Internal Analysis and Implementation of Sonic Drive In
Strategic goals and objectives
Sonic Drive In has several strategic goals. The main strategic goal of this company is to become or maintain its position as the leading restaurant operator in all the markets over the globe (Witzel, 2002). In addition, one of its key objectives is to maintain high level of satisfied customers and to increase the number of customers it has. Sonic Drive In does several things in order to ensure that it achieves these objectives. It has expanded its stores to many states within the United States. This helps it to achieve its goal of becoming a leading restaurant operator. Moreover, it uses its drive in concept that is unique to attract and retain customers. Its menu offers a wide range of products, therefore making consumers satisfied with the products that it offers.
Another key strategic goal of Sonic Drive In is to maximize the level of shareholders earning. It adopted the capital management strategy to help it achieve this goal. Sonic Drive In aims at increasing the earnings per share of all its outstanding shares by using its capital management strategy (Russel & Cohn, 2012). In addition, the managers of this company always concentrate on maximizing the share price of its stock. It adopted multi-layered growth strategy in an attempt of increasing its shareholders earnings. In this strategy, the management spends many funds to advertise the products that are in Sonic Drive In menu. It helps to boost the share prices of the stock of this company. Extensive marketing also helps it to build its brand.
Company strengths and Weaknesses
Sonic Drive In has several strengths. It has a brand that is already established. When customers want to order goods from this restaurant, they first drive into a ‘drive in space’ owned by this company (Witzel, 2002). After this, they place their orders through an intercom speaker. A carhop then delivers the food to the customers. If Sonic Drive In introduces this brand to China, consumers will be willing to purchase the products that this restaurant offers. Sonic Drive In also has a strong brand portfolio. It offers a wide range of foods where consumers can choose. Such foods include tater tots, hand-battered onion rings, wraps, hamburgers, sandwiches and cherry limeades. It shows that the consumers from China will have a wide selection of food to choose from. This will help in boosting the amount of revenues that Sonic Drive In earns. In addition, if one of the foods that Sonic Drive In offers in China performs poorly, the company will have other brands to sell to the consumers. It will therefore diversify its risks. Sonic Drive In also has good marketing campaigns that are conducted by the marketing department of this company. In 2009, Sonic Drive In spent $ 184 million in media marketing campaigns. This helped to improve the number of consumers seeking the services offered by Sonic Drive in. It proves that the strong marketing campaigns that this company contributes will be used to woo the consumers seeking fast food products in this country.
Sonic Drive In also earns high revenues. In the financial year ended 2009, it reported revenues of $718.8 million. However, these revenues reduced to $546 million in the financial year that ended 2011 (Russel & Cohn, 2012). It shows that Sonic Drive In has enough revenues to finance the acquisition of assets to be used in the new restaurants located in China. Sonic Drive In also has skilled laborers. Some of these laborers may be taken to China so that they help in serving consumers of this country. It will help in improving the level of consumer satisfaction since this company will offer quality services to its customers.
Sonic Drive In will experience several weaknesses when it starts its operations in China. One of the key weaknesses is that it does not offer local Chinese food. It will therefore find it hard to compete with the already established businesses offering Chinese food in this market. In addition, most people in China are adopting the trend of consuming healthy foods (Andexer, 2008). It shows that the sales of Sonic Drive In will not be that high, since it offers fast foods which are mainly considered junk food.
Sonic Drive In could adopt several market entry strategies while expanding into China. These strategies include:
A joint venture is established when two companies combine their resources to form a third independent company owned by the two companies. The two companies share revenues and expenses incurred by the new company. There are certain advantages of establishing a joint venture. One of the main advantages is that the two companies share the risks that may incur in foreign markets (Andexer, 2008). Moreover, the two companies contribute capital and this will help to increase the capital base of the joint venture.
In terms of exporting, a firm may opt to export directly to consumers or indirectly using agents and distributors. A firm chooses direct exporting if it is familiar with the market. If a firm is not familiar with business practices and regulatory requirements of a foreign market, it may opt to work with distributors and agents (Tielman, 2010). An agent works on behalf of a company seeking to expand into international markets in order to sell products of this company into a particular chosen foreign market. In exchange, the agent earns a commission.
In a franchising agreement, a franchisee pays fees to a parent company known as the franchiser in exchange for rights of being identified with the trademark of selling the products and services of a franchiser (Andexer. 2008). A franchiser offers the franchisee rights such as right to use managerial systems of the franchiser and operations systems.
Foreign Direct Investment
A firm may choose to adopt this strategy in order to penetrate foreign markets. In this strategy, a firm purchases another local firm in the foreign country or starts its operations from scratch. Most companies prefer foreign direct investments to franchising or licensing since the company retains strategic control after adopting this strategy.
I would recommend Sonic Drive In to adopt foreign direct investment. Sonic Drive In will have the overall control of its restaurants in China. It will therefore be easy for the management to make quick decisions since it will not need to consult another party (Andexer, 2008). Sonic Drive In will also have direct contact with its customers if it adopts foreign direct investments and this will help it improve the level of consumer satisfaction in China. If it adopts foreign direct investments, it will increase the number of job opportunities in China. Consumers will therefore view it as a socially responsible company therefore increasing its sales.
Sonic Drive In should do several things in order to ensure that the product that it offers adapts to the Chinese markets. One of the key things is introducing local Chinese food in its menu. Such food include Honey Walnut Shrimp. This dish contains fresh tempura shrimp mixed with honey sauce and walnuts. It could also consider introducing stinky tofu and doufulu dishes in its menu. Another key thing that Sonic Drive In could do to make its products adapt to the Chinese market is to conduct extensive marketing campaigns in the country. It will help consumers to be aware of the products that Sonic Drive In offers to its consumers. This will also help Sonic Drive In to deal with the high competition that is common in the fast food industry (Andexer, 2008). The advertisement should be done in Chinese and contain key media personalities from China. Sonic Drive In could also consider changing the packaging of its products. Information on the packages should be written in Chinese.
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