Are You Prepared For International Expansion? Michael Woida Vice President, International CKE...
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![Page 1: Are You Prepared For International Expansion? Michael Woida Vice President, International CKE Restaurants, Inc.](https://reader036.fdocuments.us/reader036/viewer/2022062320/56649cd95503460f949a1f95/html5/thumbnails/1.jpg)
Are You Prepared For Are You Prepared For International International Expansion?Expansion?
Michael WoidaVice President,
InternationalCKE Restaurants, Inc.
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Focus of Today’s 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?
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Reasons to ‘Go Global’• Increase your franchise’s 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.
![Page 4: Are You Prepared For International Expansion? Michael Woida Vice President, International CKE Restaurants, Inc.](https://reader036.fdocuments.us/reader036/viewer/2022062320/56649cd95503460f949a1f95/html5/thumbnails/4.jpg)
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
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What Does An What Does An Organization Need?Organization Need?
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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?
![Page 7: Are You Prepared For International Expansion? Michael Woida Vice President, International CKE Restaurants, Inc.](https://reader036.fdocuments.us/reader036/viewer/2022062320/56649cd95503460f949a1f95/html5/thumbnails/7.jpg)
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
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What does an organization need?
Strategic Plan. . .• Know where International expansion fits
within the firm’s 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?
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When Should You When Should You Begin?Begin?
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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
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What Strategy Should What Strategy Should You Employ?You Employ?
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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
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What Strategy Should You Employ?
Market Desirability Matrix• Demographic Factors
– Age Distribution– Income Distribution– Total Population– Population Growth Rates– Under 30 Population– Urbanization– Education / Literacy– Lifestyle Trends
• Economic Factors– Gross Domestic Product– Purchasing Power Parity– GDP Growth Rates– CPI / WPI
• Cultural Acceptance– Appeal of Products & Services– Lifestyle Trends– Leisure Activities– Disposal Spending in Segment– Religious / Cultural Norms– Language
• Infrastructure– Import Barriers– Local / Regional Supply Options– Distribution Issues– Quality of Telecommunications– Quality of Road System– Probability of Natural Disasters
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What Strategy Should You Employ?
• Unit Economics– Labor Cost– Real Estate Cost– Cost of Goods Sold– Taxes– Construction Cost
• Other Factors– Legal Environment– Franchise Legislation– Foreign Currency
Stability/Outlook
Market Desirability Matrix
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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 firm’s risk tolerance
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What Strategy Should You Employ?
CompanyOperated Direct Area
MasterLicense
Franchising
JVOperated Direct Area
Franchising
Alliance/License
Wholly Owned Via a third party
Control level
Franchising
JV Owned 3rd Party Owned
Level Of Brand Control
High Low High Low High Low
Region
Area
Unit
CKE US /Mexico /
Middle East
CKE Russia /Asia
CKE AsiaExamples CKE US CKE US / Mexico
(Governance Models)
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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.
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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.
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Thank you!!Thank you!!