Case Study Analysis Pret A Manger

Case Study Analysis: Pret A Manger

Student’s Name

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Table of Contents

Executive Summary ...................................................................................................................................... 4

Chapter 1: Introduction to the Case Study .................................................................................................... 6

1.1 Background to the Case Study ............................................................................................................ 6

1.2 Statement of the Problem .................................................................................................................... 7

1.3 Research Questions ............................................................................................................................. 8

1.4 Research Aim and Objectives ............................................................................................................. 8

1.5 Importance of the Case Study ............................................................................................................. 9

1.6 Structure of the Report ........................................................................................................................ 9

Chapter 2: Case Brief .................................................................................................................................... 9

Chapter 3: Problem Statement and Analysis Models .................................................................................. 12

3.1 Problem Statement ............................................................................................................................ 12

3.2.1 International marketing models ................................................................................................. 12

3.2.2 Human Resource Management Models ..................................................................................... 14

3.2.3 Strategic Management Models ................................................................................................... 16

Chapter 4: Analysis and Findings ............................................................................................................... 18

4.1 The analysis using the models .......................................................................................................... 18

4.1.1 PEST Analysis Model ................................................................................................................ 18

4.1.2 International Entry Modes ......................................................................................................... 19

4.1.3 Uppsala Model ........................................................................................................................... 19

4.1.4 ACAS model .............................................................................................................................. 20

4.1.5 The Warwick Model .................................................................................................................. 20

4.1.6 Harvard Model of Human Resource Management .................................................................... 21

4.1.7 Porter’s Generic Model .............................................................................................................. 21

4.1.8 Kenichi Ohmae’s 3 C’s Model ................................................................................................... 21

4.1.9 BCG Matrix Model .................................................................................................................... 22

4.2 The Findings ..................................................................................................................................... 22

Chapter 5: Proposed Solution to Problem ................................................................................................... 23

5.1 Alternative Solutions ........................................................................................................................ 23

5.2 Recommendations and Best-Fit Solutions ........................................................................................ 24

5.3 Implementation Plan ......................................................................................................................... 25

5.4 Limitations of the Study and Propose For the Future Research ........................................................ 26

References ................................................................................................................................................... 28

List of Figure

Figure 1: Entry Modes …………………………………………………………………………..13

Figure 2: The Warwick Model …………………………………………………………………..15

Figure 3: Harvard model of human resource management………………………………………16

Figure 4: Porter’s generic model ……………………………………………………...…………17

Figure 5: The BCG Matrix ………………………………………………………………………18

Executive Summary

Background

Business managers and CEOs are required to undertake decisions and implement

strategies that assist their firms in attaining competence. The increase in the number of

competitors and complicated nature of customers served requires a firm to be outstanding in

terms of quality of products and services offered. Nevertheless, a marketer that is able to build

strong brand equity can benefit from the expanding market opportunities in the domestic and

international markets. Pret A Manger applies unique strategy based on quality of food and

customer services hence able to reach to attain competitive advantage in United Kingdom.

However, with outlet outside the United King been located only in the United States and Hong

Kong, it implies that Pret has limited presence in the international market.

Brief Statement of the Problem

Pret A Manger started its operation in 1986 with the founders intending to offer

quality sandwiches which were absent in many of the food shops in London. The founders have

been able to develop the business idea into a strong brand driven by the quality of food offered

and outstanding customer services. The expansion in the UK market particularly in London is

undisputed, but due to lack of spacious premises for new shops, the CEO is thinking of a strategy

regarded as Twin Shops. The approach can assist in enhancing the economies of scale but can

compromise the quality of food and services. Besides, the company has a strong human resource

management approach based on effective recruitment, training, and empowerment and

compensation strategy.

Research Aims and Objectives

The aim of the current study is to identify the critical issues and provide possible strategic

recommendations to Pret A Manger’s CEO, Clive Schlee. Pret A Manger has succeeded in the

past but due to the dynamics in the contemporary world particularly the increased competition, it

is important to keep re-strategizing. The first objective of the study is to undertake analysis of

underlying issues in human resource management, strategic management, and

internationalization. The second objective is to analyse the issues using the relevant strategic

models.

