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Ruth’s Chris Steak House’s International Expansion Case Study

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Updated: Dec 13th, 2020

While focusing on the necessity of expansion, Ruth’s Chris selected a range of countries that could potentially become new locations for its restaurants. Much attention was paid to the presence of its target market among the local population. Thus the focus was placed on the consumption of beef. It was critical for the company to ensure that it would have enough customers in a new country because this fact fundamentally affects its revenue and overall success. Per capita, beef consumption was determined, which made it possible to select several nations whose people would likely enjoy visiting a steakhouse. In addition, particular significance was given to per capita GDP, as the company had to know that its customers would be able to afford the products they offered. The level of disposable income was associated with people’s willingness to eat out. Legal issues (affecting exports and US standards) were discussed as well. Finally, the company focused on the affinity for U.S. brands.

Even though the variables initially used made it possible for Ruth’s Chris to narrow its list of potential countries for expansion to 35 possibilities, several other factors could have also been considered. First, it should be mentioned that the company could have conducted a SWOT analysis. On the basis of this analysis, the organization would have identified potential markets by focusing on its current performance and opportunities. It might also be advantageous to think about geographic distance, because this affects the particular circumstances of transportation, including price and duration. The political situation in the prospective countries is also significant because it might affect business operations. The identification of current customer demands may reveal what people are interested in and whether they are likely to alter their interests.

The company considers the use of four marketing planning models that are frequently utilized by businesses that are hoping to expand. To select the most beneficial one, Ruth’s Chris should consider their advantages and disadvantages. For instance, diversification is likely to assume the most risk. This growth strategy presupposes the necessity to alter all operations. It requires the company both to create new restaurants and to reach new markets. Due to this, Ruth’s Chris would face numerous problems associated with a lack of experience and knowledge. The use of this strategy makes it necessary to develop a clear plan for the future of the organization and an impartial risk assessment.

Product development and market development are safer models that can be used for business growth. The first option means that Ruth’s Chris can continue operating in its existing markets. The organization will create new kinds of restaurants to ensure the loyalty of its clients and make them more interested in its offerings. By being aware of the market’s needs, Ruth’s Chris will more easily identify any alterations that are required. The second option allows for using the same type of restaurants and products. Even if the characteristics of the new market may be challenging, the company will not face as many issues because it will have an opportunity to build on its previous experience.

Finally, market penetration is likely to be associated with the minimum possible risk. The organization will increase the number of its restaurants so that they can be accessed by more customers. However, no changes in markets or products will take place. In this way, Ruth’s Chris will continue operating as it has in the past, and its success should not be affected adversely.

Product development and market penetration provide an opportunity to obtain more customers in the same areas because they do not require the company to start operating in new markets. However, product development is likely to be more beneficial to the company. Penetration only provides clients with an opportunity to visit Ruth’s Chris more often than they usually do. Access to restaurants improves, but new clients are not motivated to start using the company’s offerings. Product development, on the other hand, allows Ruth’s Chris to attract new customers by appealing to needs that were not considered previously.

Even though diversification is associated with greater risks, it has the best potential to increase the total number of the company’s customers. It offers a new kind of restaurant and reaches new markets at the same time. In this way, the company can develop totally new options, which would allow it to work with customers who were not even considered initially.

If Ruth’s Chris wants to use a new form of restaurant, it should consider the option of focusing on other meat products instead of beef or even offering some vegetarian substitutes for these products. As a result, the number of clients will increase significantly because they will be attracted by new options. Even though these products are not yet familiar to the company, they could adapt them to their new brand. As a result, the organization will maintain a unified identity, even when expanding in this way. If Ruth’s Chris wants to open a typical steakhouse in a new country, it might emphasize the connection with the original location and products, making the new restaurants a kind of national variation on the original ones.

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