KSU Shake Shack Fast Food Restaurant & Disneyland in Europe Case Questions see the file you will all informatin you need
this is the first case only you will find the rest in the file
Case 1: Shake Shack
When famed fine-dining restaurateur Danny Meyer opened a hot dog cart in New York City’s Madison Square Park in 2001, the venture drew legions of customers curious to experience Meyer’s take on all-American street food. The curious became the committed and Meyer’s little experiment acquired a permanent structure in the park – the Shake Shack. The Shack regularly drew long lines, leading Meyer to build a company around the concept. In a few years, Shake Shack expanded to a chain of burger restaurants in the United States and licensed outlets internationally.
Meyer sought to differentiate Shake Shack from the long tradition of burger joints and chains that dotted the American landscape. First, Shake Shack was committed to high quality ingredients and efficient operations in each of its eateries. Secondly, the company selected high traffic locations and designed each outlet to fit into its chosen locale. Finally, Meyer wanted Shake Shack employees to create culture of hospitality that welcomed each customer as if Shake Shack was a fine-dining establishment, rather than a burger joint. As of 2015, the formula seemed to be working. Shake Shacks developed a devoted fan base in each of their locations. New Shake Shack locations were greeted by enthusiastic fans who cheered the opening of the operations in their neighborhoods. But the fine casual dining market space in which Shake Shack was operating was becoming increasingly crowded. Competition was fierce among the various chains and concepts. Could Shake Shack hold its own against this legion of rivals?
At least initially, investors seemed to believe that Shake Shack could. The company went public on January 30, 2015 with shares listed on the New York Stock Exchange (NYSE). Opening day investors bid up the $21 per share offering price by 118% to reach $45.90 at closing bell. By the end of May, investors were paying $92.86 per share. But observers wondered if this price represented a realistic valuation of the enterprise.
Questions (8 Marks)
1.What do you think major succeed factors helped Shake Shack to grow rapidly?
2.Explain in depth the international strategy that used by Shake Shack?
Total: 400 words. PRPJECT
MGT 300
Dear student, this assessment has a total grade out of 40. It contains 4 different
sections, you’ve to answer each of them without references.
Dr. Majed Asiri
International Business
Case 1: Shake Shack
When famed fine-dining restaurateur Danny Meyer opened a hot dog cart in New York City’s
Madison Square Park in 2001, the venture drew legions of customers curious to experience
Meyer’s take on all-American street food. The curious became the committed and Meyer’s little
experiment acquired a permanent structure in the park – the Shake Shack. The Shack regularly
drew long lines, leading Meyer to build a company around the concept. In a few years, Shake
Shack expanded to a chain of burger restaurants in the United States and licensed outlets
internationally.
Meyer sought to differentiate Shake Shack from the long tradition of burger joints and chains that
dotted the American landscape. First, Shake Shack was committed to high quality ingredients and
efficient operations in each of its eateries. Secondly, the company selected high traffic locations
and designed each outlet to fit into its chosen locale. Finally, Meyer wanted Shake Shack
employees to create culture of hospitality that welcomed each customer as if Shake Shack was a
fine-dining establishment, rather than a burger joint. As of 2015, the formula seemed to be
working. Shake Shacks developed a devoted fan base in each of their locations. New Shake Shack
locations were greeted by enthusiastic fans who cheered the opening of the operations in their
neighborhoods. But the fine casual dining market space in which Shake Shack was operating was
becoming increasingly crowded. Competition was fierce among the various chains and concepts.
Could Shake Shack hold its own against this legion of rivals?
At least initially, investors seemed to believe that Shake Shack could. The company went public
on January 30, 2015 with shares listed on the New York Stock Exchange (NYSE). Opening day
investors bid up the $21 per share offering price by 118% to reach $45.90 at closing bell. By the
end of May, investors were paying $92.86 per share. But observers wondered if this price
represented a realistic valuation of the enterprise.
Questions (8 Marks)
1. What do you think major succeed factors helped Shake Shack to grow rapidly?
2. Explain in depth the international strategy that used by Shake Shack?
Total: 400 words.
