The Analysis on Fast Food Brands in Chinese market based on Stakeholder Mapping Matrix
Description and Profile of Wendy’s
Wendy is a global leader in the Chinese convenience food retail business. According to Wendy’s (2008), Wendy is amongst the leading four world convenience food chains. The enterprise started using the trademark “Wendy’s” in 1960s. The company has expanded into various ventures since then to different market with the main interests in various developing different products in the convenience food industry. Wendy’s (2008) revealed that, over the years, Wendy experienced massive growth and development achieved by different strategies in the market. First, the company emphasized on the Core competencies through mergers as a means of growing as well as expanding internationally. This is based on how Wendy positions itself well in the convenience food industries by using merger as a means to override the market.
Wendy’s is now referred as the Wendy’s/Arby’s Group after previously merging to become the largest quick service restaurant company comprising of two brand. Even though McDonald gain attention in the convenience food industry, Wendy's/Arby's Group, has overall been acknowledged as a leader within quality as well as customer service in the industry.
The enterprise started out as a single store in Columbus, Ohio but with time utilizing innovation and improvement of product strategy. The organization has emerged among the best four from the inception of placing utmost importance on providing quality. In fact, the enterprise operates with the tag “quality is company’s recipe.” Financially the organization has grown and expanded since its inauguration in 1969. Wendy’s (2008) found that, the sales of the enterprise rose from $ 31,726, 280 in 2013 to a value of $ 32, 074, 650 in 2014 after the merger.
Stakeholder Mapping Theory
Normally, take over from companies or partnering of organizations could result in adverse effects to the people interested in the organization. The power of interest matrix categorizes different groups that could be adversely affected by such occurrences. They named low power interest groups and high power interest groups. In their matrix, they started with customers or members of One Life that can be viewed to be a low power interest group but negatively influenced through the functions of the business. Even though, the customers are the most significant element of the business since they provide revenue by their purchases, they are not adversely affected by takeover situations (Zimmerman & Bell, 2014, P.138). Although the company’s image or brand may remain in their perception, they have little influence on the continuity of the business unless the organization changes its fundamental policies such as pricing or the quality of its brands. However, loyal customers may become disappointed and disguised with new brands or management that takes over the business (Chinyio & Olomolaiye, 2010, p. 134).
On the other hand, the government may be a low or high-interest stakeholder. Chinyio and Olomolaiye (2010, p. 135) pointed out that, have high power interest in the relation to granting of license and access to new sites for the business to operate. As such, they are affected little by take-over and continuation of operation of the business. However, the government may be hugely affected if the new management decides to expand the business in new sites or locations. Employees are another element of stakeholder that can be highly affected by the situation. Chinyio and Olomolaiye (2010 p. 136) argued that, it can either be influenced positively or negatively. When the new management decides to improve working conditions for workers as well as promoting them to high ranked jobs, the situation affects the employees positively. However, the takeovers at certain times may be detrimental when they result in retrenchment of employees.
Besides, individual competitors may again be influenced by the takeover situation. Harrison and St (2004, P. 50) noted that, takeovers might create oligopoly in the market thereby allowing one party company to increase its price of membership. This may result in customers paying higher membership fees thereby enabling such an organization to increase its share in the market. Based on the threat, most competitors will be scared since their power is destroyed through the creation of more powerful entry barriers into the market. Moreover, most suppliers can also be affected. Takeovers may result in termination of supply contracts or delay in payment to the original suppliers thereby forcing them out of business. Nevertheless, the institutional investors have an interest on the way the business makes profit. Some instances of takeovers results in investors losing their shares and as such, a takeover may negatively influence the share value.
The stakeholder' mapping matrix entails core competencies that help in making decision when it comes to differentiation and offering of quality products to the consumers. The strategy maintains high differentiation strategy based on the cost or expenses incurred in operations as a way to design prices for different products.
Wendy’s positioning with Stakeholder mapping Matrix
Wendy's core competencies in gaining a competitive advantage lie within three core elements. By strategically focusing on certain demographic segments of adult consumers of age 18-35, the firm has been can build a customer base since most of the members of the group are frequent in visiting the convenience food restaurants. The distinctive competencies includes, new brand innovation and constant improvement, superior brand quality, innovation and partnership business, and lastly suitable locations with high cleanliness levels low prices and high value products (Wendy’s, 2008).
According to Wendy’s (2008), these distinctive competencies enable enterprise to maintain its present market position and its overall success. In respect to innovation, the enterprise introduces new sandwiches to suit the economic turns based on the findings of its research and development department. Again, the product or foods are always kept fresh with safety consideration, thereby, attributing high value in the perception of the customers. Most importantly, low price is the strength and the strategy of Wendy in this convenience food industry. In a report, Wendy’s (2008) realized that, Wendy’s primary competitive advantage in the industry is driven by production of high-quality sandwiches, which are both fresh as well as made to order. This key differentiating factor allows the enterprise to maintain its current market share. Moreover, Wendy's relative quick and inexpensive meals facilitate the retention and attraction of customers or clients. The "people" quality; moreover, is an attribute, which Wendy's strategy obeys as customer service assumes a priority role.
