Expanding Red Rooster Fast Food Chain In New Zealand

Company Background

International business entails the business transaction within two or more countries. The international business is the process of business communication between two countries that includes the transaction of service, goods, managerial knowledge, technologies and the capital (Griffin and Pustay 2012). The international business also involves the export and import of the business components. International business is often called the global business as it refers to the global expansion as well as the boundaries.  The growth of the international business is determined by the several factors such as political, economical, and social and others (Dunning 2013). In addition, the country itself works as the factor for the determination of the business growth and profit in the specific country. There are several challenges and considerations too which can also be considered as the determining factors of the international business. However, the following section of the report is based on an organization and the presents a proposal of the future expansion of the same in other countries.

The Red Rooster is one of the major and popular fast food chains in Australia. This family owned company was established in 1972. The company started to flourish from the year 1986. The parent company Craveable Brands owns and operates the company and presently the Red Rooster has more than 360 stored in all over Australia and has more than 10,000 employees (Red Rooster 2017). The company basically sells different kind of roasted chickens and the wide range of food products of the company also includes fish, salads, beverages and desserts. Apart from the wide product range the company also provides service that includes catering and home delivery of orders. 

The company is currently trying to enhance the business in the international context by expanding the same in other countries. The chosen country for the expansion of the international business of the company is New Zealand. The Australian company has the potential and numerous other advantages for the expansion of its business in the chosen country. New Zealand is the most closely related country in terms of the trading and business of Australia (Dunning 2012). To internationalize the business operations of the company the following research has been done on the present situation of the market of the proposed country.

The situational analysis of the company is needed for the future expansion of the company in the new market that contains different economical, social and political structure. For the situational analysis of the company the PESTLE analysis is given below:

Business Proposal and the Chosen Company

The PESTLE analysis is the basic marketing analysis of an organization that makes the organization understand the existing and current situation of the market including the risk and privileges (Makos 2015). The PESTLE denotes the political, economical, social, technological, legal and environmental aspect of the market:

Political: The political condition of New Zealand is stable but the government is directed acceding to the political power.

Economical: The per capita income and the GDP of New Zealand is less than Australia, which is a negative indication for the expansion of the company.

Social: The country is socially and culturally rich and there are no rigid barriers for the food industry in New Zealand.

Technological: The country is well oriented with the technological equipments and to certain extent is dependent on the external sources for new technologies.

Legal: The legal risk of the food industry is high as because the legal rules and regulation are changed after every three years.

Environmental: The environmental condition of the country is in favor of the company for the expansion of its business. In addition, the geographical location of the company is also a advantage to the company.

New Zealand to certain extent is dependent on Australia in terms of importing foods which are unavailable in the country. However, the country has the sufficient quantity of meats available, but the fast food chain like Red Rooster is certainly an added advantage to the food market of the country. The diet of the people of New Zealand includes chicken; therefore, opening up branch in the country will be profitable for the company (Caspi et al. 2012). In addition, the fast food consumption in the country has been increased 5% in 2016 (De Vogli, Kouvonen and Gimeno 2014). There are other fast food restaurants in the country which are doing good business, and considering this fact the competition level is high in the country for Red Rooster.

To understand and evaluate the risk and the opportunities in the industry as well as of the company the analysis of the Porter’s Five Forces and SWOT have been presented in the following section.

Porter’s five forces is a framework that is used as the tool for analyzing the present market condition for a company that is thinking of expanding its business in a new market (E. Dobbs 2014). The five forces that determine the profit of the company are:

Bargaining power of the customer: There are few tough competitors in the New Zealand market of fast food chain for Red Rooster – Maccas, McDonalds and KFC and others (Carter et al. 2013). The people of the country are given with the options of these two companies which increases the bargaining power of them. Therefore the bargaining power of the customers in the new host market is high.

Situational Analysis

Bargaining power of the suppliers: The bargaining power of the suppliers in the new host market is low because of the other fast food restaurants in the market of the New Zealand and the dependency and liking of the people on the fast food, especially chicken reduces the bargaining power of the suppliers.

New Entries: The threat for the new entries is high, because of the existing popular restaurants in the New Zealand market. In fact, it will be easy for the Red Rooster to enter into the new host market but difficult to sustain in the same. Hence, the threat for the new entries in the market is moderate and is dependent on the sustainability of the same.

Competitive Rivalry: In the new host market of New Zealand, Red Rooster will have few tough competitors Maccas, McDonalds and KFC and others. However, the rivalry is not high as the primary product of the Red Rooster is of the same as the other fast food restaurants existed in the market.

Threat of Substitute Product: The threat of the substitute product is less in the new host market as because the people of the country have put chicken as their first priority in their diet chart. In other ways, this is one of the main reasons for Red Rooster to expand its fast food chain in the new host market of New Zealand.

SWOT denotes the strengths, weakness, opportunities and threat for the company that is going to expand the business. With the help of this analysis the company will be able to understand the internal capabilities and the resources of the company as well as the external opportunities and threat existing in the market for the future business and accordingly can set strategies for the same (Salar and Salar 2014). 

For the expansion of the fast food chain in New Zealand, understanding the cultural dimension of the same is important. In regards to this, the theory of cultural dimension by Hofstede can be considered. This theory of cultural dimension deals with the power distance, individualism, masculinity/feminity, uncertainty avoidance and virtue of a country (Minkov and Hofstede 2012). The cultural dimension in New Zealand is low which indicates the power and culture equality in the country (Unitec.researchbank.ac.nz, 2017). In the second dimension, the emphasis on the individualistic culture is high, which again is the indication of the good cultural condition in the country. The next dimension of the cultural dimension refers to the masculine prevalence on the society, which is not really a negative indication, but not entirely a positive indication too (Words of Wisdom 2017). Uncertainty avoidance is the next dimension that indicates the country still needs some generalize and expert in handling the risks and hazards in appearing in the diverse culture. The last dimension of the country refers to the search for virtue in that is focused on the different traditions and fulfilling of the social obligations.

