Overview: The advent of globalized business has brought new and interesting opportunities to companies all over the world. Chris Sullivan, chairman and co-founder of Outback Steakhouse, noted that many internationally based American restaurants have “average unit sales [that are] way, way above the sales level they enjoyed in the United States. ” (Grant, 2010: 753) For fast-food franchise giants like McDonald’s, Burger King, and KFC, up to one half of total sales stem from international chains. Grant: 757) “Casual dining” restaurants, such as Denny’s, Applebee’s, and T. G. I. Friday’s, have had very little history and presence within international markets.
This presents the possibility of never before seen challenges that could affect the success of international expansion for Outback Steakhouse. Some of these challenges include identifying where a company’s product is going to create market demand, lack of infrastructure, availability of raw materials, different national regulations, and the presence of trade restrictions. Grant: 758-9) While these are common problems witnessed by other international restaurant chains, the issues faced by Outback Steakhouse are more specific and will be discussed further in an analysis of the corporation. Also included at the end of this report are personal recommendations for Outback Steakhouse regarding how to go about expanding abroad. These recommendations will be based on the resources and capabilities that Outback Steakhouse currently employs and how they are best suited for foreign markets.
Developing an international strategy that will take consideration into the issues mentioned previously will help Outback succeed outside of the United States. Identification of Strategic Issues and Problems Since its opening in 1988, Outback Steakhouse has become one of the biggest restaurants of its kind in the United States. However, tapping into international markets is a very challenging task. The complexity of foreign expansion sheds light on issues unforeseen in domestic business. International Market Demand For Outback Steakhouse, locating the ideal international markets to expand into is challenging.
The lack of globalization among American “casual dining” restaurants brings forth a tough question: Will foreign markets accept this business practice as openly as fast-food franchise chains? Also, what kind of market will generate the most demand for a specialized restaurant such as Outback Steakhouse? This all depends on a number of important factors, such as levels of disposable income, urbanization, and demographics (among others). (Grant: 758) Cultural and Social Factors One of the biggest aspects of Outback Steakhouse’s strategy is its emphasis on quality food, service, and facilities. Grant: 754) Within international markets, customer preferences are vastly different from country to country. Outback must address these issues when deciding where to locate its international restaurants. Another issue that needs to be faced is the breakdown of Outback Steakhouse’s management and ownership structure. Currently, there is little room for franchising within the corporation’s tightly knitted “managing partner” and “joint venture partner” management strategy.
General employee selection is also a strict and demanding process. Grant: 755-6) In order to continue these practices, Outback must choose their foreign locations wisely. Challenges of Infrastructure: Outback Steakhouse’s commitment to quality and dedication to suppliers requires a readily available supply of products and equipment. Their current strategy is built around the American infrastructure, and may be hard to implement in other, less developed countries. Transportation, communication, utilities, and the availability of supplies are all factors to be addressed when looking into expanding internationally. Grant: 758) Without the capability of getting supplies and equipment to international locations, there is no way that the facilities will survive. Raw Material Supplies The head of International for Outback Steakhouse, Hugh Connerty, has stated that he expects suppliers to “have an undying commitment to us [Outback]. They have to prove they can build plants [abroad]. ” (Grant: 757)
If this does not happen, what are the possible alternatives? Many restaurants that have gone international have faced problems finding food resources that are of quality, in quantity, and remain at stable prices. Grant: 759) Even if Outback’s suppliers were willing to go international hand-in-hand, what challenges in communication and transportation would they face in a foreign society? Regulations and Trade Restrictions Quite possibly one of the most notable issues facing Outback Steakhouse is the differing regulations and restrictions that may hinder the corporation’s ability to enter certain markets.
Other countries can impose more restrictions on new restaurants than in the United States, and it may also be difficult to readily find these regulations. Grant: 759) Before entering a specific country, research must be done in order to fully understand how this may affect the corporation. It should be noted, however, that Outback Steakhouse realizes this and believes that franchising to local entrepreneurs will eliminate the need to understand each market individually. (Grant: 757) Introduction This case analysis identifies four strategic issues facing Google. Google First, Google has outgrown its original mission statement, an issue for investors and industry analysts that are trying to understand Google’s mission and direction.
The Second, the company’s diversification strategy has made the company underperform financially. Third, Google’s acquisitions of competitors and technology companies have increasingly made the company a target of government regulators. The Fourth, the company must have a strategy for personal information privacy to retain the trust of its users. The analysis and evaluation of these strategic issues identifies evidence from a number of sources that indicate these issues are of strategic importance to Google moving forward.
The analysis cites the case, financial information, and industry articles as indicators of the importance and validity of these issues. The recommendations provided are simple, measureable, and attainable. They provide some suggestions for correcting or mitigating the strategic issues identified by this analysis. While Google has to strategic issues to address, the company does not appear to have any serious problems which will cause the company harm. Strategic Issues The following strategic issues and problems exist in Google’s current situation and strategy implementation.
While all of these issues have significant strategic importance, the issues are ranked from most important to least important. Poor Mission Statement The company has a dated mission statement which leads to confusion among investors, analysts, and information technology professionals. The mission statement generally defines the purpose and strategic goals of a company. In the last few years, Google’s actions have not been in line with the company’s mission statement, prompting analysts to ask, “What is Google? ” (Grant 2010:827). Diversification
Google’s diversification outside of its core search and advertising business has failed to generate any revenue for the company (Grant 2010:827). While the company’s advertising revenues continue to increase, the costs of unrelated diversification have significantly increased costs. As a result, Google’s financial performance significantly decreased between 2006 and 2008. Regulation As a dominate company in Internet search and advertising, Google will most likely become a target by anti-trust regulators in the United States and the European Union (Grant 2010:837).
As Google continues to buy competitors or companies with internet advertising technologies, the threat of government intervention will increase. Privacy An emerging concern of many internet users over the past few years has been the security and privacy of personal information stored online. Many of the products developed outside of Google’s core business, such as Gmail, Google Docs, and Google Maps provide Google with access to large amounts of personal information from emails, to documents, to a view of someone’s home on Google Maps (Grant 2010:837).
In order to maintain the trust of its user base, Google needs to take the security and privacy of personal information very seriously. Summary Google will need to resolve these strategic issues to boost public confidence in its mission, its ability to perform financially, its ability to avoid costly antitrust suits, and its ability to ensure the privacy of the personal information it keeps. These issues have varying levels of importance depending on a person’s relationship with Google. Investors are concerned with the company’s mission and strategy, its financial performance, and its ability to avoid antitrust suits.
A user of Google’s products and services finds the privacy issue of high importance. If Google fails to resolve these issues, it risks alienating investors which could results in a sharp decline in stock price. A failure to take information privacy seriously could result in a public backlash that should could negatively affectundermine Google’s reputation and brand name. In order to be highly regarding in the industry, Google will need to address or mitigate the risks associated with these strategic issues in a timely fashion.