High Stakes of International Expansion
- Pages: 3
- Word count: 541
- Category: Population
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1. What did Hannah do to make a first cut in the list of potential variables? How did he get from 200 to less than 35 potential new markets? Which variables did he use in his decision making and why?
There were several variables used to cut down the list of potential markets. He did this by answering the following bullets Beef eaters – do people eat beef here.
Is it legal to import U.S Beef with the high USDA Prime Beef standard Population/high urbanization rates – target customer is a well-to-do beef-eater, does this area have a densely populated large enough pool? High disposable income?
Do people go out to eat?
Affinity for U.S brands? Or are they overtly anti- United States 2. What other, unused variables might prove useful when assessing the attractiveness of particular international markets? Why?
They should look into seeing how political relationships (laws, key connections, loopholes) can potentially open up doors into certain areas that would be potentially attractive markets. The current state in some of top prospective countries did not allow importing of U.S beef, but Hannah felt this was more political than cultural. If laws change or political environments become friendlier for entrance, Ruth’s Chris can possibly be one of the first to enter, giving them a leader advantage.
3. What would be your choice of top 5 countries? How did you reach your conclusion? My top 5 countries are chosen based on a combination of the per capita beef consumption, urbanization rate, population, and per capita GDP displayed in the data table in Exhibit 4. Bahamas has one of the highest per capita consumptions other than the U.S, but it’s population is considerably smaller than the rest of the other countries so it may have a smaller pool than others. Still, it is a place worth looking for considering it does have a high tourist market. Spain has a low urbanization rate but a high per capita beef consumption. This is worth considering. Singapore has a
100% urbanization rate which meets one of the variables needed. It also has an average per capita beef consumption. It also has rival Morton’s restaurants there which shows that the market for steak houses is already there. China has a high population that even a small amount of well-to-do population will make a big impact on sales. Chile also looks promising with its urbanization rate of 87%. 4. What are some actual internal and external challenges Hannah will face when opening his restaurants abroad? How can he alleviate these challenges?
One external situation that can affect opening restaurants abroad is that disposable income has generally decreased. People simply don’t spend as much money as previous years and have become more conservative in spending habits. Another external factor as I’ve touched on before is the political environment in certain countries that he may be interested in expanding into. These barriers can possibly change quickly, but until then, it will be extremely difficult or impossible to enter into these markets.
An internal challenge is deciding what mode of entry to enter with, if they do expand to a new location. With thorough market research, this can help minimize the risk associated with expansion.