International dairy queens decision Essay

International dairy queen is a successful company that owns licenses and services to dairy queen restaurants, orange Julius stores and karmelkom shoppes. Currently, international dairy queen operates over 6000 chains globally and the number is yet to increase as international dairy queen seeks to venture more into the Middle East market. Environments International Dairy Queen Stores’ decision to open a subsidiary in Bahrain presents challenges and opportunities to the company. Before developing any strategy plans International Dairy Queen should perform a SLEPT analysis which is a critical look into social, legal, economic, political and technological influences. This is because it will not operate in a vacuum and these environments indirectly affect business activities. In addition these business environments are constantly in a changing state and companies need to be aware of these changes. This enables the company to stay ahead of these changes and act in a proactive way rather than reacting hurriedly to adapt to the changes. In the Middle East, Bahrain particularly stands out as the ideal location because it has numerous opportunities. Bahrain is a vibrant country with a multicultural population owing to the numerous tourists that visit. Many people refer to it as the ‘Middle East lite’ due to its substantial resource endowment, vibrant market economy and state of the art infrastructure, stable political system and high investment rating. International dairy queen would do well having business in Bahrain. The population is large and diverse plus the hot climate and tourist attractions attract restaurants business. The description above of Bahrain demonstrates that, indeed there are untapped opportunities for international dairy queen. The general pointers to a mature economy that include a ready market for goods and services, a friendly legal environment as well as a stable political system are evident in the case of Bahrain. There is need though to avoid over glorifying the country by giving a brief of some of the potential challenges that international dairy queen will have to contend with if entry into Bahrain market will prove to be a success. The political system comprises of all processes, structures and activities that prevail in a country. On the other hand, the legal system comprises of the laws and regulations enforced in a country. (Lucas, 2000) In international business, there are global legal issues that prevail beyond country’s boundaries such as intellectual property, product safety and liability and anti-corruption regulations. The political/ legal framework in Bahrain lays out the regulations and laws governing trade. Particularly, there are rules governing registration of companies import tariffs, ownership, trade registrations, customs payment and so on. International Dairy Queen Stores will have to comply with these laws and regulations if it is to trade in Bahrain. In addition, there are laws that stipulate environment regulations. This regulation prohibits creation of pollution, or any culture that contravenes moral standards. International Dairy Queen is a well established company whose activities are eco friendly. Laws regarding registration of foreign companies are stiff but not impossible. The government permits wholly owned foreign companies. However, restrictions on the importing products from parent company are imposed. Laws regarding employment stipulate the number of employees who must be sponsored from the local community. Licensing is easy as the government stretches good will to foreign investors. International Dairy Queen has to critically look into these laws and rules and their impact to its operation before proceeding any further. Lastly, health and safety laws are enforced to protect the customers from substandard goods that may cause harm to consumers. International dairy queen should pay attention to the rules that directly affect its operations. Social factors and cultural factors are equally important. These factors encompass the tastes, preferences, lifestyles, fashion, demographic factors and patterns of behavior. (Lucas, 2000) it is important to note that the tastes and preferences of people are very dynamic. The attitudes of people also change. The vast population largely comprises of young and aged fun loving people. The numbers of foreigners, who visit the country, make the setting ideal for International Dairy Queens products. Citizens of Bahrain love the good things in life. They have an expensive taste and International Dairy Queen Stores’ products match this standard. The current trend towards eating healthy diets and sugar free products may have an impact on international dairy queen. Cases of obesity in children and the negative effects of high sugar consumption raise concern among consumers. This will mean that international dairy queen invests in promoting it desserts and probably develop tasty and high quality sugar free desserts to cater for the sensitive consumers. Although the change in customers’ tastes and preferences differ across different age groups, International Dairy Queen Range of products caters for all. When evaluating the economic factors in the external environment, the key areas that one needs to look at is the interest rates, wage rates, general level of prices i.e. inflation rate and the customer’s purchasing power. (Lucas, 2000). The economy of any country tends to fluctuate from time to time. This characterized by periods of booms and repressions. The direct impact of these changes is price increase. Currently Bahrain’s economic condition is stable. Interest rates are low and demand high. People disposable income are high and they are willing to spend more on luxuries as dining out and International Dairy Queen comes in. by locating its stores at strategic locations where impulse buying is constant for 8instance the shopping malls, beaches and gas stations. International Dairy Queen can take advantage of this situation to expand in the Middle East in this case Bahrain. Technological factors are vital and need to