Case Study #2 – Black Angus Steakhouse

1. What variables need to be considered in developing a list of potential countries ?

There are multiple variables to consider when a company wants to expand its operations outside the United States : market potential, customer characteristics, business cycles, competition (is there any competitors already in this market), local culture (make some research about the culture, to fit the needs of people), economic and political outlook (what is the situation of the country at that moment), government policies, financial requirements, labor markets, taxation, legal environment (what are the laws in that specific country), crime and corruption (if this is a safe place to work), infrastructure, foreign trade environment and current and future costs of building a business and brand (is it profitable to expand there).

2. From the list of top “candidates” what data should you collect on each market?

The marketing department should collect data for each market about overall population and target buyer population, spending power per capita, category penetration rates, overall growth of categories, share of each brands, media costs, previous marketing expenditures, category profitability, competitor metrics. Thanks to this data, Black Angus Steakhouse can build predictive models in order to know which market will be the most profitable and what will be their future position in each market.

3. What market entry strategy would you suggest ?

I would suggest a form of licensing called franchising. It consists in allowing local firms to purchase the right to use its processes and brand in their restaurant. Indeed, McDonald's use this market entry strategy and it has been very successful because local firms adapt their products to local culture. For example, in India, there is no beef in hamburgers or in France, sandwiches are made with French bread called "baguette". It is a good way to fit with the needs of a different culture.
Nevertheless, maybe this market entry strategy is too ambitious for a first global business. Therefore, I would say that a joint venture under a licensing approach is the best way to start a business abroad because partner firms in the host country have the right to use the brand but not to change products and menus and so on.

4. What are some of the internal and external challenges Black Angus may face in moving from a domestic business to a global business ?

The internal challenges are to adapt their advertising and sales promotion to the host country with foreign languages, customs, legal requirements, media options, and cultural topics to avoid…So in the case of Black Angus, their advertising and their food would be the most important things to adapt. However, changing everything to fit with host country culture would be a mistake because if Asian visitors come to Black Angus in America is because they like steak dinner at an affordable price.

The external challenges would be mostly about culture differences, economic and political environment, and legal requirements. Indeed, it is more difficult to satisfy the needs of several countries mostly if it is a very different culture than just one country.

5. What country would you propose as #1 potential ? Why ?

I would propose a country of the BRIC (Brazil, Russia, India and China) because they are the future leading economic countries because of their inexpensive labor market, their manufacturing capacity and their huge economic growth. According to Goldman Sachs, BRIC countries will overtake US economy by 2018.
Then, Black Angus Steakhouse is very popular with Asian visitors; I would suggest China as #1 potential country. Indeed, India is also an Asian country but at the moment Chinese people are those who travel the most compared to Indians. In addition, many rich Chinese know American and European cultures. Therefore, they are the most obvious target for Black Angus.