Market Selection and Foreign Entry Mode

International Strategic Plan

Pret a Manger, phrase that means ready to eat, is a restaurant chain within origins in Britain. It is high recognized for its healthy and fresh food. It has also been known to have quality service and friendly staff. The food chain guarantees of fresh products and for that you won’t find a ‘sell-by’ dates. The restaurants give out any unsold food out to charity to uphold its unique trait and also give back to the society. Its main stores are located in the United Kingdom. It has also established a presence in Eastern parts of the United States. Pret a manger has continued growing for the last 30 years to a point where it has over 350 joints in different locations across UK, USA, Paris, Hong Kong, and Shanghai. The food chain takes pride in serving over 300,000 customers for every single day and sharing with them a fresh, healthy menu. In this case, Pret a manger feels it’s time to expand again to cover more international grounds. The last to break the ground with an expansion in Japan proved to be very costly which eventually saw the food chain. It is for this reason that this paper seeks to develop a strategic plan that will help Pret a Manger successfully expand into a new market in the international scene.

The country to venture

I believe it is the time that Pret a Manger introduced its healthy and fresh menu to the United Arab Emirates by having a presence in the two major towns notably Dubai and Abu Dhabi.  A report in 2016 by KPMG on the food and beverage in the UAE point out to the spectacular growth in the market. The demographics in UAE is known to highly favor the Food and beverage sector. Euro monitor pointed out that in 2015, the value of the food and beverages market in the UAE accumulated to AED 52.4 billion (KPMG, 2016). An analysis of the market has indicated a lot of resilience despite the challenges experienced in the market. UAE’s positioning as a major global tourism and retail destination and the rich mix of cultures den ethnicities continues to make this country a prime spot for the growth of food and beverage sector. The estimated growth levels in the sector have predicted that between now and 2020, the growth in revenue in the food and beverages market in the UAE will outstrip the growth of outlets by 30% (KPMG, 2016). Consumer demand for the food and beverage products have been shown to be robust among the population in the UAE comprised of the residents and tourists. This will be in line with Clavier (2012) proposition that establishing global presence should be informed by consumer demand. The survey by KPMG has also pointed out that the consumers are increasing the amount spent for every meal. It is in this light that I would advise the Pret a Manger to invest in this country and establish a presence in UAE’s major towns.

Pret a Manger should capitalize on its company image and model that offers its competitive advantage. It is well recognized for the freshness of its food made within the premises, and the use of recycled and transparent packaging materials. With success in most of its international markets, the food chain will capitalize on that. It will also take the lessons from the failed expansion plans to create a better strategic plan to ensure its success in the United Arab Emirates.

Mode of Entry

My recommended strategy for the Pret a Manger in the UAE markets will be franchising. In this case, the company will permit another company based in the UAE to use the property rights of Pret a Manger who will act as the franchisor. The franchise will be required to make a fee for this exchange. The agreement for this strategy will require the franchise to operate within the standards set by Pret a Manger about quality, service, cleanliness, and value.

The franchisingcontract will be entered with a local food store with an established presence ready to expand to higher limits. One advantage of this selection will be a deeper understanding of the local market and demographics. This will be different from the expansion plans in Japan where the collaboration was with MacDonald’s which is an international brand thereby lacked a deeper understanding of the local market (Flitxpatrick, 2004). UAE market and population has unique characteristics, and this will thereby require using a well-informed partner.

One criterion that will be used in making the selection of the franchise is on the location of theirs. Among four things that the KPMG report indicates for guaranteed success in the UAE market, the location has been identified as being the king (KPMG, 2016). Pret a Manger will, therefore, assess the proposed location regarding flow of traffic, competitors, space, and accessibility.

The market in the United Arab Emirates has been found to be very conscious of the food quality and taste. Here, quality rules. Pret a Manger has perfected the act of maintaining and constantly improving quality of its menu. With a franchising agreement, Pret a Manger will need to carry out an intensive initial program with the franchise (Carpenter & Dunung, 2012).

This strategy will be favorable to the company as it requires less investment but offers an opportunity to make a huge return on investment. While some control may be lost, the company will still have a great say on major issues (Internicola, 2010). Franchising will also reduce the cost and links. With this strategy, Pret a Manger will soon be a reality in the UAE major towns.

References

Carpenter, M., & Dunung, S. (2012). Chapter 8.3: International expansion entry modes. In Challenges and opportunities in international business. Lardbucket Books

De Kluyver, C. (2012). Chapter 5: Target markets and modes of entry. In Fundamentals of global strategy. Saylor Foundation.

Flitxpatrick. (2004). A Doomed Venture: How Pret a Manger Failed in Japan. Retrieved from https://www.just-food.com/analysis/how-pret-a-manger-failed-in-japan_id94145.aspx

Internicola, C. (2010). Advantages and Disadvantages of a Restaurant Franchise. Retrieved from https://www.franchiselawsolutions.com/blog/advantages-and-disadvantages-of-a-restaurant-franchise/

KPMG. (2016). Hungry for More? UAE Food and Beverage Report.