Approach Adopted For Analysis

The research involves the analysis of the case study titles: Pret A Manger by Frei,

Goldberg and Sice (2015). Through the case study background and brief, the critical strategic

issues in international marketing, human resource management and strategic management are

identified and analysed using various models. The models involved include ACAS model,

international entry modes, Uppsala model, Harvard model of human resource management The

Warwick Model, PEST Analysis Model, Porter's generic, Kenichi Ohmae’s 3 C’s model, and

BCG growth matrix. Solutions are then suggested on how the identified problems would be

addressed.

The findings

The following are the key findings from the analysis:

 Pret A Manger should abandon the twin-shop strategy as it undermine is core values and

competence pillars

 The bonuses strategy adopted may not assist in optimizing the motivation of employees

 The company should invest to expand its presence in the international market

 The expansion should adopt a systematic approach as described in implementation plan section

Chapter 1: Introduction to the Case Study

1.1 Background to the Case Study

Pret A Manger Company started its operations in 1986, in London when its founders

Julian Metcalfe and Sinclair Beecham strived to bridge the market gap in the sandwich market.

This was after the two could not find sandwiches at the intended quality. The two were not only

friends by college colleagues, which made it possible for them to collectively come up with the

idea and seek to implement it. With the intention to make the idea into reality, the two borrowed

about £1,700 as the capital from which they acquired a business name, Pret A Manger, from an

entrepreneur whose business has become dormant, and opened the first outlet along Victoria

Street (Frei, Goldberg &Sice, 2015). The entrepreneurs did not want to establish just another

business but one with the focus on customer needs and competencies to succeed in the market.

From its inception, Pret A Manger focused on providing delicious, fresh and quality food items

served at promptly to safe on the customers’ time. In addition, the management have work on

strategies to ensure that the customers are served by a team of friendly and motivated staff.

Consequently, was not only able to attract a large pool of customers but also get the chance to

expand its operations; by the end of the 10

year, it had expanded into 100 shops (Frei, Goldberg

& Sice, 2015). It implies that it grew at an average of 1o shops per years.

As a result of the growth, the founders could no longer undertake all the managerial and

executive functions effectively, and control the operations of the entire business. This triggered

the deployment of Andrew Rolfe, as the CEO, in 1998. After several years as the CEO, Rolfe

the company reported losses for two years and he was fired in 2003 due to the poor performance.

In his replacement, Pret A Manger hired Clive Schlee as the new CEO, and Julian Metcalfe, one

of the founders resumed into powerful managerial decision making position as the Creative

Director to upgrade the performance of the firm. The chances in the managerial team lead to

significant progress in the performance of the company. Subsequently, the firm expanded its

business exponentially into 282 shops by 2011 (Frei, Goldberg &Sice, 2015). The 282 shops

been located in Britain, United States and Hong Kong, implies that the firm had already gone

international.

1.2 Statement of the Problem

Considering the number of outlets operated by the company up to 2011, it implies that the

company had in deed succeed since its foundation. However, it is important to highlight some of

the critical strategic decisions that have been trained but seemed to have failed. First, the

founders sold one-third of the company’s ownership to McDonald's in 2001 with the aim of

raising funds, to support its operations and expansion objectives (Frei, Goldberg &Sice, 2015). It

was agreed that McDonald's was to purchase the majority state of the business upon the

realization of the marketing objectives. The dream was not realized as McDonald’s ended up

selling up the stake because the expectations were not met. Secondly, Pret A Manger had

resolved into establishing joint ventures in Japan as a strategy to enter into the Japanese market.

Nevertheless, the strategy failure to enhance its international market performance forcing,

Schlee, the CEO to closed up to six shops operating in Manhattan and in Japan to refocus.

The company is also faced with several other strategic challenges that are likely to reduce

its performance currently and in the future. First, the firms is facing increasing competition

which is likely to affect the realization of its overall growth and marketing objectives. Secondly,

the executive led by the CEO seem to be confused on the expansion strategy to adopt.

