Overview of Chick-fil-A
Chick-fil-A, an American company is a fast food restaurant which was established in the year 1946 with its headquarters in College Park, Georgia. They are a chain of restaurants with mo than two thousand and one hundred restaurants in the country and are famous for their Chick-fil-A homemade chicken sandwiches. The restaurant does not operate on Sunday but still perform better in the market compared to its competitors (Chick-fil-A., 2017). In the year 2016, the sale of each restaurant of the company saw an increase by 11.7% and the company was ranked the fifth in the list of the growth of the restaurants in the country (Seaman, 2012, p.56). It was also the first restaurant to initiate and open their branch in the Atlanta mall so that they can attract the customers who visited the mall for shopping. They even fulfill their corporate social responsibility and by 2016, they had recycled 2.8 million plastic bottles.
In the present business scenario, the organizations, small scale, medium scale and large scale, are using strategic marketing tools to attract more customers and retain their customers so that the increased customer base can help them to generate more revenue and increase their profit margins (Grover et al. 2013, p.11). The companies have to analyze and evaluate the internal and external business environment so that they can take their decisions accordingly. The external environment is dynamic in nature and hence, the company has to use strategic tools of marketing to analyze it so that they can take sustainable business decisions. The PESTEL analysis is the analysis of the macro environment of the business which helps the organization to judge their market position and standing in the industry by evaluating themselves on different standards. The factors are those phenomenon’s which comprise of the external environment which are – political, economic, socio-cultural, technological, environmental and legal. These factors dominate the external or the macro-economic business environment and affect the policies, rules, objectives, aims and decision making process of the company (Srivastava et al. 2011, p.465). Owing to the dynamic nature of the external environment, the companies have to continuously evaluate themselves on the mentioned factors because the factors keep on changing which bears and effect on the entire business environment.
Fig2. Business Operation of the organization in domestic country
(Source: Chick-fil-A, 2017)
The companies can use the strategic marketing tool of PESTEL analysis when they want to decide on their target audience, launch a new product in the market, explore the investment opportunities available or enter into a partnership plan with another company (Pathak et al. 2010, p.70). Using PESTEL in such scenarios will help the business firm to understand their future prospects and growth and profitability rate in the industry. It would also help the business firms and the organizations to evaluate the opportunities available for them in the new market they want to enter into to expand their business operations and establish themselves in the global market.
The American fast food chain is looking for expansion opportunities in the international territories. The marketing team of the fast food restaurant is surveying the global markets to find the correct market and the market opportunity where they can expand themselves to have a global presence and also to increase their profits and sales revenue. After conducting extensive market research, the marketing team of Chick-fil-A has decided to venture in the Indian markets because of the favorable conditions persistent there.
PESTEL as a Strategic Marketing Tool
For running the business in the market, the company has to initially understand the business environment of the country so that they can take expansion decisions accordingly. The external environment or the macro-economic environment has to be analyzed and evaluated so that h the expansion plans can be made (Ali et al. 2010, p.110). The analysis of the external environment will help the fast food restaurant Chick-fil-A to set their business objectives as per the demands of the target audience in India. The evaluation of the external environment can be done with the help of PESTEL analysis. The marketing team of the company has decided to review three factors from the external environment analysis from the PESTEL model – political, economic and socio-cultural.
The political environment of India is stable for a very long time since now. The country is progressing towards political stability and development with the current ruling party helping the nation to march towards progressivity. The country has a stable political environment and also amicable ties with other nations. India has favorable political ties with America and hence, the company would not face any issues to get a business access in India and use the opportunity of expansion and growth in the international market.
The stability in the political environment has also promoted the government of the country to promote globalization and invite companies from the other countries to conduct business in India. The management of Chick-fil-A should use this opportunity and open this fast food restaurant in India. The stability in the Indian market would permit the company to carry on their business operations and activities in the country. The stable environment will allow the company to grow in the Indian markets and maximize their revenue and cover their costs.
The government of the country has even shown support and interest in expanding the e-commerce industry. Chick-fil-A has online portals in America through which the customers can place orders and get home delivery for minimum cost or no cost. Therefore, when Chick-fil-A establishes their restaurant chain in India, they can also take the opportunity of using the e-commerce website to promote themselves (Kaushik et al. 2011, p.97). The stability of the political environment will help the company to reduce the challenges of obstruction in growth and expansion. The support of the government towards globalization will also help the company to expand in the whole of India. Chick-fil-A can get a business license to operate in India very easily due to amicable ties between American and India and can either open their own branches or give franchise to some Indian company (O'Connell et al. 2011, p.1376). The other political factors like the easy attainment of business license, transparent legal system and good judiciary of the country will help the American fast food restaurant, Chick-fil-A to conduct their business operations and activities freely in India without facing any trouble from the changing dynamics of the political scenario of the country.
