How Subway Went Global ? – Group 4 IMBD – Lille campus

Subway’s director of development explains how the brand transformed into an international icon and which markets he’s watching for the future.

The day QSR interviewed Subway’s director of development, Don Fertman, the sandwich chain was celebrating. It had just hit the 32,000-store mark the day before, and the company showed no signs of slowing. In fact, Fertman confidently predicted that by the time the article ran, the chain would have added close to 500 more stores. For those interested in the math: That’s almost seven stores a day between interview and press time.
While the growth of nontraditional units in the U.S. has helped the chain boost its system to chart-topping numbers stateside, its international expansion remains equally aggressive. Fertman, who’s been with the brand since its first international store opened 16 years ago in Saudi Arabia, sat down to explain how the brand continues to grow despite the global recession, what territories he’s watching closest, and how your brand can follow in his footsteps.

What do you attribute to Subway’s international success?
The secrets to our success are probably not secrets. I think they’re really obvious and it has to do with the fact that people want something that tastes good, that’s a good value, and is something that is hopefully good

Initially, Subway identified 10 major markets that the company was focusing on internationally. Are those markets still the focus?
We’re looking at a number of markets. We’ve moved beyond the 10 markets that we had the big focus on because we found that other markets are growing, surprisingly rapidly.
For example, in our initial reading of top markets we did not include Russia. Right now Russia is up to 75 stores and our developer there has just announced plans to get to more than 1,000 stores by the end of 2015, quite an aggressive goal. But they’re looking at the economics in the market and they can see that Russia is a much bigger market than was originally anticipated. Another market is the United Arab Emirates, that was not on the top 10 but that is one of our fastest growing areas because it’s a fast-growing country. There’s a lot of construction going on there, there’s a lot of influx in population, there’s a lot of tourism. So that’s a strong growth area.

Group 4 Lille IMBD : ZARA offshoring strategy

The question of whether to offshore one’s departments or not bothers many international companies for several years. Several researches were made on that topic. One of Offshoring Research initiatives states that the main reason to offshore for most of companies is still cutting costs (http://hbr.org/2006/03/the-top-line-allure-of-offshoring/ar/1 ). But several other arguemenets are as well considered as relevant ones, like increasing quality and accelerating the production.

We decided to focus on Zara’s offshoring strategy that actually chose to leave most of the production units close to home.

This strategy allows the company to have only few stocks, keep a good quality of the products, and react more quickly according to the customer’s demands. Spain is the only logistic center with huge warehouses where merchandise is stored and can be delivered to all European countries within less than 24 hours. It takes only 48 hours to deliver it to Asia and America.

Most of raw materials are purchased in Spain and then sent for further design. About half of the clothes are made in Spain, Portugal and Morocco, 14% in Turkey, Romania, Bulgaria and in Italy. Offshoring in Asia (China, Thailand, India, Bangladesh …) represents 35% of the production. Contrary to many other midrange brands, Zara has no interest in relocating its entire production in China: the remoteness of factories could slow down the supply of shops and the renewal of the collections, one of the strengths of the brand. To ensure meeting the deadlines of deliveries Zara uses local agreements. And contracts to minimize its risks. Moreover some partnerships can be considered as long-term ones which also adds value for strategic plans.

Current strategy allows Zara to keep control over the production processes but still to benefit from economy and offshoring advantages.

The ‘butterfly defect’ at the heart of globalisation – (Group 4, Lille, IMBD)

Globalisation brings immense benefits. As barriers to the movement of goods, services and capital have been lowered, many emerging economies have seen extraordinary improvements in living standards and incomes. Even more important than the physical flows across borders has been the rise of the internet over the past 15 years, which, together with improving literacy and education, is allowing ideas to spread faster than ever before. Yet growing integration and complexity has also resulted in new systemic risks that must be managed if we are to preserve the gains of recent decades.

