Case Report Ruths Chris Steakhouse free essay sample

Case Study Synopsis:   Ruth’s Chris – The High Stakes of International Expansion Defining the Issues ? company completed a milestone completing a successful IPO that raised more than $154M USD in new equity capital ? in its 2005 annual report, the company committed to an accelerated development plan through company owned and franchised locations. ? current stores were seeing consistent incremental revenue growth, but accelerated development will require entry into the international market ? shareholders will expect to see share prices increase (i. e. to maximise profit) The Basic Issue ? company wants to increase revenue through expansion (â€Å"growth†) Analysing Case Data (Cause Effect) ? barrier to international expansion may be RCR’s strict franchise criteria:   liquid net worth of $1M USD, verifiable experience within the hospitality industry, desire and ability to develop multiple locations; $100K USD per restaurant franchise fee + 5% gross sale s royalty fee + 2% gross sales fee. ? senior management committed to the market development model, but not all senior management committed to international expansion ? arket selection criteria presents some potential barriers to international growth (insistence on US Beef) ? insufficient international market data (no data on how often people ate in restaurants, or their affinity toward US brands). We will write a custom essay sample on Case Report Ruths Chris Steakhouse or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page ? some countries will not have an affinity for US brands. Generating Alternatives ? since franchising was successful in Canada, Mexico, Hong Kong, and Taiwan, the company should continue with this approach for international expansion. Foreign-owned restaurants may be unappealing to local customers ? he franchise model should be revisited, since the criteria are too restrictive and will discourage many potential franchisees ? market selection criteria should be reconsidered. Allowing franchisees to buy local beef and produce would improve the company’s image in a foreign market and support local business ? collect all the relevant market data before entering an international country. Find out which countries truly offer the greatest growth potential with the least risk, and test those markets first. Selecting Decision Criteria ? international markets were already opened and successful in Canada, Hong Kong, Mexico, and Taiwan. These markets should be expanded first (as was done with the US market), before the company expands into other international countries. This will generate the increase in revenue promised in the 2005 Annual Report, as well as fit the qualification for accelerated development; furthermore, it will bring more exposure to the â€Å"brand†, and help the company to test and refine both its market selection criteria and its market development model, as well as allow the company time to mitigate the risks of entering other foreign markets by completing the inconclusive market research. Assessing Alternatives ? maintaining the current franchise model could limit growth potential in foreign countries. ? relaxing the demand for US Beef would eliminate barriers in countries that don’t permit the import of US beef, thus broadening the market for expansion; additionally, use of locally raised beef and other produce shows investment in the local economy and raises the profile of the company favourably ? attempting company-owned (i. e. , US-owned) restaurants on foreign soil may not win the support and patronage of local potential customers in other countries. Selecting the Preferred Alternative The preferred alternative is to expand the international markets already opened and successful in Canada, Hong Kong, Mexico, and Taiwan, since inroads into these markets have already been initiated and, hence, are a lower risk to the company; additionally, these markets have much more room for growth, and further expansion will accomplish the goals of development, additional revenue, and raised brand profile. Developing an Action Implementation Plan ? expand franchises throughout Canada, Hong Kong, Mexico, and Taiwan ? revisit the franchise model and consider relaxing some of the restrictions ? revisit the market selection criteria and consider relaxing some of the criteria ? complete the market research for foreign expansion