India is a developing country with a lot of business opportunities for foreign companies to invest in India. The gross domestic product of India is 2.074 trillion US dollars with a stable growth rate of 7.2 per cent. India is a growing economy and in the present business scenario, there are many multinational foreign companies who are investing in it (Haunshi et al. 2011, p.31). The economy of the country is growing and developing which is a good opportunity for Chick-fil-A to expand their business in the foreign territory.
The tax structure of the economy is also included in the economic factor under the PESTEL analysis. The tax structure of India is very flexible and the foreign companies have any subsidies which they can utilize to their advantage (Kaur and Das, 2011, p.861). The developing economy has given pathways to the technological advancement in the country. India has recently, seen a lot of advancement in the technological sector due to the growth in the economy. The country is inviting foreign direct investments because of which the economy has a good circulation of cash and credit in its business economy.
The government of the country is trying their best and is also putting in efforts for improving the economy of the country. In India, the fast food restaurant, Chick-fil-A will not incur much expenses or costs in establishing themselves due to economies of scale. India has a huge population and hence, a large availability of cheap labor (Singla, 2010, p.84). The country is considered in the leading position for the highest availability of cheap and skilled labor. The company would hence incur minimum cost on their labor expenses due to the easy availability of it. The company can also achieve economies of scale because of the low cost of raw materials (Chand, 2010, p.12). The infrastructure of the country is also quite well developed to support a fast and efficient supply and distribution network so that the company can get the raw materials on time and also reach out to the customers. The infrastructural development of the country with economic advancement and development, Chick-fil-A will get a good market to expand themselves in India.
India is a cultural diverse country with many communities existing simultaneously. India is known for its diverse culture and secularism and if the foreign companies want to operate and conduct in India and carry business operations then they will have to understand and respect the cultural diversity of the country and its natives (Van Boeckel et al. 2015, p.5450). In Indian, the median age of the citizens if 26.5 this proves that most of the young population is in their youth (Kearney, 2010, p.2794). India also has the benefit of population dividend which means that the young population of India is more than the old population of the country. The population dividend scenario of the country is beneficial for Chick-fil-A because their target audience would be the young population of the country like the school and college students and also the people going to the office (Pallavi et al. 2014, p.158). Therefore, if the establish their business in India and promote themselves efficiently then they will be able to maximize their revenue from this country.
Chick-fil-A only deals and prepares food products with chicken as their main component. The company specializes in chicken products and does not sell beef, pork or any other non-vegetarian dish on their menu. It is against the company’s policies to produce beef products as they believe in saving the cows and not exploiting the animal for human needs (Eitenmiller et al. 2016). This philosophy of the country will help them in the Indian markets because in India beef meat is banned. If Chic-fil-A establish themselves in India then they will not have to make much or major alterations in their menu for catering to the Indian market.
The customers are nowadays highly aware about the activities of the companies operating in India. The consumers prefer those companies who fulfill their corporate social responsibilities and take initiatives to help the society and people at large (Sarkar et al. 2012, p.37). Chick-fil-A has initiated many corporate social activities in their home country, America and if they carry forward this policy to India, it would positively affect their sales. If the company is able to fulfill the corporate social responsibility as imposed by the government then it would be beneficial for them.
Conclusion and Recommendation
India is a developing nation with a stable political and economic scenario. The government of the country is inviting foreign companies to invest in India by offering them a conducive environment to carry on with their business operations and activities. As per the analysis of the three factors of the external environment – political, economic and socio-cultural, Chick-fil-A should enter the Indian market. India has a strong and stable political environment which will help the American fast food restaurant, Chick-fil-A to carry on their business operations and activities efficiently and smoothly. The initiative of the government of India to promote globalization in their country is also beneficial for the fast food restaurant because they are a foreign company looking for investment opportunities in the India market. The analysis of the economic environment of the country also suggests that Chick-fil-A should enter the Indian market because of the growing economy of the country. India being a developing nation has the benefit of economies of scale and cheap labor availability. The company will be able to achieve economies of scale in India because of the low labor cost and raw material cost. The infrastructure of the country also adds to the establishment of an efficient distribution and supply network for the country. The analysis of the socio-cultural also favors the company’s decision to expand themselves in India. The company only sells food items as chicken being their prime component of the menu. Hence, they can introduce the same menu in India with just a few minor changes in it.
India is a well expanded and grown market which is still in the growth stage as per the four stages of the product life cycle. The in the growth stage, the markets provide the best opportunities to the business firms and organizations. Similarly, India also offers the best development and investing opportunities to Chick-fil-A to expand themselves in the international territories and boundaries. If the marketing department of the American fast food restaurant, Chick-fil-A is able to successfully conduct a market research of the Indian market and understand the consumer needs and demands then they can establish themselves in India and maximize their gains and profits after achieving economies of scale. Hence, the company should enter the Indian markets and open their business establishment there so that they can expand themselves and have a global presence like their competitors and rivals. This global presence may help the organization to gain a competitive edge in the market over their rival firms.
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