Currently, the Enterprise has over 30% of the market share of the convenience foods in the Chinese economy. Nevertheless, it is never among the major cheap convenience food restaurants, it does not offer discount for shopping but still it has a larger consumer base. Wendy’s offers customers with alternatives such as Wendy’s brands and Abby’s that offers finest foods to the clients or customers. The organization operates at low costs with superior differentiation of products to offer a sustainable revenue return brands. Differentiation is done through community building approaches that distinct products based on social groups in offering both the cheap and expensive convenience food brands. This enables Wendy’s / Abby’s Group to thrive in the Chinese market as well as growth in the thrust for fresh and new markets.
Johnson et al. (2004, p. 20) found that, mergers as a strategy by analyzing key competencies have a number of benefits to the organization with a number of reasons behind its adoption. To start with, the strategy enables Wendy to achieve a high standard of market share in both Chinese and global markets. The merger enhances the financial muscles of the organization to trade and enjoy economies of scale. This is as a result of larger volumes of sales being achieved over their competitors due to the low costs incurred the operations of the chains. In fact, Wendy’s (2008) pointed out that, this strategy has enabled Wendy’s to expand its share in the global convenience food industry.
While investigating competitive advantage in the food industry, Johnson et al. (2004, p. 20) realized that, the segment is characterized by three basic ways of gaining competitiveness among the participants. It is through beating down the prices, improving the quality of the foods. Lastly, consumers consider the convenience of purchasing such products. Besides, Wendy’s strategy is majorly focused on customers by critically lowering the total price for its highly value convenience food products. The enterprise considers low price for its products, which they effectively implement by offering comparable prices for products, but with highly valued services to the customers. Even though, quality leadership and price leadership are conflicting factors that when considered at the same time could be detrimental to the revenues of the organization, Wendy’s is strategic in differentiating the implementation of the two strategies to overwhelm the industry. It achieves the competitive advantage by balancing between the need for quality product improvement and price sensitivity in the convenience food sector.
The junk food in China is characterized by change in the tune of recession; the lead up Christmas food sales also reduces due to the reduction in food price inflation. While competition in the food industry remains extremely high among the four big players, Wendy’s utilizes the power of low prices to overrule the market. Wendy’s / Abby’s Group possesses huge buying power as a result of the increased consumer base attracted by the offer of low prices by the organization. This results in huge revenue return to Wendy thereby furthering their expansion and development in the oversea markets.
Merging and Stakeholders mapping matrix is a success story at Wendy’s since it has offered customers with highly valued products at relatively low prices at low operational cost; arguably, this result in a sustainable marginal profit rate that enables the enterprise to develop and maintain differentiation of products offered by the company. By strategically positioning itself well with this strategy, Wendy is a stable firm that remains highly competitive in a price-sensitive industry.
Wendy is a successful organization that has experienced growth in both the Chinese and global convenience food markets. Clear analysis of the paper reflects the importance of adoption of Stakeholders’ mapping in the performance and success of an organization. The larger volume of sales realized at Wendy is attributed to the core competencies attributed by the stakeholder’s mapping matrix completely implemented in the operations of the organization. The level of competition in the convenience foods sector is affected through the power of the quality of good, the price of the products, as well as convenience attributed to the customers. This is where Wendy’s management realized that by adopting the core competencies, it can become a dominant force in driving the market. The company balances between the quality and the price of the product as a means to sustain high levels of competitiveness in this industry. The pattern has become a dominant driving force in the industry and for almost 15 years, Wendy’s has remained in the position of market leader (Wendy’s 2008). A differentiated brand name and products that are affordable and of high value in the perception of the customers makes the organization the best in the sector. However, Wendy needs to adopt more advanced technological innovations that could sustain its superiority in the future projected intense competitive food retail industry.
List of References
Chinyio, E. and Olomolaiye, P. (2010) Construction stakeholder management. Chi Chester U.K: Wiley-Blackwell.
Harrison, J. S., and St, J. C. (2004) Foundations in strategic management. Mason, OH: Thomson/South-Western.
Johnson, G., Scholes, K., Whittington, R., and Dixon, S. (2004) Exploring corporate strategy. Harlow: Financial Times Prentice Hall.
Wendy’s (2008) Our Brand- Wendy’s. Wendysarbys.com. Available from. https://www.wendys.com/en-us/about-wendys/investor-faqs (accessed 12 August 2008).
Zimmerman, S., and Bell, J. (2014) The Sustainability Mindset: Using the Matrix Map to Make Strategic Decisions. Hoboken: Wiley.