Exploring the Origins of Subway: A Multi-National Company

I have chosen SUBWAY® as an Multi-National Company for my assignment. Subway was opened by Fred DeLuca at the age of seventeen in 1965 with the help of a friend, Dr. Peter Buck, who invested $1000 in his first sandwich shop which was named Pete’s Super Submarine which was located in Bridgeport, Connecticut which was meant to fund his dreams of becoming a doctor. He set a goal of having 32 stores in 10 years but by 1964, they had only 16 stores. They realized that they would not be able to reach their goal in time therefore they started franchising their sandwich shop as SUBWAY®.

SUBWAY® today is the largest sandwich shop in the world consisting of over 34,000 stores in 97 countries whose aim is to provide their consumers with fast and nutritious meals that are indented for all ages. The company has since grown into a multi-billion dollar business offering over 2 million different sandwich combinations which are served at 2,800 per minute which is equivalent to wrapping around the planet 6 times in a year.

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( http://www. subway. com. sg) The four major environment factors that affect this Business are Global Consumer’s Preferences, Competitors, Management across Culture and Demographics.

Global consumer’s preference refers to the taste and preferences of the consumers, the choices consumers make based on their own beliefs and culture. SUBWAY® being in the food and beverage industry aims to serve fresh and healthy food to its consumers. As the global consumer’s preference is shifting to healthy food instead to fast food due to the increase awareness of health issues around the world, SUBWAY® has the competitive advantage in this field.

The success of SUBWAY® is based on the fact that they are known for delivering healthy food which at the same time tastes delicious and with this consistency, it has built itself a reputation.

Secondly, there are Competitors like McDonald's, Burger King, KFC, Delifrance and O'Brien's, as well as local fast food options in Singapore. Competition can spur a company to lower prices to get or keep business especially in Singapore where the consumers are always looking for the best buy. As competitors lower their prices, it causes their competitors to always lower their prices to have a competitive advantage. Although a competitor has its disadvantages, it also has its advantages. Because of high competition in Singapore, SUBWAY® has invested in R&D, research and development, to create new products to attract its consumers.

Thirdly is Management across cultures. Singapore is a multi-racial country and therefore in consists of many cultures with different beliefs. This affects every business in Singapore especially those in the Food and Beverage Industries as it has to follow the law given by individual Cultures. For example, Muslims in Singapore will only consume food which is classified as HALAL by the government. Having said that, up till now, SUBWAY® has not been labeled as HALAL thus it’s losing almost one third of the population of the countries which are Muslims.

On the positive side, foreigners who migrate to Singapore, preferably Caucasian are the top consumers of SUBWAY® all over the world thus it gains a number of consumers as well. The last is the changing of demographics. Singapore has a population of 5,183. 7 (2011) with 21. 7% being over 65 years old. People over 65 years old tend not to patronize SUBWAY® as much as the 78. 3% who are below 65 due to the large portion of the meals and the their own taste preference. This is a disadvantage to Subway because it has already lost 21. 7% of its consumers before even starting.

Besides that, the Old-support Ratio, which determines the ratio of working-age residents to elderly residents has dropped. Indicating that there are more elderly which are not working, resulting in elderly reducing their spending power. [http://www. singstat. gov. sg/pubn/popn/population2011. pdf] The 2 major factors that affect the company is General Business Environment and Economic Environment. General Business Environment which consists of all the factors that combine to affect the benefits, costs and risk of conducting business in Singapore. Benefits are affected by the size of the market, purchasing power of the population and the future wealth of the consumers. ’ (Management by Luis R, 2012]. In Singapore, there is an estimate of 5. 1 million people but compared to United States of America with a population of 311 million, Singapore Is merely one fifth of United States. This affects the business because the size of the market is not big therefore the consumers is lower than in US. However, Singapore’s purchasing power is relatively higher than most countries; this is a benefit to the business.

As Singapore continues to upgrade, the future wealth of its consumers of SUBWAY® is likely to be good. Secondly is Economic Environment. All businesses are affected by national economic factors. The climate of the economy results to how consumers and supplier behaves within the society. As Singapore economy is recovering from the financial crisis on 2009, it has the impact on potential customers that they have generally less money to spend. Due to that fact, people might tend to keep the money in their pockets and cut down on their expenses in their everyday life which leads to the reduce visits to restaurants like SUBWAY®.

