Pestle Analysis of Chick-Fil-A Chain of Fast Food Restaurant - Research Paper Example

Executive Summary

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Business expansion is an essential achievement that depicts the growth of the enterprise as well as good performance. This report entails an investment plan for the Chick-Fil-A chain of fast food restaurant, which is seeking to enter the Middle East market. The assessment of the external environment shows that the political context, social dimensions, and technological factors have a direct implication on the success of the business. Although the opportunity for growth is high in the region, political instability is a major challenge that the company will face. However, having an insurance plan will guarantee business continuity in case of misfortune. Therefore, the report ascertains the viability of the proposal to venture into the Middle East market.

Introduction: PESTLE Analysis

The process of establishing a business enterprise requires the assessment of the designated resources to sustain and offer the necessary baseline for operation. Equally important is the external environment, which the business has little control over the shifts and changes in the dimensions such as the political, legal, economic, social, and technological elements (Cosares, 2015). The need for business expertise becomes handy in such matter through strategic planning to ensure that the activities of the organization are inclined to the external environment factors to guarantee growth and high returns. The same scenario holds for a business seeking to expand into new markets especially when it is across the border of operation. The use of PESTLE Analysis has been essential in ensuring that entrepreneurs and marketers assess the targeted market in line with the objectives of the business (Tebloyeva, 2010).

Investing in the Middle East is one of the necessary moves an organization can make. The processing of entering in developing market poses significant advantages both for the business, and the host country informs of direct foreign investment. Through a critical analysis of the external factors, a new company can successfully venture into the particular industry and strike significant revenue stability within a short period. Nevertheless, new markets are not devoid of risks and challenges; however, an efficient and comprehensive PESTLE Analysis can assist in mitigating the effect of the anticipated problems through strategic planning and forecasting. The key elements associated with a fast food business seeking to enter the Middle East market include the political, social, and technological factors as outlined in this report.

Overview of the OrganizationThe fast food business in the United States is one of the secure hotel and catering enterprises that attract high returns. Most of the globally operated business in the food sector started in the United States, Canada, or the United Kingdom. The onset of the Chick-Fil-A business can also be traced back in 1946 in the Atlanta Suburb of the Hapeville region in the United States. The company was formerly called the Dwarf Grill and mainly specialized in simple products, which made the business to be known as the dinner house (Chick-Fil-A, 2017). Later in the same year, business was renamed to Dwarf House, and its operation started to increase across all the major states in America. Some of the notable products on the menu have been categorized into lunch, breakfast, and dinner. Other products include Entrees, salads, sides, and kids meal, which occur in different tastes and forms. The outlets also include the varieties of drinks and sauce dressings.

Moreover, in the recent years, the business has grown to thousands of units spread across the United States. The level of growth has enabled the company to expand its coverage to the Canadian market and beyond the European market. Currently, the business is anticipating to venture into other markets across the globe in the 2017 strategic target. The introduction of college-based outlets has increased the sales capacity of the organization with more stores opening Alabama and Washington (Chick-Fil-A, 2016). Nevertheless, the process of expanding to new territories requires the understanding of the external environment factors associated with the target market. Seeking to invest in the Middle East will need a critical assessment of the political, social, and technological environment to ensure that the entry strategy incorporates all the essential factors of international investment. The three factors have proved to be most key elements of the PESTLE Analysis about the targeted region.

Overview of the Political AspectsA business seeking to invest in the Middle East should be prepared to face possible risks emanating from the political implications on business operation. Irrespective of the industry and area of specialization, political elements affects the success of the firm positively and negatively. A stable and sustainable political and leadership structure is essential for peace and stability in line with social and corporate engagements that encourage external investment. One of the critical concerns in the Middle East is the extent to which a country will remain in a state of peace to guarantee sustainable profits for investors (Shahshahani, 2014).

