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Running head: THE ORGANIZATION’S RESPONSE TO CHANGE OVERVIEW 0

The Organization's Response to Change Overview

Chipotle Mexican Grill is an American fast-casual restaurant founded in 1993. The company is currently operating in multiple countries apart from the United States of America like Canada, the United Kingdom, and Germany. Previous units focused on developing different strategies for the company to compete strongly in the severely tough market. However, it is imperative to make different recommendations to the company leadership to embrace positive responsiveness allowing them to integrate the changes effectively for gaining the advantages linked with the recommended strategies. For the same reason, the study will begin with the evaluation of the targeted industry. Afterward, the study will evaluate the pros and cons of vertical integration compared to outsourcing. Finally, the study will use BCG Matrix to assess its strategic position to make suitable recommendations to the company related to the strategy's implementation.

Chipotle is mainly operating in the restaurant industry. It is imperative to evaluate the same industry with the same consideration to identify that either it is declining and maturing at the current stage. According to Cavusoglu (2019), different cycles are linked with any particular industry, including start-up, growth, shakeout, maturity, and decline. The restaurant industry in the United States has experienced positive stability in the last years. The US restaurant industry's sales have almost doubled in 2017 compared to their sales in 2017, reaching $800 billion, where the industry's actual sales were about just $42 billion in 1991 (Dube, Nhamo, & Chikodzi, 2020). The same industry is also making a vital contribution towards the economic growth and development of the United States (Ha, Park, & Park, 2016). It is also employing more than ten million people in the United States.

The restaurant industry in the United States has experienced growth in the last many years. For example, it resided at $400 billion in 2000 where it increased to $500 billion in 2005. Then the sales by the same industry jumped to $650 billion in 2010. Rhou, Singal, & Koh (2016) anticipates the industry to reach a value of $890 billion in 2020; however, it would not have been possible because of COVID-19. It is imperative to mention that the USA's population increase had been a significant determinant for the restaurant industry's increased sales. Dube, Nhamo, & Chikodzi (2020) support that the restaurant industry in the United States experienced a steady increase in sales of about 5 – 10% annually. At the same time, it is imperative to mention that competition in the same industry also increased massively. Cavusoglu (2019) informs about the increase of restaurants in the United States each year by reaching 10 – 15%.

Moreover, the customers' interest and taste preferences had also diversified massively in recent times. For example, the Pizza and burger restaurants experienced a growth of 30%, where the Asian and Latin food restaurant experienced an increase of more than 50%. Due to the same changing social behavior of the US customers, the restaurants can't operate effectively by managing all the customers' needs and requirements positively from a single location (Rhou, Singal, & Koh, 2016).

As per the above analysis, it is quite clear that the USA's restaurant industry is certainly experiencing growth, but the same growth is coming at a steady rate. The competition's growth rate in the same industry and the change in the customers' behavior is relatively great. It recommends that the USA restaurant industry currently falls within the maturity stage. Chipotle's massive turnover potential in the same industry due to steady growth, high competition, and continually changing customers' requirements.

As per the Porter-Diamond Model, the company must determine various critical factors to select and implement its strategy, including demand condition, firm strategy, factor conditions, related supporting industries, government, and chance (Barney & Hesterly, 2019). With the same concern, there are mainly two options available to the company for carrying out the business operations, including vertical integration and outsourcing. Vertical integration will allow the company to carry out multiple functions within the production chain (Della-Piana, Low, & Lyman, 2010). It will eliminate the need for intermediaries for the company in the supply chain through positive expansion. It gives benefit to the company in the areas of government and chance. The company can operate effectively to avoid any legislative issue (Cavusoglu, 2019).

Moreover, they will also gain an opportunity to generate maximum revenue as well as profits. However, it comes with multiple drawbacks for the company. Demand condition, the company will no longer pay attention to the changing demand of the customers in the market (Dube, Nhamo, & Chikodzi, 2020). The company will find it difficult to change itself proactively for competing strongly with the rivals. The related supporting industries will experience a decline due to less business.

Outsourcing is another option available to the company by which it will be integrating a specialized entity, team, or organization within its supply chain process. It could involve outsourcing payroll activities, information technology, and logistic services to any other player or stakeholder to take specific relief from the same challenge to focus on other critical aspects of the supply chain process (Barney & Hesterly, 2019). It will deliver multiple benefits to the areas of demand condition, firm strategy, factor conditions, and related supported industries (Della-Piana, Low, & Lyman, 2010). Demand condition, the company will pay attention to the changing demand of the customers in the market. The company will find it convenient to change itself proactively for competing strongly with the rivals (Cavusoglu, 2019). The related supporting industries will experience growth due to the increased business. Factor conditions, the company will be able to meet the customers changing demand positively to experience growth. However, it comes with some drawbacks for the company (Ha, Park, & Park, 2016). Government, the company could find itself in legislative trouble due to the suppliers' fault. Chance, the company could lose its chance of generating sufficient profit and revenue.

Considering the above analysis, the study recommends that the company use the outsourcing option instead of vertical integration. The reason is that the restaurant industry is experiencing a steady growth at the current time where the level of competition and customers taste diversity is increasing massively (Ha, Park, & Park, 2016). Thus, the company needs to focus positively on the critical aspects to increase its share in the market for which outsourcing is a favorable option.

