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The Case of Chipotle: Strategy Selection

The current Part I, II, and III discuss Chipotle’s marketing expenses, proposed organizational structure, and strengths and weaknesses respectively. The new pieces of analysis draw on the previous research carried out to understand Chipotle’s standing on the market. For Part I (marketing expenses), it was important to identify the company’s primary competitors. Surely, Part I did not take into account every single one of them. Yet, interestingly enough, the most helpful write-up for selecting contenders was the SWOT matrix. The “Threats” quadrant helped with understanding the competition in Chipotle’s market niche, and “Strengths” guided the selective process and allowed us to choose companies who offer similar value. The analysis of Chipotle’s marketing expenses also stemmed from the SWOT matrix where it is clearly outlined that the chain’s marketing campaign and brand visibility make some of its weakest points (“Investors room,” 2020; Lellay, 2016).

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The second part draws on the research made for IEE and IFE matrices. It discusses the strengths and the weaknesses of the company, though, from a new perspective. Both internal advantages and disadvantages are not inherently good or bad (David, 2013). For instance, it was discovered that Chipotle’s prices are higher than those of its contenders (Shaw, 2014). On the one hand, a price leadership strategy would imply lowering the prices to compete with more customers. On the other hand, however, it is possible to provide justification for such prices by utilizing one of Chipotle’s major strengths – its integrity when it comes to food sourcing.

The proposed organizational structure (Part III) is also justified by the findings that we have made previously. In the description of the new organizational structure, the emphasis was put on transparency and fast communication. These two characteristics are critical because their absence would render vast but sustainable changes impossible. Part III also highlights the importance of corporate social responsibility, which is one of Chipotle’s major strengths recognized in the SWOT matrix.

Based on Part I, Part II, and Part III, it is already possible to outline some directions that Chipotle might want to consider to gain more competitive advantages. Firstly, the restaurant chain might want to choose differentiation strategy over price leadership. Surely, these strategies are not mutually exclusive: in fact, there are companies that are successfully combining both. Yet, with the current operations management at Chipotle, it appears that decreasing the prices will compromise the company’s commitment to ethical practices or worsen work conditions, including remuneration. For Chipotle, differentiation will mean serving food with integrity, which will appease consumers who care about sourcing and their health. Shaverien (2018) reports that today, increasingly more buyers pay attention to the company’s reputation before making a purchase. If they find that it has been unethical, they might as well switch to an alternative altogether. Therefore, it is only reasonable for Chipotle to capitalize on its commitment to corporate social responsibility.

The second strategy stems from Chipotle’s struggle with visibility. As Part I has demonstrated, the company has not been keeping its marketing expenses on part with its competitors. Focusing on marketing and especially, the use of technology will help the restaurant chain to tackle two problems at once – weak advertisement and insufficient research and development. At the same time, Chipotle might want to look into other marketing prospects that have already been widely used by its competitors such as social media marketing and collaborations with influencers.

References

David, F.R. (2013). Strategic management concepts: A competitive advantage approach. Pearson. Investor room. Web.

Lellay, H. (2020). Chipotle crafts a targeted-marketing strategy. Restaurant Business. Web.

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Shaverien, A. (2018). Consumers do care about retailers’ ethics and brand purpose, Accenture research finds. Forbes. Web.

Shaw, B. Three weaknesses for Chipotle investors to monitor in 2014. Web.

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