Since the political and legal factors differ in domestic and foreign markets even more, as Chipotle embraces the diversity of decentralization of its restaurants to other countries, like Japan, it should ensure that such challenges are addressed fully. High influence of any business in a given country emanates from the political class.
Language Differences
Language differences always create problems for an international marketer. For instance, as Chipotle tends to move to Japan, in one way or the other, there will be that disparity in language hence renders difficulty in communication while running business in Japan (Kokemuller 19).
Competitors
Economic livelihood is also impacted by the level of competition. Theoretically, under higher competition for a starting business like large in the case of Chipotle, the share of dollars which the customers use diminishes. Nevertheless, a considerable number of competitors in the industry in Japan frequently represent high demand for the products or the services provided. When the competition is not there, the industries might not find its products to compete globally (Kokemuller 15).
SWOT analysis in Japan
SWOT analysis is an important business analysis technique which can be performed by any organization for all its products as well as services and markets when the management is choosing the best way to obtain future growth and positive results in any business domain (Sholes 20). While carrying out the analysis, it is necessary to identify the strengths and weaknesses of the given company together with the threats and opportunities of the current operating market. A brief SWOT analysis for the company is provided below.
Strengths: Program planning and producing ability which Chipotle can embrace fully and make its utilization in Japan. When Chipotle is looking for a new venture in a new country like in Japan, the productivities in that country will be the driving factor which will make it lay a strong foundation for the business. Developed broadcasting domestic market may give the new industry easy time to carry on with the business in the country. Nevertheless, development ability for program formats like in this case of Chipotle must be in the forefront in order to enjoy the profits in this region where the restaurants are going to be relocated in Japan (Sholes 24).
Opportunities: Chances at the disposal of Chipotle when taking the business of food provision to Japan. This region still has both high levels of GDP and GDP per capita which in one way or the other will play a very vital role in helping the consumption of food which is provided in such regions. Moreover, Japanese government supports overseas promotion. This actually builds confidence among the investors like in the case of Chipotle after a wide closure of its outlets in various countries it actually needs some confidence restoration in its new place of venture (Sholes 23).
Weaknesses: The maturation and undergrowth in domestic content market in a case where there is a market for specific goods in a given country, when they are not advertised by the key stakeholders of the country. Then there is no business which is likely to take place in such places. When taking action to fully relocate the business to Japan, Chipotle must beware of the eventualities that it can accrue in the country due to potential lack of freedom for advertisement of their products which they offer in such restaurants.
Threats: In many cases, in any country there are factors which act as a barrier for any business which might want to prosper there. Presence of pirated copies is one of them, being a large barrier against overseas development. Let us presume that Chipotle is located in Japan and pirated copies have flooded the market. With such a challenge, when competitors duplicate its products, it will be problematical for the company to expand. Additionally, Japanese government should strengthen the measures to support overseas promotion (Chui 11).
Conclusion
In a nutshell, Chipotle should make its decision after considering the SWOT analysis. The organization should ensure that the threshold of the region, where it is relocating to after the closure of it numerous restaurants in various parts of the world, is viable for business. The business can do well in any country but this can be made possible thanks to the political goodwill in such countries. For any business to be successful in a foreign country, there must be a political goodwill and interest in the business within the new targeted audience. Taking all the mentioned factors into account, it would be hard for Chipotle to survive in Japan.
References
Neil Kokemuller. Your ability to attract and retain customers is an important microeconomic businessfactor. Press, 2014
Michael Chui. The future of Japan. Reigniting productivity and growth. 2015
Scholes exploring corporate strategy with mystrategy. Financial times/Prentice Hall.2009.
