Wendy's Franchising In Argentina Essay

2389 words - 10 pages

Wendy's Franchising in ArgentinaA Case AnalysisBrief History and Overview of the Company:Wendy's is a chain of fast food restaurants based in Dublin, Ohio and owned by the American corporation Wendy's International, Inc. There are over 6,600 Wendy's restaurants worldwide.The chain is famous for its chili. Also, it is known for its Frosty dairy desserts, the fact that their burgers are square and made from fresh (as opposed to frozen) ground beef, and its making of all sandwich items to order. Unlike most fast food chains, Wendy's historically did not serve breakfast, except for stores in Puerto Rico. Wendy's tried serving breakfast in the mid-1980s, but the endeavor quickly failed.Wendy's ...view middle of the document...

1978:The 1,000th Wendy's opens in Springfield, Tennessee.1979:Salad bars are added to Wendy's restaurants.1981:Thomas makes his first appearance as Wendy's advertising spokesperson.1984:Famous and award-winning "Where's the Beef?" ad campaign is run.1986:James W. Near becomes president and COO and launches a major reorganization.1989:Thomas begins another stint as advertising spokesperson; the Super Value Menu debuts.1995:Wendy's International acquires Tim Hortons, a Canadian coffee and baked goods chain.1997:The 5,000th Wendy's restaurant opens in Columbus, Ohio.Time FrameThis case happened in 1998.Point of ViewThis study is based on the standpoint of a consultant or a third party entity.Statement of the ProblemWendy's, an American fast-food chain, extended its international expansion program to Argentina in 1995. Near the close of 1997, Wendy's had only 11 outlets operating in Argentina. None of these 11 restaurants were franchise operations. Rather, all were company owned and operated acquired from its joint venture partner with Argentinean fast-food chain Pumper Nic. Near the close of 1997, Wendy's presence in Argentina in terms of the number of restaurants operating, as well as in terms of the company's relative position in the Argentinean market with respect to McDonald's, was unsatisfactory from Wendy's perspective. Now comes the question,Should Wendy's continue its expansion in Argentina, and if so, how should the expansion occur?SWOT AnalysisStrengths:Quality - Serving old fashioned quality, made to order fresh hamburgerStrong Financial Position due to periodic retiring, redeeming, and repurchasing debtWeaknesses:Pricing is higher compared to competitorsBarely well known outside USRelatively high franchising cost per Latin American Standard (Close to a US $ 1 Million)Expanding in blocks requires high financial costAbsent promotional marketing abroadOpportunities:Argentina is the 8th largest country in the world and enjoyed free access to a combined market of over 200 million peopleArgentina has the highest GDP per capita in Latin AmericaModified direct foreign investment laws in ArgentinaGrowing franchising industry in Argentina73% of the country's land was devoted to cattle breeding and raisingThreats:Consumption of hamburgers per capita in Argentina was only one-third of that in USRelatively high cost of Argentinian labor (per Argentinean standard) which led to increase in unemployment rate, and sharp increase in cost of living (58% between 1991 to 1997)Dwindling qualities of products sold by franchisees in ArgentinaRelevant issues associated with policy question concerning the continuation of Wendy's expansion in Argentina:Argentina's risk profile [e.g., the level of exposure that a foreign company faces when operating in the country).Status of any new Wendy's restaurants in Argentina.Within this context of this issue, the options arecompany-owned operations ( the existing 11 Wendy's operations in Argentina) or(b) franchise...

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