«Chick-Fil-A in France» - Free Essay Paper
With globalization, the markets for businesses are no longer limited to their home country. Restaurant chains that have been successful in the USA have started expanding their presence across the world. Chick-Fil-A, which is one of the most popular fast food chains in the US, is one of the restaurants looking for a possibility of global expansion.
France has a diverse population, and over the years, it has seen a growing demand for American food. The business environment and the culture in France are quite similar to that of the US, and the company should not find it difficult to operate there. In addition, the French government has been supportive of international businesses and encourages them to operate in the country both independently and using a franchising model. This paper explores the prevailing conditions in France, their difference from those in the US, and chalks out a suitable plan of action that Chick-Fil-A should take to begin its operations in France.
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Background of Chick-Fil-A and France
When Truett Cathy started a small restaurant under the title Dwarf Grill in 1946, he had not envisaged that someday, it would become the second largest fast-food chicken restaurant chain in the US. In the 1960s, the restaurant was reinvented as Chick-Fil-A, the name with which it gained the nation-wide popularity. The restaurant specializes in chicken sandwiches and other fast food items. From opening its first restaurant in Atlanta in 1967 to 1700 outlets in 39 states across the US in 2012, Chick-Fila-A has witnessed exponential growth, and as of 2012, it had the annual revenue of over $4.6 billion (Chick-Fil-A, 2014).
Since 1987, the company started practicing franchising as a method of expansion. However, its franchising method is different from what the other players in the industry practice. Chick-Fil-A selects a location, builds a restaurant, retains its ownership, and only ranchises out the operation of the restaurants (Franchise Direct, 2014).
Europe, especially France, is a new market that Chick-Fil-A could enter and benefit from. France is the largest market in Europe for franchising. The economy is mature, and the market is highly competitive. However, there is great scope for new business concepts and models to grow in France (Faria, 2014).
Cultural Influences on Business
France has a population of over 65 million of which over 4 million are foreign residents from all across the world (Passport to trade, 2014). The culture is diverse and so are the tastes and preferences of the people living there. France is a prominent member of the EU and the currency used is Euro. Businesses follow Anglo-Saxon practices and like in the US, business values are based on centralization, individualism, and uncertainty avoidance (Global Alliance of SMEs, 2014). Flexibility is limited in public sector organizations, and they are bound by administrative norms and rules. Business culture prefers vertical hierarchies.
Economic and Legal Influences on Business
The economy of France, like that of the US, is strong and the market is open (Heritage Foundation, 2014). The process of business start-up is relatively easy and requires minimal capital investment. The country is also open to the franchising system, which will make Chick-Fil-A’s entry into the country easier. France has price controls in place for several products and services. Laws for protection of property rights are well made and enforced. This makes operation of international businesses hassle-free and less stressful because they know that their rights are protected and that they can take legal action against copyright or property right infringement.
Political and Government Influences on Trade/Business
The French government dominates the major sectors of the economy, but ffreedom of business and trade is still relatively high. This encourages new businesses to start operations and expand. For foreign companies like Chick-Fil-A that are planning on starting operations in France, the high level of control that they will be able to exercise on their franchises or business boosts their confidence. The government maintains an overall control but does not interfere in the operations. New businesses are encouraged and the government supports international players operating in France.
Involvement in International Organizations
Like the US, France too is actively involved in international organizations like World Trade Organization (WTO), World Bank Group (WBG), International Monetary Fund (IMF), etc. (EMEA Finance, 2009). This gives businesses a higher degree of control on the international markets, provides a platform for their issues or problems to be redressed, and makes trade easier and less risky.
Globalization has led to opening of the French market to both imports and exports. The economic strategies are favorable to potential exporting countries and import tariffs are low. It is easy for a foreign company to operate in France due to the high level of business freedom that it is granted. Growing diversity, spreading of “global” taste, and changing lifestyle of people in France have increased the demand for the US food products and imports have increased (Collette, 2014). France is also the ninth largest supplier of imported goods to the US, and so the balance of trade is effectively made.
The fact that French people already have a taste for American food will make the success of Chick-Fil-A easier in the country. Already, international food chains like McDonald’s, Popeye’s Louisiana Kitchen, Inc., and YUM! Brands, Inc. derive a huge portion of their revenues from international markets outside of the US (Stock Analysis on Net, 2014).
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