management 98

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You can use either Jack in the Box or other fast food chain to do this exercise.

For Question 1, choose an international location(s), you can choose one or two countries as your target location for expansion, then look up information about the macro/general environment such as GDP and inflation from the references listed below. I recommend using CIA World Factbook and Wikipedia to look up country information. There are also rankings of political risks, corruption, etc. Transparency International is a good source. EIU (the Economist Intelligence Unit, www.eiu.com ) and Euromoney (http://www.euromoney.com/Poll/10683/PollsAndAwards/Country-Risk.html ) also provide country profile and political risk ranking but require registration and subscription.

For a fast food company, you may want to consider the countries with a large and relatively affluent population and a stable and growing economy, i.e. large GDP, per capital GDP, healthy growth rate, relative even income distribution (not-too-high Gini Index, OECD average pre-tax is 0.46, US is 0.49), low inflation, low political risks, and not-too-fierce competition (within industry rivalry).

1. CIA World Factbook on country profile (external analysis on general environment of the country):

Economic indicators related to market potential: GDP, per capita GDP, GDP growth rate, Gini Index (income distribution), unemployment rate;

Population indicators related to market potential: total population, growth rate, age structure;

Government/Political factors related to political risks: democracy or not, number of political parties;

Economic indicators related to economic risks (currency crisis or depreciation): inflation rate, current account deficit (trade deficit) and the ratio to GDP, public debt as a percentage of GDP

https://www.cia.gov/library/publications/the-world-factbook/

2. Transparency International:

Corruption Perception Index (corruption ranking of countries à political risks)

http://www.transparency.org/research

Or, Heritage Foundation’s country ranking in “Economic Freedom”:

http://www.heritage.org/index/ranking

3. For competitor analysis and internal analysis, I recommend using Nasdaq and company website as major sources of info. You can find the focal company’s profile, financial indicators, and its major competitors in Nasdaq. In the summary section, you can see the international presence of the company and its competitors. Most of Jack in the Box’s competitors have wide international networks. McDonald’s has restaurants in 119 countries as of 2017 (wikepedia, don’t cite this one though).

4. You can also get SWOT analysis of each individual company from DataMonitor/MarketLine database. There is detailed analysis of the company’s international and domestic presence, its strength and weakness, and the challenges from external environment. To access the SWOT report, log in to WKU library website using your netID, under “Databases”, choose “Business Source Premier”, then search using company name and “SWOT”. For example, when you search SWOT report for Burger King, search “Burger King” in title AND “SWOT” in abstract, sort the result by publication date (newest first), then you will see the most current DataMonitor/MarketLine SWOT report on the top of the list. You can search the SWOT report for your focal company and its major competitors. 

For Question 2, choice of entry mode, you should base your choice on textbook sections and the results from Question 1. If your target market has low political risk and low economic risk, then you can choose licensing/franchising/joint venture/wholly-owned subsidiaries, or a combination of these, such as setting up a joint-venture with a local company as the master franchisee and then set up franchising network around the joint-venture (as Starbucks did in some overseas market); if both risks are high, your choice will be tipped toward non-equity options, i.e. licensing/franchising. But if only political risk is high, and economic risk is low, you may want to consider joint venture again, because a local partner can offer protection or knowledge to navigate the political system in the host country.

Question 3 and 4 are already incorporated in the first two questions. So you can be brief on these two questions, or skip them.

You don’t have to do a very thorough analysis for this exercise. The purpose of this exercise is to let you be familiar with the process of gathering info (what and where) and putting this info into the analytical framework (external and internal analysis and the choice of entry mode).