Subways plans for growth in the UK market a winner or will it just be sandwiched in Essay Example
Subway has established itself as a newer and healthier option among fast-food franchises. Instead of the traditional burgers and chips, Subway offers sandwiches, catering to the market's shift towards more health-conscious options. It has become one of the largest franchises in the American market, and operates stores in 75 other countries, including the U.K. Recently, Subway was awarded a Gold Award in the sandwich category of the `21st Annual Outlets and Institutions Choice and Chains Awards' in the US. Similar to other fast-food chains, Subway operates through a legal contract with local businesses, allowing them to use its name, logo, and trading methods for an 8% profit minus tax in royalties fee and 3.
The start-up fees for this franchise are only £2700, which is much lower than most others. The franchise charges only 5% for advertising. H
...owever, the sandwich market already has a major player in the form of Greggs plc, which had pre-tax profits of £40.5m, a rise of 10%.
Although Greggs only allocated 4% of its annual profits for 2003, it is still considered a major competitor for Subway in the UK. The well-known chain has stores located on most high streets across the country and offers high-quality products that are comparable to Subway's offerings. However, as the market matures, profits from super-normal levels are decreasing and becoming more normal. This saturation is due to many competitors vying for a share of the market's profits. Furthermore, unlike in America where Subway is a well-known brand, it presents another challenge in establishing itself within the UK.
Due to its lesser recognition compared to McDonald's or KFC, the UK high street presence of this franchise i
not as strong. Although it thrives in the US, succeeding in the UK poses a challenge.
Due to the business cycle, there is presently a scarcity of job opportunities in the market. This has resulted in an increase in wage costs for companies as they strive to attract enough employees and become competitive. Subway aims to gain a monopolistic advantage by making the market less competitive through its offering of high-quality, healthy products that add value. For instance, they have advertised that an American student managed to lose over 17 stone just by consuming Subway's 6" range twice daily.
Marketing is important for Subway to promote their range and stand out from competitors. A valuable part of the marketing mix, it informs consumers about the advantages of their products. Subway also invests in a top-notch training program to maintain consistency in their offerings. This not only ensures quality but can also lead to job enlargement, boosting employee motivation - particularly for those in low-skilled roles. Additionally, job rotation can be useful in maintaining high standards.
All of the mentioned strategies have the common goal of enhancing Subway's competitiveness. One approach involves engaging in predatory pricing to eliminate Greggs from the market, leveraging Subway's superior financial resources. Another option is pursuing inorganic growth by launching a takeover bid for Greggs; however, this course of action might be costly and face opposition on anti-competitive grounds. Alternatively, Subway could opt to distinguish itself from other rivals by investing in fresh product development.
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