According to Frei, Goldberg and Sice (2015), the CEO is yet to decide on whether to invest more

on the twin shops or to exploit opportunities in other regional and international cities. Thirdly,

there is the concern in that with the continued expansion, it would be uneasy to maintain the

quality and uphold the values of the organization. These are the problems among others in the

case the executive led by the CEO should address through the relevant strategies.

1.3 Research Questions

At the end the research through the findings and analysis, three questions are primarily

required to be addressed. The three essential questions for the study include:

i. What are the human resource management, strategic management, and

internationalization issues the management at Pret A Manger should address?

ii. What are the options the management should adopted to address the issues?

iii. What strategic recommendations can be adopted by the CEO to boost the competence of

the firm and support the realization of the corporate are long term objectives?

1.4 Research Aim and Objectives

Pret A Manger has succeeded in the past but due to the dynamics in the contemporary

world particularly the increased competition, it is important to keep re-strategizing. The aim of

the current study is to identify the critical issues and provide possible strategic recommendation.

Besides, the study aims at realizing the following objectives.

 Undertake analysis of underlying issues in human resource management, strategic

management, and internationalization

 Analysis the issues using relevant strategic models

 Use the strategic models in identifying the options and recommend on the best strategic

options to the CEO and the executive board

1.5 Importance of the Case Study

The significance of the case study analysis is the justification for time and resource spent

in the undertaking. In this case, the purpose of the study is to assist the CEO of Pret to

understand the strategic issues faced and the possible strategies to address them. The findings

and the analysis can also be used by managers in other firms to address similar issues.

1.6 Structure of the Report

The case study analysis will incorporate five chapters. The chapters 1, 2, 3, 4, and 5

include the introduction to the case study; the case brief; the problem statement and introduction

of the models; the analysis and findings; and the conclusion and strategic recommendations

respectively.

Chapter 2: Case Brief

Since its foundation by the owners in 1986, Pret has built a business empire amid

strategic challenges from time to time. The co-founders remained committed to steady growth

through expansion but the primary focus was on the quality of food and services. The ability to

expand from 1 to 100 shops within 10 years and then to 282 in 2011 is an indication that Pret is

growing into a potential multinational corporation. In fact, is has already entered the

international market through the United States and Hong Kong markets. The expansion in this

case has not been in vain, the revenues collected increased from £177.3 million in 2006 to

£281.6 billion in 2010. Besides, the operating income increased from £14.8 million in 2006 to

£32.0 million in 2010 (Frei, Goldberg &Sice, 2015).

Apart from the ability to expand, the performance of the company is defined by its co-

competences including the quality of food products, outstanding customer care and strategic

location of its outlets. Pret prepares and sell delicious, fresh and health food items including

sandwiches, salads, soups, pastries and coffee. Since the food items are cooked in it kitchens and

on demand, the quality is maintained and the service staff get the psychological strength to

market the food items they are involved in preparing.

The quality of service is enhanced by the quality and commitment of the employees. The

employees are empowered through training and internal promotions which entices them to

develop the necessary skills and corporate citizenship. Interestingly, the recruitment of new

employees is based on Pret’s values including passionate, clear-talking and team working. The

employees are prepared to courteously serve the customer, within the minimum time.

Consequently, customers are attended to within 60 seconds of entering into the shop which is

way below the time taken by clients to be served in competitors’ outlets (Frei, Goldberg &Sice,

2015).

The strategic location of the outlets is also identified as a critical competence of the firm

(Frei, Goldberg & Sice, 2015). The firm has internal real estate experts who assist in the

identification of premises in strategic locations. As a result, the shops are located in places that

are easily accessible to the target customers. The real estate experts have therefore played a

critical role in the growth of the number of outlets.

Twin Shops is a concept introduced in the case study as a strategy applied to some extend

at Pret, but not largely because of some concerns. According the concept, Pret is taking business

premises with relatively small space for the kitchen and customer service and outsource

sandwiches and other food items from another outlet. The use of the strategy has been triggered

by the desire to expand the business in London despite the saturation in real estate market. The

twin shop- strategy is considered to be advantageous due to the enhanced economies of scale.

The strategy would also assist to firm in realizing its expansion objectives. In addition, since the

two shops enjoined are managed by a general manage and assistance managers in the respective

markets, it assist in enhancing leadership development.