Case2: Disneyland in Europe
Between 1988 and 1990 three $150 million amusement parks opened in France. By 1991 two of
them were bankrupt and the third was doing poorly. Despite this, the Walt Disney Company went
ahead with a plan to open Europe’s first Disneyland in 1992. Far from being concerned about the
theme park doing well, Disney executives were worried that Euro Disneyland would be too small
to handle the giant crowds. The $4.4 billion project was to be located on 5,000 acres in Seine-etMarne 20 miles east of Paris. And the city seemed to be an excellent location; there were 17 million
people within a two-hour drive of Euro Disneyland, 41 million within a four-hour drive, and 109
million within six hours of the park. This included people from seven countries: France,
Switzerland, Germany, Luxembourg, the Netherlands, Belgium, and Britain. Disney officials were
optimistic about the project. Their US parks, Disneyland and Disneyworld, were extremely
successful, and Tokyo Disneyland was so popular that on some days it could not accommodate the
large number of visitors. Simply put, the company was making a great deal of money from its
parks. However, the Tokyo park was franchised to others—and Disney management felt that it
had given up too much profit with this arrangement. This would not be the case at Euro Disneyland.
The company’s share of the venture was to be 49 per cent for which it would put up $160 million.
Other investors put in $1.2 billion, the French government provided a low-interest $900 million
loan, banks loaned the business $1.6 billion, and the remaining $400 million was to come from
special partnerships formed to buy properties and to lease them back. For its investment and
management of the operation, the Walt Disney Company was to receive 10 per cent of Euro
Disney’s admission fees, 5 per cent of food and merchandise revenues, and 49 per cent of all
profits. The location of the amusement park was thoroughly researched. The number of people
who could be attracted to various locations throughout Europe and the amount of money they were
likely to spend during a visit to the park were carefully calculated. In the end, France and Spain
had proved to offer the best locations. Both countries were well aware of the park’s capability for
creating jobs and stimulating their economy. As a result, each actively wooed the company. In
addition to offering a central location in the heart of Europe, France was prepared to provide
considerable financial incentives. Among other things, the French government promised to build
a train line to connect the amusement park to the European train system. Thus, after carefully
comparing the advantages offered by both countries, France was chosen as the site for the park. At
first things appeared to be off to a roaring start. Unfortunately, by the time the park was ready to
open, a number of problems had developed, and some of these had a very dampening effect on
early operations. One was the concern of some French people that Euro Disney was nothing more
than a transplanting of Disneyland into Europe. In their view the park did not fit into the local
culture, and some of the French press accused Disney of “cultural imperialism.” Others objected
to the fact that the French government, as promised in the contract, had expropriated the necessary
land and sold it without profit to the Euro Disneyland development people. Signs reading “Don’t
gnaw away our national wealth” and “Disney go home” began appearing along roadways. These
negative feelings may well have accounted for the fact that on opening day only 50,000 visitors
showed up, in contrast to the 500,000 that were expected. Soon thereafter, operations at the park
came under criticism from both visitors and employees. Many visitors were upset about the high
prices. In the case of British tourists, for example, because of the Franc exchange rate, it was
cheaper for them to go to Florida than to Euro Disney. In the case of employees, many of them
objected to the pay rates and the working conditions. They also raised concerns about a variety of
company policies ranging from personal grooming to having to speak English in meetings, even if
most people in attendance spoke French. Within the first month 3,000 employees quit. Some of
the other operating problems were a result of Disney’s previous experiences. In the United States,
for example, liquor was not sold outside of the hotels or specific areas. The general park was kept
alcohol free, including the restaurants, in order to maintain a family atmosphere. In Japan, this
policy was accepted and worked very well. However, Europeans were used to having outings with
alcoholic beverages. As a result of these types of problems, Euro Disney soon ran into financial
problems. In 1994, after three years of heavy losses, the operation was in such bad shape that some