be considered. This is because technology gives organizations a competitive advantage and facilitates globalization. Whenever one assesses the technological factors of any place the following questions come to mind. Does the technology enable production of high quality goods and at a cheaper cost? Does the technology offer innovative products that allow better ways of operating? Most importantly, does the technology provide better or new ways of communicating with customers? These questions play a guiding role in deciding what technology to utilize in order to gain a competitive edge. Technology in Bahrain can be described simply as state of the Art. Their transportation and communication system is highly advanced and the people are highly skilled. Given that international dairy queen is a dedicated company to quality it has to ensure that the franchisee are highly educated and its employees do not compromise on quality service delivery. Hence the highly skilled population in Bahrain should come in handy when a franchise opens. International Dairy Queen being a company involved in mass production is particularly keen on acquiring fast and efficient technologies. Total quality management is also of great importance to International Dairy Queen Inc. This is because its dairy products are very sensitive to quality. International Dairy Queen Inc is dedicated to satisfying customers’ expectations and the technological advances in Bahrain facilitate this. Bahrain has all the facilities the company needs thus setting a part Bahrain as the country of choice in the Middle East. The advanced communication system in Bahrain will facilitate easy communication with customer if international dairy queen decides to use customer relationship management to market its products. Markets The characteristics of the market place are vital in international dairy queen’s decision on pricing. There are various types of markets and they include commodity markets, controlled and uncontrolled markets, vertical high and vertical low markets. In the case of international dairy queen, it operates in a commodity market. This is because it has many buyers and competitors and at the same time non unique products. Thus, they enjoy minimal price flexibility. (Sunjen, 2000) The pricing of International Dairy Queens products will greatly depend on the presence of competition, economic conditions, cost of production and laws regulating prices in the new market (Bahrain). In addition, factors such as product awareness, prospects perceptions, ability to pay, products life cycle, elasticity and cost of channels of distribution will similarly affect pricing of international dairy queen products. (Sunjen, 2000) Most countries impose laws which regulate prices of goods such that prices don’t fall below a predetermined level. This is meant to prevent dumping. In this case International Dairy Queen is not affected; however, the economic conditions will influence pricing of International Dairy Queen Products. How so? Inflation causes increase in prices of virtually everything; raw materials, wages, interest rates hike. The cost of production reflects on final cost of a product. If the technology used to produce a product is costly then final cost of a product is also high. International Dairy Queen has invested greatly in modern facilities and state of the art technology. Most of the processes are automated. This will play a significant role in minimizing cost of production. In addition, costs of acquiring raw materials increases during inflation which eventually translates to high price of goods. Pricing of a product is influenced by the force of demand and supply. This is because if demand for a product increases prices of the product will also increase. This is the theory. However, this is not always the case. In the presence of competitors firms react by reducing their prices so as to retain customers to competitors. International Dairy Queen being a new company in Bahrain should consider to competitors and its comparative advantage. International dairy queen is a new company in Bahrain. This being the case its existence is unknown to people in Bahrain. The goal of International Dairy Queen should therefore be creating awareness and penetrating the market in Bahrain. This in itself will influence pricing. for example, using a promotional strategy. This is whereby it lowers prices of its products as a way of promotion. The effect is that customers get attracted to sample the range of products and make repeat purchases. A customer’s perceptions about a company’s product greatly influence pricing. How so? Positive perceptions regarding quality and superiority enable a company to price its products highly. Alternatively, the intention or desire to appeal and identify its product with the high class group should influence pricing. This is called premium pricing and a company using this strategy will price its products expensively as an indicator of quality. The availability, quality and cost of distributive channels influence pricing in that the eventual cost is transferred to the consumer. International dairy queen uses franchises to market its products thus eliminating the risk of long distribution channel and ensuring quality service to its customers. (Idq website) products usually undergo life cycles and each stage in a products life cycle dictates its price differently. Products in n early life cycle attract higher prices. International dairy queen being new to Bahrain enjoys this advantage as its products are still new to the market. D1 D2 This graph shows the effects of S changes in production (supply) and P1 purchasing power (demand) and P2 how these changes offset the equilibrium. Q1 Q2 Source: Self Organization Organizational structures vary across organizations depending on the objectives of a firm and its culture. This structure is important because it gives a frame work of allocating functions and processes to different departments in the organization. In order for a company to be successful in its operations it needs a good structure. A good structure is one that is efficient