However, the twin-shop strategy is disadvantageous in two ways. First, its adoption

implies that Pret is concentration on the London market despite the saturation and high

completion in the market. Secondly, the strategy is against long term values and culture that has

assisted it is building a successful business engagement. The preparation of some food items

from other outlets and distributing them to the enjoined shops would compromise the quality of

food. In fact according to Frei, Goldberg and Sice (2015), the preparation of the food in the same

premises was one of the factors which attracted a large pool of customers to Pret’s outlets. The

shift into the proposed strategy may discourage many of the loyal and potential customers.

Management of the workforce is the other critical issues arising from the case study. A

part from the recruitment and training as described about, other issues including the turnover, the

buddy day and bonuses. Buddy days’ programs where every worker promoted or recruited to

work at the headquarters are assigned to work at one of the shops for a full day every six months.

Schlee, the CEO also participated in the program with the aim of motivating the employees

serving customers at the shops. The employees are offered bonuses based on mystery shopper

program and shop manager bonuses. The mystery shopper program involves the ratings by

customers based on services; the employees from the shops that are rated highly receive £1 per

hours for the week (Frei, Goldberg &Sice, 2015). The shop managers whose shops report

appealing improvement including year-over-year growth, mystery shopper scores, profit margin

and attractive shop inspection rates are awarded up to 30% of their basic salaries a bonuses. In

regard to employees’ retention, it is evident that the industry has a turnover of 300% per year,

but it is 60% at Pret. It implies that employees at Pret have developed stronger corporate

citizenship compared to other industrial players.

Chapter 3: Problem Statement and Analysis Models

3.1 Problem Statement

From the case background, the issues identified can be categorised into human resource

management, strategic management, and internationalization (Ramsey & Duhe, 2010). Regarding

the human resource management issues including annual turnover of 60% annually, employees

been not well informed of the twin shop strategy and weaknesses in the bonuses approaches are

the identified (Frei, Goldberg &Sice, 2015). Strategic management issues revolve around the

involvement of the twin shop strategy, the increasing competition in the market and the exit of

MacDonald’s are strategic partner. The internationalization strategy of the company is poor

considering the closure of outlets in Japan and Manhattan, the concentration of operations in the

United Kingdom and the limited presence in the international market.

3.2 The strategic models

3.2.1 International marketing models

i. PEST Analysis Model

The model focuses on the political, economic, social and technological factors likely to

influence performance of a firm in a foreign market (Faarup, 2010). The political factors including

the civil stability, the policies of the government and the legal framework influencing the

operations of a business should be considered. The economic environment concerns the

economic development and growth and the purchasing power of the target customers, which are

likely to affect the sales volume of the company. The social component regards to factors such as

the cultural attributes of the foreign market and the population demographics. Lastly, technology

as an element of the model involves the assessment of whether the technology required by a firm

is available or can easily be introduced to support the operations. A marketer interested in any

foreign market, it is critically important to have all of the components analysed.

ii. International Entry Modes

The international entry modes are the strategies adopted by an organization to enter into

an international market and have its products/services sold (Tema, 2010). A company can export

direct or indirectly to the target market (see Figure 1 below). It can also adopt joint venture,

merger and acquisition, or undertake a Greenfield investment by constructing a business from

scratch among other approaches. The mode selected should however be done in consideration

with the nature of the products or services, the size of the market and the future prospects.

Figure 1: Entry Modes

Source (Tema, 2010)

iii. Uppsala model

The Uppsala model advanced for phased implementation of internationalizations strategy.

The objective of the use of the model is to ensure that a firm does not take significantly high risk

levels in a foreign market it is not sure of its potential. The model advocate for limited

investment at first, then expand operations through expansion. In the end, a firm successfully

exploits the potential from an informed point of view.

