Reference no: EM132352314

Case Study

Building the Subway franchise

When Fred DeLuca wanted to earn some money in 1965 to pay his college fees, he asked a family friend what he should do. Ills friend Dr. Peter Buck, suggested that he should try to open a sandwich shop, seeing the successful operations of the local town. Buck loaned him USS 1000 and the first store was opened in Connecticut, USA in August of 1965. The Super Submarine sandwich store sold fresh sandwich in which the toppings could be selected by the customer. Fred looked after the store himself. Ile himself when to the market to buy fresh vegetables as the quality was important for the successful running of the store. For the first few years, the store experimented with different products and marketing strategies. The founder changed the name to Subway and developed the following characteristics:

1. They had relatively lower cost as compared to McDonalds or Burge King as they used grills and other equipment to fry their food.
2. They decided to have less employees per store around 6-8 as compared to other in the same business. A typical McDonalds had 15-20 employees.
3. Simple design and strong Logo
4. Clear and simple pricing and product presentation.
5. They concentrated on Hygiene to ensure the quality of fresh food.

This was the model when they started their business in 1974. Over the next 30 years they have grown in size mainly through franchising. They started experimenting with various locations. They were small and could operate only on lower start-up costs and wage rates, so besides malls they operated in factories and schools and even the general locations. By the end of mid 90's Subway had more outlets than McDonalds but with lower turnover. The company faced a strategic problem, the sales growth was beginning to slow down. he could not find any new location so he went back to his customer and conducted a survey for the customer and found out that people like to eat subway as they sell low fat burgers as compared to the standard hamburger and French fries. He developed a new marketing campaign that focused on seven types of low-fat sandwiches. The company claims that this boosted their sales instantaneously. In 2000s they developed another range of sandwiches called big eater meal with cheese and meat. This move also has a positive impact on their business. By 2004 subway had 20,000 outlets in Canada and USA.

Later on in 1984, the company opened its operations outside North America- in Bahrian in Middle East. By 2004 they had over 2,000 outlets in 75 countries. Their aim is to be the number 1 Quick Service Restaurant franchise in the world. Their strategic objectives are to build good company reputations and have a wider customer range. while their operational objectives are to make their food healthier, or to construct a wider range of menu. The strategic goal of the company is to reach 7500 restaurants by 2010.

Questions

1. Elaborate on the strategy perspectives that represents the most appropriate explanation of Subway's development over the years.

2. Is it possible for a company to start with an emergent strategy and then develop a perspective strategy? Provide a detailed explanation to show your understanding on the concept.