Outback Steakhouse | |Going International |
There is a combination of business practices and features that made Outback Steakhouse (OBS) successful in the US market:
• Unique human resources management style where management and joint venture partners take on ownership of their business and share success
• Limited operation hours reducing wasteful spending and employees’ stress
• Rigorous hiring process, high employee retention rate and skills
• Limited serving to 3 table per employee
• Cultural support of innovative management process
• A wider range of option in their menu, as well as high quality food
• Partnership-like relationship with its suppliers
• Exotic Australian theme
• Diversified into other products such as that with Carrabba’s
These give OBS their differentiation identity amount its competitors. However, some argues that their unique culture might not fit well with international investors.
2) Hugh Connerty proposed that international expansion includes the following:
• An opportunity for its suppliers. OBS is committed to grow with its suppliers.
• Carefully selecting individuals that share the core value of OBS using franchising.
• Plans to expand internationally first into Canada, then into a diverse international stage all within the first year. UK will be the target of the following year. Market risk is diversified into other markets.
At first glance, this seems like it utilizes the similarity of the Canadian market to expand its international presents, while continuing to grow its value chain as a whole. However, there are many issues that this strategy will face as discussed in the next section.
I recommend to expand within US first before the market saturates, then internationally. There are a few things OBS should pay attention to:
• Limited ability of the suppliers to expand internationally. As such, there is a need to help develop existing suppliers or find new international partners.
• Difficulty in controlling business practice of franchisees overseas. It will be difficult to find the “right partners” that value the culture of OBS.
• Limited window of opportunity in US. There are still 5 years before the US market is saturated, OBS should strengthen its position before all the good locations are taken.
• Limited knowledge in foreign market. Foreign markets represent high risk without the understanding of consumer’s habit, laws, and trade regulations.
OBS’s success rides heavily on its style, culture, and supplier, international chain might not inherit the same structure. OBS should leverage its existing strength to secure its position in US. Only then they should expand into similar market such as Canada and the UK.
The expansion strategy does not make sense. Keeping in mind that BS does not have international experience:
• The brand might not be appreciated as much as OBS would have hope for in other countries
• Unknown in if the differentiation strategy would work overseas
• Lack of international market study, especially in steak demand
• Suppliers will have a difficulty following the value chain internationally, especially if OBS were to expand in a broad scope within the first year.
• Lack of understanding of foreign culture, consumer habit, franchising laws, and trade regulations
• No study was done to compare diversifying products vs. international expansion
All these represent high risk if Outback were to expand internationally. A strategy is needed to tackle these issues before OBS should even consider expanding into foreign markets.
Understanding that each region...
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