people were predicting that the park would close. However, a variety of developments saved the
operation. For one thing, a major investor purchased 24.6 per cent (reducing Disney’s share to 39
per cent) of the company, injecting $500 million of much needed cash. Additionally, Disney
waived its royalty fees and worked out a new loan repayment plan with the banks, and new shares
were issued. These measures allowed Euro Disney to buy time while it restructured its marketing
and general policies to fit the European market. In October 1994, Euro Disney officially changed
its name to “Disneyland Paris.” This made the park more French and permitted it to capitalize on
the romanticism that the word “Paris” conveys. Most importantly, the new name allowed for a new
beginning, disassociating the park from the failure of Euro Disney. This was accompanied with
measures designed to remedy past failures. The park changed its most offensive labor rules,
reduced prices, and began being more culturally conscious. Among other things, alcohol beverages
were now allowed to be served just about anywhere. The company also began making the park
more appealing to local visitors by giving it a “European” focus. Ninety-two per cent of the park’s
visitors are from eight nearby European countries. Disney Tomorrowland, with its dated images
of the space age, was jettisoned entirely and replaced by a gleaming brass and wood complex
called Discovery land, which was based on themes of Jules Verne and Leonardo da Vinci. In
Disneyland food services were designed to reflect the fable’s country of origin: Pinocchio’s facility
served German food, Cinderella’s had French offerings, and at Bella Notte’s the cuisine was
Italian. The company also shot a 360-degree movie about French culture and showed it in the
“Visionarium” exhibit. These changes were designed to draw more visitors, and they seemed to
have worked. Disneyland Paris reported a slight profit in 1996, and the park continued to make a
modest profit through to the early 2000s. In 2002 and 2003, the company was once again making
losses, and new deals had to be worked out with creditors. This time, however, it wasn’t
insensitivity to local customs but a slump in the travel and tourism industry, strikes and stoppages
in France, and an economic downturn in many of the surrounding markets.
Questions (12 Marks)
1. What is Walt Disney Company shown as multinational enterprises (MNE) characteristics?
2. Disney instead of licensing some other firm to build and operate the park and settling for a
royalty, it takes wholly ownership strategy in the firm, why?
3. Are Walt Disney and Euro Disney indicate the same strategy of MNE?
4. Before going ahead with Euro Disney, was there an external environmental analysis from
Disney? Clarify.
Total: 800 words.
Question: In about 150 words, analyze how Social, Economic, Political and Technological
factors might affect the food industry. Define each factor with example in context. (10 Marks).
Food Industry
There’s no denying that the food industry is one of the strongest in the world after all, everyone
needs to eat! Indeed, there are some interesting dynamics at play in this space which make it
unclear just how profitable food businesses will continue to be.
Governments across the world have expansive regulatory frameworks for every aspect of the food
industry. This includes the cleanliness of commercial kitchens, the standards for storing and
transporting produce, and even the requirements for laborers in the food business. Without a doubt,
this makes the food industry one of the most tightly regulated industries of all. On the plus side,
this ensures that consumers aren’t exposed to poor quality nutrition, but the complexities of
regulation certainly take away from the margins of the food business.
We’re seeing various types of automation more and more in the food industry. Perhaps the best
example is the use of self-checkout screens at fast food venues such as McDonalds, but it’s not the
only one! Just recently, social media platforms went crazy as viral footage of a hotel’s robot
cooking up omelets began to spread. As we find more ways to use technology including robots in
the food industry, there will be less need for laborers. Overall, this is a good thing for the industry,
as it will allow businesses to improve profitability and reduce the likelihood of human error.
As a general trend, Disposable incomes are growing for a reason: laborers are earning more money
these days. On the whole, the cost of hiring workers is increasing across all industries. This is
caused by not only a growing demand for employees, but also higher and higher government
expectations for minimum wages. As in many other industries, the effect of increasing labor costs
is simple: less margin for the owner of the business, and thus less profit.