and flexible yet facilitates smooth communication and relationship among different sections in the organization (salaman, 2001) there are different types of organizational structures. They include; centralized and decentralized structure, hierarchical structure, tall structure, matrix structure and flat structure. It seems to me that international dairy queen uses the hierarchical structure. This is because each level is one above the other and each manager has a given number of staff directly under his span of control. The organizational structure International Dairy Queen Inc has both formal and informal structure. The formal structure shows the flow of hierarchy from the top level management to the lowest level. An organizational chart has been used to show the level of hierarchy in International Dairy Queen. International Dairy Queen has a centralized system and all the subsidiaries follow the same centralized system. That is all the department report to the director and all the employees report to their respective managers in the various departments. The informal structures within the company although not written on paper has strong presence within this company. Staff groupings are productive because they improve level of motivation and sharing of information. The company encourages productive groupings. The concept behind International Dairy Queen having this organization structure is to clearly show the relationship among the people in the organization. It also gives little of different position. The departments also have their own department organization structures. The purpose behind having this organizational structure is that flow of information is enhanced. This is especially so true for a big company such as International Dairy Queen. Absence of such a structure would cause distortion of information, and inefficiency. The structure shows a diagrammatic illustration of how departments should relate and the hierarchy of authority. The organizational structure allows free flow of information which enables the company to coordinate its various activities. This in turn increases the efficiency of services. Corporate Chart Source: Self Process Understanding the business process assists in gauging the success of a company in terms of higher profit gains, physical expansion, better quality products, increased market share and accumulation of assets. According to Davenport (1993) he defines a (business) process as â€Å"a structured, measured set of activities designed to produce a specific output for a particular customer or market. It implies a strong emphasis on how work is done within an organization, in contrast to a product focus’s emphasis on what. A process is thus a specific ordering of work activities across time and space, with a beginning and an end, and clearly defined inputs and outputs: a structure for action. Taking a process approach implies adopting the customer’s point of view. Processes are the structure by which an organization does what is necessary to produce value for its customers. † The business process allows an organization to measure how well the business is doing and measure whether the products and services meet customers’ needs and requirements. (Barnes, 2001). The success of International Dairy Queen Store’s investment depends a lot on how much its consumers get value for their money. Consumers of the company’s dairy products should perceive that they get the best their money can buy. Therefore, value adding should start right from the suppliers, production and packaging to distribution and selling process. At each stage, the product should be improved without adversely hiking price of the final product. Consumers should get best quality at minimal cost. Customer process analysis focuses mainly on acquiring and retaining customers as well as satisfying their needs. Adding value to customers requires in depth study into impacts of pricing, timely distribution, variety and so on. Time and cost is essential and should be analyzed so that it is cost effective. In the case of International dairy Queen Stores, its success in Bahrain depends greatly on the strategy the company will employ in attaining its goals. The marketing program should anticipate customers’ needs and cater to them. A modernized system of informing customers and getting feedback is essential. Relationship marketing, where customers’ queries and suggestions are personally addressed needs to be analyzed. Furthermore, the efficiency of implementing market programs and the dedication of employees to quality service delivery needs to be analyzed. The production process can be enhanced through the use of modern technology so that the time needed to produce a product is reduced. Conclusion In summary the decision to venture in the Middle East is timely. As seen the business environment tremendously affects the business. They can either affect your business negatively or positively. Therefore, it is advice able for international dairy queen to manipulate their effects to work out for its benefit. Markets are dynamic and there influences on pricing of products are significant. International dairy queen has a variety of options in determining its prices depending on its goals. A clear understanding, consideration and implementation of the issues discussed plus international dairy queen’s vast experience trading in foreign countries will come in handy in building a successful subsidiary in Bahrain. Bibliography Barnes, W. ed. (2001) Understanding Business: Process. London: Routledge. Davenport, T (1993) Process innovation: Reengineering work through information Technology. Boston. Harvard business school press. Lucas, M. ed. (2000) Understanding Business: Environments. London: Routledge. International dairy queen: The Middle East. Retrieved from http://www. dairyqueen. com/en-Intl/DQ+Around+the+World/Middle+East/default. htm accessed on August, 29, 2007 Salaman, G. ed. (2001) Understanding Business: Organizations. London: Routledge. Suneja, V. ed. (2000) Understanding Business: A Multidimensional Approach to the Market Economy. London: Routledge.