PESTLE Analysis

It is evident from the above passage that the cultural dimension of the country indicates towards the cultural stability and healthy understanding within the society. The country is ready to accept new business expansion as there people in the country is supportive and open to the new business. The cultural dimensions do not create any boundaries in the society for entering new business. In short, the cultural dimension of the country is favorable for the Red Rooster to expand its business.

For the expansion of the business of the fast food chain of Red Rooster, the financial status and the trading ethics and law must be assessed for both the countries. The economical condition of New Zealand is one of the basic factors that determine the sustainability and the profit of Red Rooster in the country. It is discussed and stated above in the report that the food consumption of the people of New Zealand to certain extent is based on the chicken. Therefore, the stage for the international business in New Zealand is set in terms of the demand and market in the same. In other hand, the economical status of the county must be taken into account before expanding the business in New Zealand. However, the economic condition of the country is found to be table. In other hand, Australia comes in the first rank in terms of international trading with New Zealand. It is found that from the year 2018 onwards the trading of the terms will be upgraded (Newzealandnow.govt.nz 2017). However, the ASEAN Australia-New Zealand Free Trade Area (AANZFTA) will be favorable for Red Rooster to expand the business of the same in New Zealand (Bath and Nottage 2013). The interests and the benefits for the agreement refers to the elimination commitments and tariff reduction, regional rules of the origin providing opportunities for the Australian companies in the international business, certainty to the Australian investors and service suppliers, business outreach activities and economic cooperation (Department of Foreign Affairs and Trade 2017).   

It is recommended to the company that before entering the new host market for the international business in New Zealand, the company must take a thorough research in the economical and social condition of the market based on the same industry in terms of the demand and trend of the market. Another recommendation for the company refers to the establishment of the partnership of the same with local company belonging to the same industry, which will help Red Rooster to attract more customers. In addition, the company must strategies and follow certain business model in order to effective a successful business in the new international market.

Food Market of New Zealand and the Scope of Expansion

Conclusion:

It is evident from the above discourse that for the expansion of the fast food business of Red Rooster in the international market, New Zealand will be best country. The PESTLE analysis of the new international market presents favorable market situation for the company. In other hand analysis of the Porter’s five forces and the SWOT explains the condition of the present market as well as the resources and capabilities of the organization for the expansion. Moreover, the socio-cultural context also presents positive and structured context for the company to expand the business in the international context.  In addition, the trading terms and condition for the international business of Australia is another favorable aspect for Red Rooster. However, the recommendations imply that the company must have a thorough research and the try to collaborate with local companies to understand and attract customers in the new market of New Zealand and accordingly chose business model for the same.   

Reference:

Bath, V. and Nottage, L.R., 2013. The ASEAN Comprehensive Investment Agreement and ‘ASEAN Plus’–The Australia-New Zealand Free Trade Area (AANZFTA) and the PRC-ASEAN Investment Agreement.

Carter, M.A., Signal, L., Edwards, R., Hoek, J. and Maher, A., 2013. Food, fizzy, and football: promoting unhealthy food and beverages through sport-a New Zealand case study. BMC public health, 13(1), p.126.

Caspi, C.E., Sorensen, G., Subramanian, S.V. and Kawachi, I., 2012. The local food environment and diet: a systematic review. Health & place, 18(5), pp.1172-1187.

De Vogli, R., Kouvonen, A. and Gimeno, D., 2014. The influence of market deregulation on fast food consumption and body mass index: a cross-national time series analysis. Bulletin of the World Health Organization, 92(2), pp.99-107A.

Department of Foreign Affairs and Trade. 2017. ASEAN-Australia-New Zealand Free Trade Agreement. [online] Available at: https://dfat.gov.au/trade/agreements/aanzfta/Pages/asean-australia-new-zealand-free-trade-agreement.aspx [Accessed 13 Oct. 2017].

Dunning, J.H., 2012. International Production and the Multinational Enterprise (RLE International Business). Routledge.

Dunning, J.H., 2013. Multinationals, Technology & Competitiveness (RLE International Business) (Vol. 13). Routledge.

Dobbs, M., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.

Griffin, R.W. and Pustay, M.W., 2012. International business. Pearson Higher Ed.

Makos, J., 2015. An Overview of the PESTEL Framework. PESTLE Analysis, 18.

Minkov, M. and Hofstede, G., 2012. Hofstede’s fifth dimension: New evidence from the World Values Survey. Journal of cross-cultural psychology, 43(1), pp.3-14.

Newzealandnow.govt.nz. 2017. Economic Overview | Invest in New Zealand | NZ Now. [online] Available at: https://www.newzealandnow.govt.nz/investing-in-nz/economic-overview [Accessed 13 Oct. 2017].

Red Rooster. 2017. Red Rooster. [online] Available at: https://www.redrooster.com.au/ [Accessed 13 Oct. 2017].

Salar, M. and Salar, O., 2014. Determining pros and cons of franchising by using SWOT analysis. Procedia-Social and Behavioral Sciences, 122, pp.515-519.

Unitec.researchbank.ac.nz. 2017. unitec.researchbank.ac.nz [online] Available at: https://unitec.researchbank.ac.nz/bitstream/handle/10652/1268/fulltext.pdf?sequence=1 [Accessed 13 Oct. 2017].

Words of Wisdom. 2017. Geert Hofstede’s dimensions of New Zealand. [online] Available at: https://mrichardson7.wordpress.com/2013/09/19/geert-hofstedes-dimensions-of-new-zealand/ [Accessed 13 Oct. 2017].

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