Introduction
China is among countries that have a large demand for fast foods. Subway is a US fast food chain which overtook McDonalds Corporation internationally. Subway aims at expanding to double its figure in China over the next five years. Currently, the sandwich maker has over 73 stores in Beijing and two hundred and twenty in china. Compared to other fast food agents, subway has a smaller market share and thus slow growth and the fact that there is high demand for fast food in China gives the company an opportunity to expand.
Retarding and Promotion
In Beijing, the sales grew with more than 40 percent for years and Subway expects the sales growth to rise in the next two years. Currently, there is no specific clear target especially for youths. Targeting teenagers in China could give the company more sales and larger market share than the competitors since they understand more about western foods. In order to promote the product printed coupons can be very efficient and can be delivered using newspapers. Also, due to poor advertising and low brand awareness, Subway has a great opportunity of improving these strategies in order to enhance the business. The company can advertise on buses and use of mobile advertising since they are cheaper and can cover a large market segment.
Products Diversity
Subway needs to develop into a more generalized, capitalizing on china’s enormous urbanization plan and fast food industry. The greatest success for Subway competitors in China such as McDonalds is use of Chinese flavors without changing the flavor of the product. Therefore, if the company follows the footsteps of its competitors, then there is great hope for success. They can provide sandwiches which are flavored without changing the quality and prices. The company should also introduce more meals targeting kids and also provide other promotional products such as kid’s toys. Also, Subway can introduce new products and services in the market which can enhance wider market share thus giving the company a competitive edge towards its competitors.
Budget and Profit
According to Alexander Moody by the end of this year, Subway intends to use a budget of $500,000 to expand with an estimation of 180 outlets in Beijing and 600 stores in china within a span of five years.For expansion, the company can use approximately $ 175,000 for advertising and new franchisees, $100,000 for salaries of individuals who have knowledge in fast foods and familiar with the environs of china and $120,000 to rent or construct new stores. The rest of the money can be used for raw materials and equipment needed by Subway to introduce the new branches. During the five years, 12 and 18 months can be used for construction. High profits returns are expected by the company after the expansion since people are migrating to rural areas.
Conclusion
Expansion of Subway in China may be a great success. This is because high profits are expected if the company gains a wider market coverage area. What is important is maintaining the quality of the sandwiches but adding new Chinese flavors and improving on advertisements activities. The major objective is for the company to grow and acquire larger market share. Therefore, Subway requires more strategic plans and the deal is done. With this their dream of expansion will become true.
References
Encyclopedia of Business. (2011, n.d). Sandwich Shop . Retrieved November 24, 2011, from Encyclopedia of Business: http://www.referenceforbusiness.com/business-plans/Business-Plans-Volume-03/Sandwich-Shop.html
Yue, B. (2011, July 04). Subway eyes further China expansion. China Daily , p. 16.
Perton, M. (2011, March 8). Subway Tops McDonalds to become Largest Fast-Food Chain. Retrieved November 24, 2011, from The Consumerist: http://consumerist.com/2011/03/subway-bigger-than-mcdonalds.html
Simms, A. (2011, March 11). How Subway tops the fast-food chain. Retrieved November 24, 2011, from The Guardian: http://www.guardian.co.uk/commentisfree/2011/mar/11/subway-fast-food-chain-mcdonalds