Population changes have direct impact on businesses like SUBWAY®, changes int the structure of a population will affect the demand of goods within a country. For example, the unemployment rate in Singapore is 2% (Trading Economics, Jul 2011) with its high Gross Domestic Product per capita at Top 15 ($43,117), therefore people have more money to spend, resulting in more potential customers. I have chosen SWOT analysis to summarize the planning and strategizing of SUBWAY® for it to be efficient and effective.

The strengths of SUBWAY® the freshness of their products, worldwide brand recognition, customizable menu, and fairly priced. Subway has always maintained a high level of quality for their ingredients, making sure that they are serving fresh food every day. This is important as consumers these days are more health conscious and the level of freshness SUBWAY® provides satisfies them. SUBWAY® is also recognized worldwide, this gives a sense of security to the consumers, knowing that SUBWAY® has blossom around the world.

It gives SUBWAY® consumers the convenience of eating there as their stores can be located at almost every corner of Singapore; from shopping malls, tourist attractions to schools and universities. Lastly is that SUBWAY® has a brilliant way of marketing their sandwiches, offering over a million different types of combination of sandwiches to its consumers, this creates a sense of achievement for sandwich lovers as they would be able to experience their favorite ingredients combined into a tasty sandwich which are always fairly priced.

Most importantly, this also increases customer retention as customers would not be easily bored of the same old menu that other fast-food restaurants provide and are always offered with different customized combinations. Some of SUBWAY®’s weakness is the lack of creativity on design, customer service that varies from individual stores and high employee turnover. SUBWAY®’s store decor has been outdated and this affects the attraction of new consumers, those who are unaware of SUBWAY®.

Decor is one of the most important factors of a store as it is the first feature that attracts customers to your store. Without a striking look, customers may think twice before entering the store. Besides that, SUBWAY®’s service commitment is not consistent from store to store as the employees have failed to motivate their staff to perform and excel in their work. Unlike other fast-food restaurants like McDonalds; where their staff are taught and train to provide the best service, Subway solely aim for fresh food and thus the turnover rate of the employees is very high.

The high turnover rate of employees effects their consumers as studies have shown that recognition of customers do help customer retention over a period of time. The Opportunity of SUBWAY® is vast, they can invest more to expand its business in the international market and also make improvements in its decoration and look to encourage dine-in. By improving the customer service model and promoting motivational factors like bonuses, employees would be more motivated to work and the level of service would increase thus satisfaction for the customer can be increased and also the loyal customer base will increase.

They can also improve the relation inside and outside the organization by changing its policies a bit, allowing multiple franchise owners to come to an agreement on various issues. For example, the availability of online stores which are limited to certain stores only. SUBWAY® faces serious threats from some of the large fast food chains in the world which include well-known brands like Wendy’s, KFC, McDonalds and Long John Silver. These fast-food restaurants have been around for a long period of time and have developed large loyal customer base over the years.

These other fast-food restaurants have started being health conscious to cater to the needs of their consumers. For example, McDonald have started using healthy oil to cook all their ingredients. Long John has switched introduced baked fish to replace fried fish for a healthier meal. The current economic recession is another threat for the company as it directly affects the consumption and spending power of the consumers. As I have mentioned early, Singapore is still recovering from the economic crisis thus our spending power have been reduced causing less Singaporeans to patronize not only Subway but other fast-food restaurants.

I believe SUBWAY® has huge potential to remain one of the top franchises in the world if they are keen on improving themselves to cater to the needs of their consumers. Mostly importantly, they should keep on improving themselves even after they have met their consumer’s needs. Summarizing the SWOT analysis, Subway still has the competitive advantage against other fast-food restaurants as consumers are more health conscious and Subway is known best for providing the healthiest yet delicious sandwich in the world.

From the weaknesses of Subway, they can be easily solved by introducing new policies to help motivate their employees. A new decor can be propose if the franchise owners are keen on creating a new image for Subway to help increase the chances of Subway surviving another decade. Subway’s opportunity and threats are no different to what other fast-food restaurants but if they keep on holding on to what they believe in; healthy and fresh food, I believe they would overcome the threats and achieve their opportunities.

In the next 5 years, SUBWAY® can improve its customer service by training their staff over the years, building a company motto like McDonald’s; Serve with a smile. They can also brainstorm ideas for more combinations of unique sandwiches combination to add on to their current one. They should invest more money into Research and Development have the competitive advantage in their industry. They should also closely monitor their SWOT analysis and slowly aim to achieve their opportunity, try to correct their weaknesses and increase their advantages while deterring their threats.