3.2.2 Human Resource Management Models

i. ACAS model

The model advocates for fair treatment of employees in an organization as a means to

motivate them for the best outcome (Griffin, 2011). Fairness in this case constitute of a number

of aspects. First, the employees should be paid competitively as reward for the role they play in

an organization. Secondly, the model proposes that there should be a formally known

disciplinary policy, opportunity to raise grievances applied equally for all. Lastly, there must be

organizational goals and supportive mechanisms to assist the employees realize the objectives.

ii. The Warwick Model

The model holds that the management of human resources should comprehensively

incorporate the outer and inner contexts, as well as the business strategy and human resource

management contexts (Griffin, 2011). The outer context regards to the social-economic,

technical, and competitive aspects, which the inner context include the culture, structural and

leadership factors in the organization (See Figure 2). The business strategy context incorporates

aspects such as the objectives, market and tactics, and the HRM context including roles,

organizations and expected output. The model therefore recognizes the role of both the internal

and external in effective human resource management decisions and strategy. The consideration

of all of the factors would effectively assist in the establishment of team of highly skilled,

motivated and committed employees.

Figure 2: The Warwick Model

Source (Aswathappa, 2013)

iii. Harvard model of human resource management

The model considers human resource management as an input with the objective to

realize outcomes for long term consequences. The HR policies including the reward system and

workflow system should be done in consideration of the stakeholders’ interests and situation

factors. The stakeholders identified include shareholders, employees, community, and trade

unions. The situational factors include workforce characteristic, operating conditions, labour

market and legal provisions (See figure 3 below). According to the model, HR management put

into consideration of all the factors lead to appealing outcomes in terms of competence,

commitment and congruence to the duties and responsibilities.

Figure 3: Harvard model of human resource management

Source (Neha, 2015).

3.2.3 Strategic Management Models

i. Porter’s generic model

According to the model a firm can adopt a cost leadership, differentiation or focus

strategy. The cost leadership strategy involves putting in place systems and strategies to enhance

efficiency and reduce the cost of providing goods and services below the industrial average. As a

result of the strategic approach, the firm is able to sell its outputs at below average price hence

attracting price conscious customers. Under the differentiation, a firm incorporates additional

and unique features in the products/services compared to its competitors (see Figure 4 below).

Such features attract a large pool of customers despite the fact than the prices charged would be

above the market average. The focus strategy is adopted when a firm puts its attention on a given

market section/segment and develop products and services meeting their needs.

Figure 4: Porter’s generic model

Source (Kreitner & Cassidy, 2011)

ii. Kenichi Ohmae’s 3 C’s model

The model holds that a business strategy should put into consideration three aspects

including corporate, customer and competitors. For company to gain competitive advantage the

available resources should be invested effectively to satisfy the customers and minimize the

impact of competitive rivalry. Consequently, the corporate benefits from relatively high revenue

and income level, as a way of realizing strategic objectives.

iii. BCG Matrix Model

According to the model, a strategic decision in an organization can be influenced by the

business growth rate and market share; the model is animated (see figure 5 below). A star

characterising an organization or product whose both the growth and market share are high. A

question mark is applied to denote an organization or a product with a low market share amid the

high market growth rate. It is regarded as a question mark because the management should

investigate the reasons for the low market share at the time when the market opportunities

expand. A product or a firm characterised with a low growth and high market share is denoted as

a cow. The strategy appropriate in this case is the optimization of sales and gets the best because

the market is likely to move into a decline. Lastly, a firm/product animated as dog has low

growth and market share; according to the model, the best thing is to liquidate.

Figure 5: The BCG Matrix

Source (Value Based Management.Net, 2016)

Chapter 4: Analysis and Findings

In Chapter 4, the focus on the analysis of the issues identified at using the nine strategic

models discussed in the previous chapter. The chapter has two sections including the analysis

using the models and the presentation of the research findings.

4.1 The Analysis Using the Models

4.1.1 PEST Analysis Model

The application of PEST analysis assists a firm in entering into a foreign market with

favourable marketing environment. The closure of the joint venture shops by Pret A Manger in

Japan and Manhattan implies that the business environment in those markets was not favourable

and that the management might have underestimated some of the factors hence the business

failure (Griffin, 2011). However, the markets in Hong Kong and the United States seem to have

favourable political, economic, social and technological environment hence the success. The

company should therefore continue expanding markets in the two markets, and apply PEST

analysis to evaluate any other markets its targets in the future.