As per the BCG Matrix, there are four quadrants available to the company. The company needs to optimize its products and services effectively to place the same things in the profit-making quadrant like cash cows or stars. It will benefit the company in generating sufficient revenue and profit to meet its financial targets and sustain its brand image (Barney & Hesterly, 2019). The conventional physical restaurants being operated by Chipotle are currently acting as Cash cows for the company. The reason is that the industry sales of the same type are relatively steady where the company developed a strong brand image to capture fair market share in the same industry (Della-Piana, Low, & Lyman, 2010). Therefore, Chipotle needs to sustain its business operations with the same service as necessary for its financial stability. The online deliveries or home deliveries trend is increasing within the United States of America. Cavusoglu (2019) supports the same by informing an increase in the same industry by 37% in the last three years only. With the same consideration, Chipotle is reserving a fair share in the same industry as well evident through its online sales by 32%.

Chipotle is mainly a grilled food restaurant; therefore, fast food sales like Pizza and burgers are declining as US customers are gaining much interest in their health. These products fall within the company's Dog category and need to carry out timely decision-making related to the same products for lowering their expenses (Abwanzo, 2017). With the same consideration, Dube, Nhamo, & Chikodzi (2020) informs about the increase of organic food sales in the USA by 21% in 2018. However, the company is not reserving a fair share in the same category. Therefore, the company needs to focus on improving its business sales and transforming the same product into the Stars category for generating sufficient profit.

As per the above analysis, the company's strategic positioning is currently lying moderately between the product quality and pricing. A particular option is available to the company to improve its product quality by adding new products to the portfolio or improving current organic food (Ha, Park, & Park, 2016). It will benefit the company to attract customers to generate more profit and revenue positively.

As per the above strategic evaluation and recommendations in the previous deliverables, the company's leaders need to make valuable changes in different areas, including

• The company needs to bring changes in its decision-making style by making it more consultative.

• The company leadership must gather regular feedback and recommendations from their customers and employees to carry out positive decision-making (Della-Piana, Low, & Lyman, 2010).

• It will allow the company to incorporate maximum positive changes within their weak or potential areas to gain maximum positive results.

• The company needs to bring changes in its planning structure as well.

• They must focus on the long-term objectives of the company. The reason is that the short-term goals might benefit the company for a limited time, but it will not be bringing any favorable results for them in the long run.

• The company must develop its vision and mission and share it with all the concerned stakeholders to arrange them simultaneously (Barney & Hesterly, 2019).

• It must develop a clear work breakdown structure to delegate roles and responsibilities to all the concerned stakeholders for exerting their efforts in the right direction.

For implementing the above changes, the leadership at Chipotle needs to adopt a consultative leadership style.

• It will encourage the company leadership to gather regular reviews and feedback from the employees to bring different company changes to contribute towards its operational effectiveness (Della-Piana, Low, & Lyman, 2010).

• It will also encourage the company leadership to support all the employees to put the effort in the right areas to achieve desired positive results.

Various measures will be evaluating the effectiveness of the results being attained by the company after implementing the recommendations.

• Increase in sales informing about the company's sales, ROI informing about the company's return on investment.

• Customer satisfaction informing about the increase in the customers' satisfaction rate after implementing the strategies (Barney & Hesterly, 2019).

In recent years, the restaurant industry in the USA has had positive stability. The same sector also contributes significantly to America's economic growth and progress. The interest and taste tastes of consumers have in recent times also diversified extensively. The competitive growth trend in the same market and the changed behavior of the consumer are very high. In the United States, the trend in internet orders or home deliveries is the. The restaurant industry is currently experiencing a maturity stage. With the same consideration, it is more appropriate for the company to adopt an outsourcing strategy to compete strongly with the current market players to gain maximum advantage. The company needs to focus on the organic food industry and home deliveries to improve its strategic positioning to generate more profits. The company will require certain modifications in their decision-making style, leadership style, planning structure to implement the recommendations made in the study effectively to achieve desired positive sales, ROI, and customer satisfaction.

References

Abwanzo, B. (2017). Chipotle Company Assessment. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3278492

Barney, J. B., & Hesterly, W. S. (2019). Strategic management and competitive advantage: concepts. Harlow, United Kingdom: Pearson Education Limited.

Cavusoglu, M. (2019). An analysis of technology applications in the restaurant industry. Journal of Hospitality and Tourism Technology, 10(1), 45–72. https://doi.org/10.1108/jhtt-12-2017-0141

Della-Piana, V., Low, M., & Lyman, K. (2010). The business strategy audit: a company self-appraisal to analyze your business strategy's effectiveness and strategy-making process. Cambridge: Cambridge Strategy Publications.

Dube, K., Nhamo, G., & Chikodzi, D. (2020). COVID-19 cripples the global restaurant and hospitality industry. Current Issues in Tourism, 1–4. https://doi.org/10.1080/13683500.2020.1773416

Ha, J., Park, K., & Park, J. (2016). Which restaurant should I choose? Herd behavior in the restaurant industry. Journal of Foodservice Business Research, 19(4), 396–412. https://doi.org/10.1080/15378020.2016.1185873

Rhou, Y., Singal, M., & Koh, Y. (2016). CSR and financial performance: The role of CSR awareness in the restaurant industry. International Journal of Hospitality Management, 57, 30–39. https://doi.org/10.1016/j.ijhm.2016.05.007