Introduction
Subway has been known in the food industry for a while. Founded by Fred DeLuca in 1965, the organization has been exploring new opportunities in the food industry, gaining quite a reputation over the past few years as the company with the largest restaurant chain (Kestenbaum & Genn 2015).
When it comes to exploring the strengths of the organization, one must mention the customization of the products. The submarine sandwiches that the firm has been producing since the day when it was founded are easily distinguishable from a range of other products since they bear a range of memorable characteristics, including unique flavors and a vast variety of customizing options.
The company currently operates in 99 states and has a chain of more than 38,000 restaurants. Furthermore, the firm has been growing exponentially with the introduction of new opportunities for expansion (Kestenbaum & Genn 2015). The recent focus on the production of healthier meals for the whole family makes Subway even more popular among a range of similar restaurants. While technically producing fast food, Subway has elevated itself compared to the firms such as McDonald’s, Burger King, and KFC by offering its customers a chance to consume healthy food (see Figure 1).
Company Initiative
Despite being already quite famous, Subway has recently decided to explore new opportunities and try to appeal to an even wider demographics Particularly, the company has decided to embrace the population group known as the millennials (‘Subway’s digital makeover’ 2016). The specified task seems quite intricate since the propensity toward digitalization is the primary characteristic of millennials (‘Subway’s digital makeover’ 2016). The introduction of new digital options for the customers of a fast food chain, however, seems barely possible since most of the services require an immediate and direct contact with the customer (‘Subway’s digital makeover’ 2016). Nevertheless, the incorporation of digital innovations into the Subway business environment may serve as the foundation for not only compelling millennials to purchase the firm’s products but also enhance the key production processes, thus, leading to a rapid improvement in the quality of the end product (Gerber 2013).
A closer look at the changes that Subway is going to experience within a comparatively short amount of time will reveal that the primary alterations will concern improving the current tools for ordering products. For instance, the Subway mobile application is going to be upgraded to a significant extent so that the user interface become more easy to use, and the ordering process be intuitively understandable. The specified steps are crucial for enhancing the productivity rates (Morrison 2011).
One must bear in mind, though, that the tendency to introduce digital tools into the system of producing and delivering services to end customers has become ubiquitous in the global market (Thanos & Clark 2017). In other words, the idea of digitalization alone does not make Subway strikingly different from an array of other organizations operating in the fast food industry. What makes Subway’s idea so brilliant compared to the endeavors of other firms is the focus on the redesign of kiosks as entirely digital concepts, as well as using e-tools for enhancing transparency within the organization. In other words, the promotion of the information technology will be carried out in all domains of the company’s operations, including not only the production process and communication but also the area that involve tracking down the key transactions carried out in the context of the organization, managing the risks that the company may face in the environment of the global economy, and enhancing security within the firm (Chuah 2013) (see Figure 2).
Related Issues
As the description provided above shows, the current Initiative of Subway is connected to an array of issues that the firm can explore in the realm of the global market. While communication and quality management are the primary areas of concern, the application of digital innovations will also serve as the foundation for improving the security levels within the company (‘Subway’s digital makeover’ 2016).
In a long-term perspective, the adoption of digital innovations, particularly, the rearrangement of kiosks and their transfer into the environment of the digital world, will contribute extensively to the expansion of the firm’s supply chain. Indeed, a closer look at the subject matter will show that the incorporation of digital innovations into the company’s design, particularly, the active us of applications for tracking down the progress of tasks completion, will lead to a massive enhancement of the procurement and transportation processes (Bartlett & Beamish 2014). As a result, a massive drop in the number of delays is expected. Consequently, the quality of the end product will rise significantly, triggering a rapid rise in customer satisfaction levels. The latter, in turn, will help manage customer retention by building loyalty among the target demographics. As a result, the use of digital tools as the methods of enhancing the efficacy of the current supply chain of Subway must be viewed as a necessity. In addition, the adoption of digital technology as the means of introducing positive changes into the supply chain environment will help build a more efficient SCM infrastructure by enhancing the information management processes (Ott & Kimura 2016).