4.1.2 International Entry Modes

The international entry modes adopted determines how successful a marketer would be as

long as the business environment is favourable. The use of joint venture seems to have not

worked for Pret in the Japanese market. On the other hand, it seems that in the United States and

Hong Kong, the management (at Pret) is in full controls of the operations. The entry mode used

is likely to be establishment of subsidiaries the two markets. The mode is particularly appropriate

because it gives Pret the opportunity to maintain the quality of the food service, uphold its values

and learn about a foreign market.

4.1.3 Uppsala Model

From the case believe, it is evident that Pret A Manger failed in totality in the Japanese

market through joint ventures. It implies that the company had reservations in the market and

could not invest on fully controlled subsidiary in the market. With the minimized investment

through the joint venture, it was clear that the market was not favourable hence there was no

need to continue or expand operations in the market. The Uppsala model seems to have played a

role in this case. However, since Pret A Merger has learnt a lot about the marketing environment

in Hong Kong and the United states, it would be noble to embark on massive investment to

optimize on the markets.

4.1.4 ACAS model

Based on the ACAS Model, it is clear that Pret A Manger has put in place strategies to

enhance fairness and uphold the value of the employees. First, Pret’s employees have the

opportunity to play a role in critical decision making particularly in regard to the selection of job

applicants. Secondly, the internal based promotion is a strategy adopted to empower the long-

serving and committed employees. Thirdly, the employees are offered relevant training to assist

them undertake their duties and responsibilities without undue struggle due to insufficient

knowledge and capabilities. Besides, in addition to the basic play and allowances, it is clear the

Pret offers bonuses to rewards the best performances. Nevertheless, the strategies adopted in the

determination of the bonuses including mystery shoppers and shop performances may be

subjective rewarding some and leaving others.

4.1.5 The Warwick Model

The model advocates for the incorporation the outer and inner contexts, as well as the

business strategy and human resource management contexts. Management at Pret A Manger

seems to have learnt the art of putting into consideration all the contexts in the management of

the human resource. The recruitment process is based on the corporate culture; training is offered

to assist in enhancing the ability and commitment of the employees. Promotion from within

implies that the internally developed capabilities are put into consideration to facilitate growth

and development aspirations of the customers. However, lack of adequate knowledge about the

concept of twin shops among some of the employees implies that there are some disconnect

between the corporate strategy and the management of the employees.

4.1.6 Harvard Model of Human Resource Management

In the bid to trigger supportive and appearing human resource outcomes such as

commitment and competence, there are a number of strategies adopted at Pret. The management

have clear compensation system for the salary and allowances and to add the bonuses to both the

shop attendants and the managers (Hiriyappa, 2013). Besides, to ensure that there is congruence

between the employees and duties assigned, the recruitment and training are highly upheld. The

management of the employees is also supportive to the long term well-fair and stability of the

organization particularly due relatively low turnover compared to other players in the industry.

4.1.7 Porter’s Generic Model

The porter’s generic model assists in the revelation that Pret adopts a differentiation

strategy. In addition to sandwiches, the company has other range of products offering to

customers with different tastes and preferences which rules out the use of focus marketing

strategy. The preparation of the food items in each and every shop with the aim of enhance

quality implies that Pret is not interested in cost leadership. However, the focus on the quality of

food and the outstanding customer service implies that Pret is ascribed to differentiation strategy.

4.1.8 Kenichi Ohmae’s 3 C’s Model

Pret A Manger put into consideration the corporate, customer and competitors in making

strategic decision. For example, upon the two years of consequent loss, the CEO in charge was

fired to safeguard the performance and stability of the firm (Newth, 2012). The focus on quality food

and reduced time of service implies that the company is focused on the customer needs and

expectations. In regard to competitors, the company has invested to offer better customer

experience by learning from the weaknesses of the competitors. The only issue is that the firm

has not been able to expand its operations into the international market like some of its

competitors including Tesco, Sainsbury, Waitrose, and Marks & Spencer.

