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Desert Restaurant LLC is a catering business with a focus on Arabic traditional food. The company has been established in 2006 and for 5 years of its operation it has managed to strengthen its positions at the national market. The reasons for overseas expansion are numerous. First, the company has managed to get 60 franchise companies all over the UAE for the period of its work and the desire to enter the international market is explained by the desire to expand. Second, the demand on Arabic national food is high in the USA (O’Sullivan n.p.).
The desire to expand its business is also supported by the fact that such services are in demand in the USA. Using international expansion, Desert Restaurant LLC provides the opportunity to exploit the benefits of internalization, such as economies of scale, scope, and learning, exploitable relationships between business segments and geographical areas, shared distinctive capabilities or core competencies among business units, and differences in factor markets (Lao 5). The specifics of the products and the desire to offer the food which seems strange for international society attracts customers with its uniqueness.
Therefore, the demand on the Arabic food is higher in the USA and the market share is more beneficial as well. The “inequality in the position of the buyer and seller regarding knowledge on the value, nature and quality of the product” (Ietto-Gillies 102) is one of the main reasons for entering international market. Thus, the restaurant location in the USA encourages forward integration. The desire to enter international market at the current stage of company development is explained by the necessity to increase a total income as the company area control may be internationally centralized (Ietto-Gillies 101). The USA market analysis should be conducted to understand the reasons for entering international market.
Therefore, looking at these activities, it can be easily noticed that the industry market is expanding. The sales of the restaurant industry are planning to increase by more than $10 million in 2012. Firms’ sizes and employment is also planning to increase that says about high competition in the industry and high demand on the industry products. The information about size of firm industry estimates and sub-industries helps to assess the situation at the American food market and make specific conclusions about the further development of the Desert Restaurant LLC’s activities at the international arena and particularly in the USA (“BARNES Reports” 97).
Considering the situation on the international arena, it should be stated that the US market segmentation is rather high, it comprises 39.1% of the global restaurants sector value. Additionally, it is important to state that being one of the largest segments in the restaurant sector, restaurants and cafes steel cannot compete with fast food sphere which increases from time to time (“Restaurants Industry Profile” 2). There are also other substituting sectors, such as various eating places, ice-cream and soda fountain stands, carry-out only restaurants, chili stands, coffee shops, food bars, grills, hot dog and hamburger stands, snack bars, etc. All these sub industries add to the competition (“BARNES Reports” 97). The industry consists of such specific sectors as fast food retail, restaurants and cafes, drinking places and catering.
Desert Restaurant LLC belongs to the restaurants and cafes as it is a full-service restaurant. Buyers in the industry are rather sensitive. Additionally, people have an opportunity to cook at home, therefore the services are not of the primary importance. Company image is very important. The negative experience may reduce the number of clients to minimum that can not only reduce the income, but also create great expenses and company bankruptcy. Price fluctuations in commodities are one more factor which impacts the industry development. Cheap alternatives (eating at home) are also the factors that make different companies to be creative and reduce prices. “Improving efficiency by adopting innovative solutions, new product development, or marketing and pricing strategies” (“Restaurants Industry Profile” 21) are just several strategies used by the companies at the international market and Desert Restaurant LLC should pay much attention to those to make sure that their strategies are winning.
Market Entry Strategy
Having entered a new international market, Desert Restaurant LLC should develop specific strategies which may help it stand to the leading positions at the international market. Much general aspects may be recommended, however, stress on advertising and promotion campaign should be made. Desert Restaurant LLC should pay attention to its image and make all possible to create a positive one. To kick off promotional activities, Desert LLC can start with an e-business model that can target selected Web users across target cities. The campaign can be designed in the form of web banners, flash gadgets, e-zines, newsletters, press releases and mass mailers.
Websites such as Profilecanada.com give a detailed list of end consumers who can be systematically targeted by Desert LLC. Local celebrities such as stand-up comedians can be roped in to give wings to initial promotional activities. Local radio stations can be hired to run news-reels about the new restaurant chain. There must be simultaneous promotional activities across print media, newspapers and magazines. The initial promo campaigns may prove expensive for Desert LLC, but they will do good to establish a presence in the mindset of end consumers. Thus, the company should create an impressive image, it should rush at the American restaurants market, astonish everyone with its strength and power. It is important do not give an opportunity for the competitors to realize that a powerful player has entered the market. Therefore, specific theme advertising campaign with traditional Arabic significance should be implemented.
Therefore, it may be concluded that operating in a highly competitive environment and desiring to enter an international market, Desert Restaurant LLC has many chances to succeed in the affair. Being a specific type of cuisine for Americans, the company may attract many clients by impressive advertising.
“BARNES Reports: Worldwide Fast Food Restaurants Industry (NAICS 72221).” Worldwide Fast Food Restaurants Industry Report (2011): 1-104. Web.
Ietto-Gillies, Grazia. Transnational corporations and international production: concepts, theories, and effects. London: Edward Elgar Publishing, 2005. Print.
Lao, Yadong. Entry and cooperative strategies in international business expansion. London, UK: Greenwood Publishing Group, 1999. Print.
O’Sullivan, Feargus. “Middle Eastern food is taking the world by storm.” Global Travel Industry News, eTurboNews, 2009. Web.
“Restaurants Industry Profile: Global.” Restaurants Industry Profile: Global (2011): 1-44. Web.