Introduction
It is argued that a company should employ comprehensive and efficient expansion strategies if it strives to maintain a sustainable growth in the future. In the case under consideration, Pret A Manger, a British fast food restaurant chain, is the subject of the discussion of an appropriate foreign market entry strategy. The company is UK-based, and the majority of the chain’s restaurants are in the UK (Junqian, 2014). Also, Pret A Manger operates successfully in the United States as well as in Hong Kong and Shanghai (Junqian, 2014). However, it is possible to notice that the overall presence of the company in the international market is insufficient given the fact that the chain is relatively successful and has a competitive advantage. The attempt to enter the Japanese market in 2002 in a joint venture with McDonald’s has been a failure. Therefore, the purpose of this paper is to develop a profound strategic plan for international market entry for Pret A Manger.
The Selection of Possible New Market for the Expansion
The Concepts of Target Markets and Market Selection
First of all, it is essential to overview the concepts of target markets and market selection principles as they play the primary role in developing a market entry strategy. The work of de Kluyver (2012) will be used as a key reference for this section since the author provides a comprehensive observation of target markets and various modes of entry. As the author states, one of the most important aspects of selecting a suitable market entry strategy is the company’s basic value proposition (BVP) because such decisions as selecting global target markets, entry modes, and customer communication patterns can influence the necessity to adapt the business’ BVP to some extent (de Kluyver, 2012). Accordingly, the ability of the company to tailor its offerings to the global market without changing the core of the brand is the key to success when entering foreign markets.
In order to measure the market’s attractiveness and estimate the company’s potential to succeed in this market, there are four key factors. They are the following: (1) the market’s size and growth rate, (2) institutional contexts of a particular country’s market, (3) competitive environment of the region, and (4) market’s cultural, administrative, geographic, and economic distance from other markets served by the particular company (de Kluyver, 2012). Based on these criteria, it is possible to suggest several markets in which Pret A Manger could succeed in expanding.
Recommendations for the Expansion Strategy
Dwelling upon the provisions from de Kluyver (2012) observed in the previous subsections, it is possible to state that Pret A Manger should consider its expansion to European markets. In particular, it is possible to mention such countries as Italy, Switzerland, Belgium, and other members of the European Union. Generally speaking, the primary rationale behind this decision is that these markets could be considered as being in the same economic and social context as the UK and having similar trends and customer behaviors in the fast food industry.
It is possible to mention that the most important aspect of the Pret a manger brand is that the company offers healthy fast food without chemical additions, and it is also concerned with questions of environmental sustainability (“Food chain Pret A Manger targets more expansion as profits rise”, 2017). This aspect allows targeting such customer groups as “global citizens” and “global dreamers” (de Kluyver, 2012). As it was previously mentioned, Pret A Manger has a considerable competitive advantage as the company offers services, which are not fulfilled by other companies in the selected market.
Regarding the region’s institutional contexts (including political, social, and economic peculiarities of the targeted countries), it should be stated that European countries would be easier to enter since they are significantly similar in terms of product, labor, and capital markets (de Kluyver, 2012). It is also apparent enough that the aspect of cultural, administrative, geographic, and economic distance mentioned by de Kluyver (2012) is an advantage for Pret A Manger when expanding to European markets since these countries have relatively short distance with the UK.
The Selection of the Mode of Entry
Foreign Entry Mode Options
According to Carpenter and Dunung (2012), there are five principal modes of entry to foreign markets. These options include the following: exporting, licensing and franchising, partnering and strategic alliance, acquisition, and “greenfield venture,” which is a new wholly owned subsidiary (Carpenter & Dunung, 2012). de Kluyver (2012) proposes a similar classification of entry modes. Each of the mentioned modes has different characteristics, but it could be observe that they differ primarily by the level of the company’s control over the business process in the foreign market, with exporting being the method with the lowest level of control and greenfield venture being the most controlled approach to expansion (Carpenter & Dunung, 2012). Additionally, costs and risks vary from method to method in a relatively similar manner as the level of control.
The Rationale for the Selection of the Entry Mode
It should be stated that the most suitable entry modes for Pret A Manger are acquisition and greenfield venture. Partnering with McDonald’s in 2002 was not beneficial for the company. Also, such options as exporting and franchising offer a considerably low level of control over the operations, which is disadvantageous for Pret A Manger because the company is known for its excellent quality and service. Therefore, it is apparent that the company needs a full control over the whole complex of operations related to the restaurant’s functioning.
The primary disadvantage of this approach is the high cost of implementation. However, as it is mentioned by de Kluyver (2012), companies that employ acquisition or greenfield venture modes have the highest potential of succeeding and growing in the foreign market. Another issue which is common for the chosen option is the higher level of risk due to the integration into the unknown environment. However, this is not the case with the scenario in which Pret A Manger enters European markets because it would be significantly easier to adapt to the market conditions of these countries than, for example, in China or Japan. Therefore, the only substantial disadvantage is the cost of implementation, which should be eliminated by the company’s projected profits from a wholly owned business in foreign markets.
Conclusion
In conclusion, it is essential to observe that Pret A Manger is the company with great potential for expansion in the international market. The company is successful due to the excellence of provided services, and it also has a competitive advantage. This paper exemplifies the reasons for expanding in European markets since they are the most appropriate and suitable for Pret A Manger to enter.
References
Carpenter, M., & Dunung, S. (2012). International expansion entry modes. Web.
de Kluyver, C. (2012). Target markets and modes of entry. Web.
Food chain Pret A Manger targets more expansion as profits rise. (2017). Web.
Junqian, X. (2014). Pret a Manger prepares for sandwich battle. Web.