4.1.9 BCG Matrix Model

Based on the BCG matrix, Pret A Manger, its products and services can be said to be a

star (Newth, 2012). The case brief reveals that its revenue is on an upward growth while the market

share is potentially growing at the 15% of the increase in the number of outlets. However,

considering the huge unexploited international market, the management should upgrade their

growth and expansion strategy in foreign markets. In London, the company should make its

brand cash-cow because there is limited room for expansion in the city.

4.2 The Findings

From the analysis, there are three issues that seem to be of significant important and may

require application of relevant strategies to boost the competence of the company (Henry, 2011).

First, it is clear that the bonus strategy adopted is not effective in creating harmony and

motivating all the employees equally. In fact, the approach may end up rewarding the best

performers based on ratings that could be subjective particularly the mystery shoppers. Many of

the committed, hand working and performing employees may miss the bonuses just because of

negative perceptions of some of the shoppers. In addition, the performance of a shop could be

influenced by a number of factors such as space and location; hence the bonus offered to the

managers may not reflect the true performance based reward to shop managers. It is therefore a

clear finding that the bonus reward system at Pret needs to be re-designed.

Secondly, it is clear that the twin shop’s strategy is not an appropriate strategy. If

adopted, the strategy can enhance the efficiency of operations, but the brand equity tagged on

quality would not be guaranteed. The employees in the shops outsourcing the food items would

lose the psychological confidence when serving the shoppers. The strategy should therefore not

be used as an expansion strategy.

Thirdly, it is the finding from the analysis that despite the strong brand equity and the

huge potential in the international market. In fact, the company has concentrated in the local

market with limited expansion even in markets such as the United States and Hong Kong, which

have proved to be of significant potential. Therefore, it is the finding of the analysis that the

management should embark on internationalization expansion.

Chapter 5: Proposed Solution to Problem

The findings from the previous sector identify the issues that should be addressed to

enhance the competence of the firm. Through the application of the strategic models, it is

appropriate to offers suggestions on the option that the CEO may have at hand. The best options

would be recommended and implementation plan put in place. In addition, the evaluation of the

research and recommendation to enhance the quality of the future research provided.

5.1 Alternative Solutions

Each of the three issues identified may be addressed through the relevant strategies.

Regarding human resource management, the compensation and reward through the bonuses as

designed should be re-designed (Henry, 2011). In this case, all the employees and managers

should be give bonuses based on the financial performance of the organization. For instance, at

the end of every six months a certain percentage of interim income should be given as bonuses.

However, the current rating system should be retained but the reward for the best performers

should be non-monetary. For instance, recognition, dinner and possibly annual tour for the

outstanding performers can be effective non-monetary rewards to the employees and managers.

Secondly, the CEO should abandon the twin shop strategy because it may lead into loss

of corporate values and culture which have assisted the firm in gaining competence so far.

Instead, the firm should look for other alternatives including the acquisition of premises and

businesses of small scale firms whose business possesses spacious food shops.

The third option is that Pret A Manger should increase its internationalization to increase

its international presence in the United States and Hong Kong among others countries. In the

two foreign countries where operations have already been established, there is the need to

increase the number of shops to benefit from the economies of scale. Besides, the CEO should

undertake market research in various countries to determine the ones whose business

environment would be viable. For instance, there are upcoming economies in Africa, Asia and

Latin America whose markets are expanding rapidly and political stability realized contrary their

perceived history. For the countries that would be selected, the firm should invest in fully owned

subsidiaries to assist it to uphold its values and culture.

5.2 Recommendations and Best-Fit Solutions

A company may not succeed in implementing all the strategic options that are at hard at

the same time because to constraint in resources (Henry, 2011). The best fit solution should

therefore be adopted within the limits. However, considering the nature of the options, Pret A

Manger can implement the reform in the compensation strategy and internationalization at the

same time. The reform in the bonus system would assist in motivating a wider range of

employees at probably the same cost to the organization. The motivation based on shop and

personal performance would not be affected because the current rating system would be

maintained (Hiriyappa, 2013). It is therefore recommended that the system should be

restructured and implemented in the coming financial years.