The recent financial crisis was the first of the systemic crises of the 21st century but certainly will not be the last. At its heart were four critical failures. A mismatch developed between a system that had become global in its reach and a regulatory structure still rooted in national institutions. Revolutionary technological changes driven by the exponential improvements in computer power facilitated new financial instruments that were not understood by an older generation of supervisors. Management and regulators were blinded by the blizzard of data. Last, conflicts of interest were endemic in the system, and far from excessive risk-taking being curtailed, it was excessively rewarded. Politicians, chief executives and bank boards were seduced by lucrative incentives and the toxic mix of cheap credit, bonuses, and accounting and political systems that rewarded short-termism.

That the most highly supervised, institutionally well endowed and data-rich of industries could fail so catastrophically should provide a wake-up call for all of us. For the vulnerability of our interconnected global systems to the “butterfly effect” – in chaos theory, the potential for a ripple in one part of the world to be amplified and lead to major disturbances in another – is by no means confined to finance.

Increased mobility and population density has exacerbated the threat of a global pandemic. The virtual integration of global society and business over the internet has created a new threat of collapse due to cyber attacks or failures in the infrastructure. Meanwhile, rapid integration of the global economy is leading to rising greenhouse gas emissions, with the potential to trigger catastrophic climate change on the other side of our planet.

In all of these areas, a disconnect between an increasingly global world and the fragmented structure of nation-states – what we might call the “butterfly defect” – exacerbates systemic risks. At a time when in finance, as in many other areas, greater co-operation is required, international economic policy and governance is gridlocked. New ways of working are required, including through the establishment of creative coalitions of government, business, cities and civil society. Complexity cannot be fought with still more complexity.

Policies at the national and international level should aim to build resilience. In finance, this has implications for competition policy, for the geographical location of key institutions and for regulation, including to moderate short-term incentives. Fundamental reforms in global governance are required to harvest the upsides of globalisation and mitigate the systemic risks endemic to rapid economic growth and closer integration.

While systemic risks come from globalisation, they also pose the gravest threat to continued globalisation. The political and psychological response to growing complexity is to try to become more local. Protectionism, nationalism and xenophobia are on the rise, and there is a real danger that globalisation will be rolled back and that our societies will become more closed. This would be a terrible mistake, not least for poor people across the world who are yet to benefit from increased connectivity and growth. The way to manage the systemic threats arising from globalisation – financial, climate, pandemic, cyber and others – is to ensure we co-operate to address them.

Link : http://www.ft.com/intl/cms/s/2/cb3e3c4e-a919-11e3-bf0c-00144feab7de.html#axzz3D0F2XLoX

How Globalization will affect us throughout our professional career ? Groupe 4 – Lille (IMBD)

Grégoire is driving his german car, heading up to the airport. He woke up at 7am this morning, had a colombian cup of coffee and watched news on his korean flat TV. The 11am KLM flight will take him to Shangai.

He found his job 3 years ago thanks to his Russian friend Veronika that he had met earlier at SKEMA Business School. Veronika had this friend who had a friend who had a cousin who knew a girl that was very interested with his LinkedIn profile. Despite a rough competition with a Brazilian man to get the job, he managed to obtain this position thanks to his skills and knowledge about Asian cultures.

As he spent 1 year in China during his studies, the company chose him as the  representative to deal with potential suppliers. Grégoire has some basis in Chinese language which will be valuable for the meetings but for a better understanding, he will rely on English which he masters perfectly. He learnt a lot about multicutural interactions so he knows how to manage this kind of negociations.

The meetings may not end up into an immediate agreement as he knows it is a long, time consuming process in Asian cultures but he is setting up the basis for a durable trustworthy relationships.

Grégoire is now coming back to France. He had an amazing personal and professional experience over one week. Even living a thousand miles away from home, he didn’t feel homesick thanks to his laptop and cellphone that allowed him to break the frontiers. He was then able to communicate with his family and colleagues and to organize online-conferences at any time.

He is now thinking about telling his children about the globalization benefits to encourage them to broaden their horizons as well. But could they imagine how to live without globalization? They grew up with it and don’t even pay attention to it.

*this document was created with international impact and love, using Googledocs online technologies.