Nowadays, scientists know more about the relationship between food and our bodies than ever
before. There’s a clear relationship between the food we eat and our personal health, and
consumers are conscious of this. As a result, many individuals are looking for healthier ways to
fuel their bodies. This doesn’t necessarily have a positive or negative effect on the food industry,
but it means that businesses will have to adapt to stay relevant. For example, fast food
businesses will likely have to move away from traditional, high-calorie fried foods towards
healthier alternatives like salads. Consumers are also more knowledgeable about their individual
dietary restrictions. For example, many individuals now understand the negative impact of gluten
in those with Celiac disease. This has led to consumers expecting greater understanding on behalf
of those who work in the food industry. Once again, this isn’t necessarily a bad thing, but it means
that the food industry will have to make changes to keep clients happy.
Case 3: BHEL
Bharat Heavy Electricals Limited Concentrates on the Power Equipment Industry Bharat Heavy
Electricals Limited (BHEL) is India’s largest engineering and manufacturing enterprise, operating
in the energy sector, employing more than 42000 people. Established in 1956, it has established
its presence in the heavy electrical equipment’s industry nationally as well as globally. Its vision
is to be ‘a world class enterprise committed to enhancing stakeholder value’. Its mission statement
is: ‘to be an Indian multinational engineering enterprise providing total business solutions through
quality products, systems, and services in the fields of energy, industry, transportation,
infrastructure, and other potential areas’. BHEL is a huge organization, manufacturing over 180
products categorized into 30 major product groups, catering to the core sectors of power generation
and transmission, industry, transportation, telecommunications and renewable energy. It has 14
manufacturing divisions, four power sector regional centers, over 100 project sites, eight service
centers and 18 regional offices. It acquires technology from abroad and develops its own
technology at its research and development centers. The operations of BHEL are organized into
three business sectors of power, industry and overseas business. Besides the business sector
departments, there are the corporate functional departments of engineering and R & D, human
resource development, finance and corporate planning and development. BHEL’s turnover
experienced a growth of 29 per cent, while net profit increased by 44 per cent in 2006-07. BHEL
has formulated a five-year strategic plan with the aim of achieving a sustainable profitable growth.
The strategy is driven by a combination of organic and inorganic growth. Organic growth is
planned through capacity and capability enhancement, designed to leverage the company’s core
areas of power, supported by the industry, transmission, exports and spares and services
businesses. For the purpose of inorganic growth, BHEL plans to pursue mergers and acquisition
and joint ventures and grow operations both in domestic and export markets.
BHEL is involved in several strategic business initiatives at present for internationalization. These
include targeting the export markets, positioning itself as a reputed engineering, procurement and
construction (EPC) contractor globally, and looking for opportunities for overseas joint ventures.
An example of a concentration strategy of BHEL in the power sector is the joint venture with
another public enterprise, National Thermal Power Corporation, to perform EPC activities in the
power sector. It is to be noted that NTPC as a power generation utility and BHEL as an EPC
contractor have worked together on several domestic projects earlier, but without a formal
partnership. BHEL also has joint ventures with GE of the US and Siemens AG of Germany. Other
strategic initiatives include management contract for Bharat Pumps and Compressors Ltd. and a
proposed takeover of Bharat Heavy Plates and Vessels, both being sister public sector enterprises.
Despite its impressive performance, BHEL is unable to fulfil the requirements for power
equipment in the country. The demand for power has been exceeding the growth and availability.
There are serious concerns about energy shortages owing to inadequate generation and
transmission, as well as inefficiencies in the power sector. Since this sector is a major part of the
national infrastructure, problems in the power sector affect the overall economic growth of the
country as well as its attractiveness as a destination for foreign investments. BHEL also faces stiff
competition from international players in the power equipment sector, mainly of Korean and
Chinese origin. There seems to be an undercurrent of conflict between the two governmental
ministries of power and heavy industries. BHEL operates administratively under the Ministry of
Heavy Industries but supplies mainly to the power sector that is under the Ministry of Power. There
has been talk of establishing another power equipment company as a part of the NTPC for some
time, with the purpose of lessening the burden on BHEL.
Questions (10 Marks)
1) BHEL is mainly formulating and implementing concentration strategies nationally as well as
globally, in the power equipment sector. Do you think it should broaden the scope of its strategies
to include integration or diversification? Why?
2) Suppose BHEL plans to diversify its business. What areas should it diversify into? Give reasons
to justify your choice.
Total: 500 words.
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