The nature of religious associations and leadership structure has affected the political stability in most countries. Over the years, some countries have been subjected to constant strife, violence, and terrorism that lead to loss of business assets Yemen, Iraq, and Syria have regularly been associated with religious wars, which reduce the rate of growth and development associated with businesses established in the region (Banham, 2017). The conflict of the distribution of the wealth from oil mining has resulted in the rise of opposing forces against the ruling government, which leads to peace instability.

Furthermore, the level of business risk is very high based on the changing tax regimes for external investors to sustain the inflation rates or the declining GDP from the effect of unstable political governance. Nevertheless, some countries such as the United Arabs Emirates and Qatar have a stable political environment that encourages investment of multiple units such as chains of fast food restaurants (Toledo, 2013). Moreover, the need for food security favors the hotel and catering sector, which tend to stabilize more easily as compared to manufacturing firms after a political crisis. Therefore, the analysis of political risks based on PESTLE elements is essential for a business seeking to venture in the Middle East.

Overview of the Social Aspects

Several social factors associated with the Arabs and other citizens in Middle East region affect the market position of a business entity. The religious element is an essential consideration for consumer-based products, which should be in line with the custom and teachings of the respective religion. Gender factor is also a social element that affects the business performance (Sharoni, 1997). The skewed access to factors of production makes women in these countries to have little impact in line with business advancement because most of them are not employed, and a greater number are not educated.

On the other hand, the purchasing power of the customers depends on the social class defined by the level of income and education. Most of the elites in the community are associated with social purchasing habits that influence their rate of spending. The top class in the society majorly is related to the status symbol, which is depicted with expensive products and high-quality goods that represent social status. The lower social levels are majorly characterized by sustainable purchasing behaviors such as selecting affordable products (Jordan, 2013). Moreover, the quality of the product plays a critical role in encouraging the consumers behavior especially when it comes to food-based brands.

Nevertheless, the fast food culture is not entirely embraced by the community based on food policies and cultural inclinations. However, fast food companies that ventured the region in the recent years have played an imperative role in transforming the nature of the market and the tendency is now shifting towards variety of fast food brands. A firm seeking to invest in the hotel and catering sector must incorporate the tastes and preference of customers such as the shifts to organic products and healthy products to attract more customers across the different classes in the society. Moreover, promotion-based purchase is none of the culture in the business sector to encourage customers to try new brands since most clients are used to a particular firm and product and giving chance to unfamiliar product will be critical.

Overview of the Technological Aspects

Technology plays a critical role in business development by enhancing the level of efficiency. The Middle East region is one of the economic zones with limited technology advancement, but the corporate sector is exhibiting a new transformation that depends on technology and automation. The need for quality and efficiency has encouraged the incorporation of technology-based processes to enhance supply chain management, production, customer management, and supply of finished goods and services. Major technologies that are changing the business sector include Outcome Economy, Platform Revolution, Workforce Reimagined, and Intelligence Enterprise (Accenture, 2015). Business organizations incorporating technology in their operation have been associated with a greater advantage over their competitors not using the trending current technology measures.

Moreover, the need for modern methods of reaching customers to ensure a higher level of retention and acquisition is a major concern for customer-based business such as those in hotel and catering industry. The need for greater awareness in the fast food industry require new platforms meant for customer engagement, advertisement, and online shopping to enhance the performance of the organizations in the sector. For example, the use of Intelligent Enterprise has been essential in setting the new platform for customer and market research to understand the position of the competitors and the needs of the targeted clients. Online shopping portals are becoming more popular as opposed to on-store purchases (Gulf, 2014). Most hotel and catering services have introduced the delivery of orders directly to customer location to enhance the level of competitive advantage as well as improve customer satisfaction. Nevertheless, some firms have faced significant challenges while trying to adopt the new technologies in their businesses.

Decision Choice

Chick-Fil-A should consider investing in the Middle East region by opening their chain of stores in the main cities to ensure that the business capitalizes on the high population of the towns. The move to enter into the region will offer the organization an opportunity to expand its capacities regarding revenue growth. Currently, the firm is facing competition in the Unites States and C...