However, it is the complete redesign of the user interface that will make a difference in the company’s current situation and help attract an increasingly large number of buyers. According to the statement made by the company’s leaders, the changes in the user interface and the incorporation of the latest IT innovations into the firm’s communication framework will make the key information very accessible; as a result, the processes of conversing with the company members and choosing products are bound to become very simple. The specified strategy is likely to appeal to a wide variety of customers and at the same time target the demographic that Subway has lacked tangibly over the past few years. Particularly, the application of IT tools and the adoption of applications that can be downloaded and used to purchase the company’s products will appeal to Millennials. By exploring the unique characteristics of the target demographics, Subway will be able to attain massive success (Ott 2015).
Global Initiative
The identified change aligns with the key global initiatives that have been undertaken by the corporations operating worldwide over the past few years. For example, Subway’s initiative aligns with the consistent focus on health that has gained special significance over the past decade in the fast food industry (‘Subway’s digital makeover’ 2016).
Furthermore, the concern for food loss and the necessity to reduce the amount of produced waste can also be observed in the choices made by Subway regarding the active promotion of IT innovations. Indeed, a recent report indicates that there has been a significant shift toward the active promotion of healthy products and dieting options for customers (‘Subway’s digital makeover’ 2016). The specified phenomenon can be explained by a combined effect of the emphasis on diversity and the importance for addressing some of the contemporary health concerns, including obesity and diabetes as the primary factors contributing to a massive rise in death tolls across the globe. Therefore, Subway’s initiative regarding the active promotion of healthier food choices and the introduction of dieting options for customers is in chord with some of the contemporary global initiatives.
Furthermore, the choices that Subway has made to enhance its production process can be viewed from the perspective of waste management as a massive contribution to the enhancement of the waste reduction process. With the rise of awareness about the impact that industries have on the environment, particularly, the enhancement of the global warming process, there has been an impressive increase in the concern for the waste management techniques deployed by the companies operating in the global market (Ott et al. 2016).
Finally, the issue of cultural sensitivity in regard to meeting the needs of new audiences must be mentioned. It is imperative to make sure that the unique characteristics of Millennials be identified prior to shaping the new approach. As a result, a range of mistakes can be avoided when redesigning the corporate brand and shaping the communication strategy (Ott et al. 2016).
Challenges
Among the key challenges that Subway is currently facing, the necessity to retain its customers, at the same time appealing to a new demographics must be mentioned first. Furthermore, the redesign of the brand image so that it could remain memorable and at the same time attract the attention of new audiences, particularly, Millennials. Finally, the need to transfer to an entirely new environment, i.e., the digital realm where the communication with target customers is maintained with the help of social networks and other tools should be listed among the key challenges for Subway at present.
Theoretical Framework/Concepts Description
The process of change that can be currently witnessed at Subway can be explored from the perspective of the Product Cycle Theory (PCT) and Oligopolistic Behavior Theory (OBT). Although the adoption of the two frameworks might seem excessive, one must keep in mind that operating in the global economy realm implies taking an array of diverse factors into account; therefore, considering the development of an organization from several aspects of its operations is essential. The PCT places a heavy emphasis on the necessity to meet the needs of the target demographics, as well as encourage the use of lean management techniques (Tetthe & Okantey 2016). From the PCT perspective, the processes occurring in Subway can be explained as an attempt to gain a deeper insight into the needs of customers, as well as identify the tools for attracting new demographics. In other words, the introduction of innovative tools into the realm of Subway should be interpreted as an attempt to increase product quality and, therefore, lead to a significant positive change in customer attitudes toward the Subway brand, in general, and its products and services, in particular. To be more specific, the model implies that a company should start with meeting the needs of local populations and then expand into the global market, embracing an increasingly large number of buyers and taking their unique characteristics into account when defining the marketing-, quality-management-, and communication-related issues. Indeed, the necessity to cater to a larger number of buyers can be deemed as the factor that galvanized the process of change in the Subway corporate environment in accordance with the PCT framework. Likewise, the idea of embracing variety and catering to the demands of new types of clients can be viewed as the key impetus for the improvement process in the organization (Ott et al. 2016). The OBT is another way of looking at the innovation process that has been launched at Subway.