The expansion in the international market is the best approach to enhance the market

share of the company. It would also be a means of risk diversification such that the decline in

performance in the U.K market would be diluted by the performance in other markets. In the

European region, Pret A Manger should target markets such as Germany, Spain, and France

among others. In Africa, countries such as South Africa, Nigeria and Morocco among other are

likely to be appropriate targets. In Asia markets such as China and India have significant

potential to be exploited. In Latin America, Brazil is identified as a potential market to

implement the internationalization strategy. Considering the high quality of food items offered

and outstanding services, the subsidiaries in foreign markets are likely to attractive a wide range

of customers resulting into growth in revenue and profits earned. In addition, in developing

economies, the company is likely to be accorded valuable support by the governments to boost

job creation.

5.3 Implementation Plan

The proposed market expansion in the international markets should be implemented

systematically. From the recommendations, there are several countries considered to be attractive

for the firm, but since it is not possible to enter into all the countries at the same time, the best

ones should be given the priority. It implies that the implementation should start with market

research to facilitate the selection of the best countries to enter and cities within the market with

the greatest potential. Models such as PEST analysis and international entry modes should be

applied in the comparative analysis to determine the best markets. Considering the intensity of

the research required, Pret A Manger should take up to 6 months. Subsequently, the management

should take another 1 month to analyze the findings and select the best markets. Based on the

number of countries selected, business plans for each of the markets should be formulated in a

span of 1 month depending on the size of the subsidiaries. The next step would be to use the

business plans to seek approvals from the shareholders and funds from the financial partners; this

should take another month.

The next step after the approval is the preparation to set up operations. The first step in

this phases it to acquire permits and licenses from the respective authorities to ensure that before

investing in the foreign market, the government agencies have accorded the required approval.

The second step in this phase is the acquisition of the premises from which the shops are to be

set. The best option in this case is to enter into long term lease rather than buying land and

constructing own premises. The premises would then be renovated to the appropriate layout as

per Pret A Manger’s standards. This phase should be undertaken con-currently in the respective

countries and is expected to take up to 4 months. With the ready premises, the management will

acquire the necessary equipment, furniture and fixtures. Subsequently, the company will recruit,

training and deploy employees into the respective work stations to undertake corresponding

duties and responsibilities. The activities are expected to take up to two months. The shops will

be opened to operate for 2 months upon which they will be launched. From the plan discussed, it

may take up to 17 months for the expansion to be effected.

5.4 Limitations of the Study and Propose For the Future Research

Despite the fact that the study through the case study analysis assisted in the realization

of the research objectives, it is not in exception of limitations. It is noble to identify some of the

limitations and proposed on how future researchers could enhance their research on the same or

similar scenarios. The first limitation is that the information about the company involved was

restricted to the case study hence the information and data involved may not comprehensively

represent the state of the firm. In fact, the data on financial and number of shops from the case

study were up to 2011, which implies that they are not up to the most recent; the data have

changed significantly between 2011 and 2016. The second limitation is that the research was

depended on secondary sources which may not contain the most current expert opinion on the

research problem. From the limitation, it is suggested that the future researchers should

undertake both the secondary research through the analysis of a case study and primary study by

incorporate survey or interviews. The two approaches would complete one another to boost the

quality of the findings.

References

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Kreitner, R., & Cassidy, C. (2011). Management. Mason, OH: South-Western Cengage.

Value Based Management.Net (Jan 6, 2016). BCG Matrix Model. Retrieved from:

http://www.valuebasedmanagement.net/methods_bcgmatrix.html

Aswathappa, K. (2013). Human resource management: Text and cases. New Delhi: McGraw

Hill Education.

Griffin, R. W. (2011). Management. Mason, OH: South-Western Cengage Learning.

Henry, A. (2011). Understanding strategic management. Oxford: Oxford University Press.

Hiriyappa, B. (2013). Corporate Strategy: Managing The Business. AuthorHouse.

Frei, Goldberg & Sice (2015). Pret A Manger.

Tema F (2010). Entry Modes in International Business. Retrieved from:

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international-business.html

Faarup, P. K. (2010).

The marketing framework

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a dynamic environment. International Journal of Commerce and Management, 20(2), 188-190.

Newth, F. (2012).

Business Models and Strategic Management: A Modular Approach

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