Subway is an American fast food restaurant that primarily sells submarine sandwiches (subs) and salads. It is owned and operated by Doctor's Associates, Inc. Subway is one of the fastest growing franchises in the world with 42,070 restaurants in 107 countries and territories as of June 28, 2014. It is the largest single-brand restaurant chain and the largest restaurant operator globally.
Assignment Question:
Being a student of strategic management, you are required to discuss Subway’s market position in the light of porter’s five forces model.
Michael Porter's framework derives 5 forces that determine the attractiveness of a market. Porter referred to these forces as the microenvironment to contrast it with the more general term macro environment. A change in any of these forces normally requires a company to re-assess the marketplace. Porter’s five forces are threat of new entrants, threat of substitute products and rivalry among competitors, bargaining power of suppliers and bargaining power of buyers.
You are required to discuss the following points.
Threat of new entrants
¯ Barriers to entry
¯ Switching cost
Threat of substitute products
¯ Buyer inclination to substitute products
Rivalry among competitors
¯ Exit barriers
¯ Product differences
¯ Diversity of rivals
Bargaining power of suppliers
¯ Presence of substitute inputs
¯ Supplier concentration
Bargaining power of buyers
¯ Price sensitivity
¯ Substitute available
¯ Product differentiation
Solution :
Assignment Question:
Being a student of strategic management, you are required to discuss Subway’s market position in the light of porter’s five forces model.
(10 marks)
Note:Michael Porter's framework derives 5 forces that determine the attractiveness of a market. Porter referred to these forces as the microenvironment to contrast it with the more general term macro environment. A change in any of these forces normally requires a company to re-assess the marketplace. Porter’s five forces are threat of new entrants, threat of substitute products and rivalry among competitors, bargaining power of suppliers and bargaining power of buyers.
You are required to discuss the following points.
Threat of new entrants
¯ Barriers to entry
¯ Switching cost
Threat of substitute products
¯ Buyer inclination to substitute products
Rivalry among competitors
¯ Exit barriers
¯ Product differences
¯ Diversity of rivals
Bargaining power of suppliers
¯ Presence of substitute inputs
¯ Supplier concentration
Bargaining power of buyers
¯ Price sensitivity
¯ Substitute available
¯ Product differentiation
Solution :
Strengths:
Size and number stores and channels as compare to the Mc Donald’s, KFC etc. Menu reflects demand for fresh, healthy and fast and also the according to the tradition and values of the specific country as different menu in Pakistan, china etc.. As every on Worldwide know the brand Subway. Low franchisee start up costs as its mention in the comparison of different start up cost of fast food setups. Franchisee training is structured, brief and designed to assure rapid start-up and success.
Weaknesses:
Decor is not according to the new fashion. Some franchisees can be unhappy because of not been getting attention and benefits from the company as there is a big set up and too many branches. As far as the nature of job is concern there is high employee turnover ratio. There is a chance of no or less control over franchise saturation in given market areas like the quality and customer service.
Opportunities:
Due to low investment cost (Franchising cost) as compare to other companies in fast food industry like Mc Donald’s, Pizza Hut etc. There is always an opportunity to grow globally. Updating decor can make the sale up and good reputation of the company and brand competition is getting stiffer in this specific industry so improvement in relation to customer service can make a visible difference. There are good potential customers in Chine, and almost 520 M people are belong to upper middle class so with the combination of Chinese traditional menu that can be a good in time thinking to invest in china. Another concept of Halal franchises not only to targeting the Muslim but other customers as well.