According to the classification offered by Bartlett and Ghoshal, Subway can be characterized as the global company (Harzing 2000). Being represented in a vats variety of states and having a single office, Subway currently experiences a comparatively low pressure for local responsiveness since most customers of the local market are already familiar with the organization’s products and, therefore, do not need to be convinced to remain enthusiastic about the firm’s offers (Harzing 2000). On a global scale, though, Subway needs to make a significant effort to withstand the competition of companies such as McDonalds and other fast food chains. While the current focus on volume and the use of cost-efficient strategies can be deemed as sensible given the high rivalry rates, it is crucial for Subway to consider switching to becoming a transnational organization. With a high responsibility for meeting the needs of both local and global consumers, Subway will be able to develop a well-coordinated framework for improving its user interface, enhancing the communication process, and establishing a lean management strategy that will contribute to a massive drop in waste levels. Consequently, the foundation for gaining the attention of a much larger number of customers will be built, and Subway will be ready to compete in the global economy realm successfully along with its rivals (Harzing 2000).
As far as the competitors are concerned, it should be noted that Subway is in dire need for a massive renovation of its current approach toward managing the SCM processes, the communication with buyers and other stakeholders, and the improvement of the end product quality. With the recent technological breakthrough and the impact that IT has on the process of shaping customers’ behavior, a range of companies operating in the food industry have switched to the use of IT tools as the means of interacting with the target demographics and delivering their services. KFC is, perhaps, the most prominent example of IT tools deployed properly in the realm of the global economy. Representing the international strategy based on the taxonomy suggested by Bartlett and Ghoshal, McDonald’s clearly poses a significant threat to Subway’s success in the global economy (Harzing 2000).
Comparison to Another Company: McDonald’s as the Key Competitor
As stressed above, Subway currently needs to adjust its marketing, communication, SCM, and production strategies so that it could maintain its competitiveness at the required high level. Corporate giants such as McDonald’s pose a giant threat to Subway, making it look less significant compared to their innovative approaches. Compared to Subway, McDonald’s experience is much vaster, which means that McDonald’s has a large competitive advantage. Furthermore, McDonald’s has a strong presence in the global market, with a distinct image that provides an immediate brand name recognition. Furthermore, the use of innovative technologies is viewed as a necessity in the organization; particularly, McDonald’s has recently deployed the concept of the restaurant of the future, with the concept of a drive-in technology that will create opportunities for serving to a larger number of customers and delivering the necessary services within a much shorter amount of time than the traditional processes usually take (Dai, Peng & Li 2017). Therefore, McDonald’s should be deemed as an important competitor that may oust Subway from the realm of the global market. In addition, the strategy that McDonald’s uses to expand its supply chain is admittedly more efficient than the one that is currently utilized by Subway. Particularly, the fact that McDonald’s owns each of its restaurants as opposed to Subway should be recognized as an evident advantage. While the specified approach implies dealing with greater financial challenges and managing a vaster number of risks, especially the ones associated with deploying lean management frameworks, reducing expenses, creating a sensible pricing strategy, etc., it serves as the foundation for building customer loyalty (Xu, Thong & Venkatesh 2014).
It is remarkable that even being represented in a larger number of states does not give Subway the power to take a better position in the current rank of the top global fast food organizations. Indeed, as a recent report indicates, Subway has more than 44,000 locations, whereas McDonald’s has only a total of approximately 36,500 (Swanson 2015). The number of countries where Subway services are provided is also not that different from the one of McDonald’s (112 compared to 119 respectively). However, the array of tools that Subway uses to maintain its services and products memorable, as well as the devices that the firm deploys to make the communication with customers consistent and the security within the company efficient could use a significant upgrade compared to the one of McDonald’s (Swanson 2015). Particularly, the recent shutdown of a total of 3% of Subway restaurants across the globe points to the fact that the firm is about to suffer a sever crisis unless proper tools for enhancing its productivity and allowing it to attract a larger number of customers are introduced into the company’s framework (Xu et al. 2014). Consequently, the application of the approach based on not only the active use of innovative tools for enhancing communication and quality management but also the promotion of the consistent improvement as the foundation for the corporate philosophy should be deemed as a necessity.
