Are You Prepared For International Expansion? - PowerPoint PPT Presentation

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Are You Prepared For International Expansion?

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Are You Prepared For International Expansion? Michael Woida Vice President, International CKE Restaurants, Inc. Focus of Today s Discussion What does your ... – PowerPoint PPT presentation

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Title: Are You Prepared For International Expansion?


1
Are You Prepared For International Expansion?
  • Michael Woida
  • Vice President, International
  • CKE Restaurants, Inc.

2
Focus of Todays Discussion
  • What does your organization need to be able to
    grow outside of your home market?
  • When should you begin international expansion?
  • What strategy should you employ? Direct
    Investment, Master Franchising, Area Development,
    or Single Location Franchising?

3
Reasons to Go Global
  • Increase your franchises equity and brand value
  • Leverage your existing intellectual property,
    training, marketing and support resources
  • Exploit new markets for long-term business growth
  • Spread risk by diversifying your revenue source
  • Generate incremental fees and royalty revenues
  • Exploit the opportunity that the global
    marketplace offers.

4
Reasons to Go Global
  • Universal acceptance of franchising
  • As a legal and business relationship
  • By consumers who value the brand
  • By prospective franchisees
  • Expanding global economy and rising standards of
    living
  • International Markets Maturing Gateway Closing
  • Macro-Economic and Political Issues Always Exist
    - Difficult to time markets
  • Takes time to build your International Business
  • Growth of global/regional/domestic franchise
    competitors

5
  • What Does An Organization Need?

6
What does an organization need?
  • Strategic Benefit. . .
  • Will International expansion augment/accelerate
    your organizations growth or simply reallocate
    domestic resources (and growth opportunities)?
  • Is there a market for your concept outside of
    your home country? Can your brand flourish?
  • Can you leverage your international growth to
    enhance your position at home?

7
What does an organization need?
  • Organizational Readiness. . .
  • Solid Domestic Foundation
  • Mission, Vision, Values Well Defined
  • Positioning, Core Competencies Understood
  • Profitable Business Model Strong Unit Level
    Economics
  • Track Record Of Success In Home Market
  • Executive Management Commitment
  • Corporate Mandate
  • Financial Resources
  • Human Capital
  • Realistic Payback Expectations

8
What does an organization need?
  • Strategic Plan. . .
  • Know where International expansion fits within
    the firms immediate and long-term activities
  • The scope of expansion (where why) should be
    defined (Mature, Contiguous, English, etc..)
  • What are the defined measures of success for an
    International venture?

9
  • When Should You Begin?

10
When should you begin?
  • Operational Infrastructure in Place. . .
  • Core operating system support processes
  • Training systems and materials (i.e.,
    translation)
  • Marketing platform systems
  • Supply Chain/Logistics
  • Franchise Administration
  • Legal Systems Processes Formulated
  • Trademarks registered
  • Disclosure/License Agreements drafted

11
  • What Strategy Should You Employ?

12
What Strategy Should You Employ?
  • Geographic Expansion Strategy
  • Contiguous Markets
  • Targeted Regional Markets
  • Emerging Markets
  • Utilize Market Selection Matrix
  • Identify Critical Success Factors
  • Assign Weights To Each Factor Based On Your Brand
  • Rank Countries By Continent, By Region or
    Geopolitical Boundaries

13
What Strategy Should You Employ?
  • Market Desirability Matrix

14
What Strategy Should You Employ?
Market Desirability Matrix
  • Unit Economics
  • Labor Cost
  • Real Estate Cost
  • Cost of Goods Sold
  • Taxes
  • Construction Cost
  • Other Factors
  • Legal Environment
  • Franchise Legislation
  • Foreign Currency Stability/Outlook

15
What Strategy Should You Employ?
  • Where should you avoid?
  • Markets low on your Desirability Index
  • Markets where you concept is not applicable
  • Markets with restrictive franchise legislation
  • Markets with restrictive foreign exchange rules
  • Environments that exceed your firms risk
    tolerance

16
What Strategy Should You Employ?
(Governance Models)
Wholly Owned
Via a third party
JV Owned
3rd Party Owned
Franchising
Franchising
Franchising
Company Operated
MasterLicense
JV Operated
Alliance/ License
Control level
Direct
Area
Direct
Area

Region
Area
Unit
CKE Russia / Asia
CKE Asia
Examples
CKE US / Mexico / Middle East
CKE US / Mexico
CKE US
Level Of Brand Control
High Low
High Low
High Low
17
What Strategy Should You Employ?
  • Basic Expansion Structures - Terminology
  • Direct - franchisor acts as franchisor to single
    unit franchisees or multi-unit franchisees in the
    foreign market.
  • Area development - franchisor grants to a local
    area developer the right to become a single
    unit franchisee multiple times, in a defined
    geographic territory.
  • Master - franchisor grants to a local master
    franchisee the right to subfranchise in the
    foreign market.
  • Area representative - less certain definition -
    franchisor grants to a local entity certain
    rights a new market.

18
What Strategy Should You Employ?
  • Basic Expansion Structures - Terminology
  • Joint venture - franchisor grants to a local
    entity certain rights and itself owns some part
    of the entity together with a local partner.
  • Hybrid various elements of any of the above may
    be combined to suit individual needs.

19
  • Thank you!!
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