Conclusion and Recommendations
Seeing that Subway is currently facing significant pressure from its numerous competitors, it is essential to explore further options concerning expansion, acquisition of new customers, and development of the competitive advantage. A unique product, i.e., the sub-sandwich that has been representing the company, can be viewed as a constituent of the competitive advantage of Subway, yet the organization also needs to incorporate the elements if IT into its design. Thus, the active use of social networks as the means of redefining the company’s brand image and promoting it successfully to Millennials as its new segment of the target audience, as well as the gradual improvement of the SCM structure, including the procurement processes, transportation, time management, etc., will become a possibility. The specified steps are bound to help elevate the company from the position of a minor corporation to a leader in the fast food industry. Combined with the focus on culture-specific and health-related needs of the target population, the improved approach toward production, waste management, and communication will lead to impressive results, including an increase in profit margins and customer retention levels.
Reference List
Bartlett, CA & Beamish, PW 2014, Transnational management: text, cases & readings in cross-border management, 7th edn, McGraw-Hill, New York City.
Chuah, J 2013, Law of international trade, 5th edn, Sweet & Maxwell, London.
Dai, J, Peng, S & Li, S 2017, ‘Mitigation of bullwhip effect in supply chain inventory management model’, Procedia Engineering, vol. 174, pp. 1229-1234.
‘Fast food industry’ 2014, Web.
Gerber, J 2013, International economics, 6th edn, Perason, Hoboken.
Harzing, AW, 2000, ‘An empirical test and extension of the Bartlett and Ghoshal typology of multinational companies,’ Journal of International Business Studies, vol. 31, no. 1, pp. 101-120.
Kestenbaum, H & Genn, AM 2015, So you want to franchise your business?, Entrepreneur Press, Toronto.
Morrison, J 2011, The global business environment: meeting the challenges, Palgrave Macmillan, Hoboken.
Ott, UF 2015, ‘Repeated moral hazard in international joint ventures: inter-temporal culturally sensitive incentive schemes for hidden action’, Research in International Business and Finance, vol. 35, pp. 166-179.
Ott, UF, Gates, M, Lei, L & Lewis, R 2016, ‘A configurational and experimental approach to compare British and Chinese cultural profiles of generation Y’, Journal of Business Research, vol. 69, no. 11, pp. 5500-5506.
Ott, UF & Kimura, Y 2016, ‘A set-theoretic analysis of negotiations in Japanese MNEs: opening up the black box’, Journal of Business Research, vol. 69, no. 4, pp. 1294-1300.
Ott, UF, Prowse, P, Fells, R & Rogers, H 2016, ‘The DNA of negotiations as a set theoretic concept: a theoretical and empirical analysis’, Journal of Business Research, vol. 69, no. 9, pp. 3561-3571.
‘Subway’s digital makeover’ 2016, QSR Magazine. Web.
Swanson, A 2015, ‘Mapped: every popular sandwich chain in the U.S.’, The Washington Post. Web.
Tetthe, ML & Okantey, PC 2016, ‘Multinational subsidiary performance: evidence from the Ghanaian banking sector’, GJDS, vol. 13, no. 1, pp. 41-62.
Thanos, LM & Clark, SD 2017, ‘A qualitative exploration of culturally-pluralistic segmentation among Millennials’, International Journal of Marketing Studies, vol. 9, no. 4, pp. 1-14.
Xu, X, Thong, JY & Venkatesh, V 2014, ‘Effects of ICT service innovation and complementary strategies on brand equity and customer loyalty in a consumer technology market’, Information Systems Research, vol. 25, no. 4, pp. 710-729.