Question

In about 300 – 400 words, write an essay analyzing the below case study using the SWOT framework. 

 

Wendy’s International, Inc.

 

Wendy’s Old Fashioned Hamburgers was considered the third largest fast-food hamburger business in the world, although it reported higher revenues in 2002 than did Burger King. The company as a whole generated $2.73 billion in revenues in 2002, up 14.2 percent from the previous year. With headquarters in Dublin, Ohio, the corporation operated over 9,000 restaurants in 33 countries worldwide.

 

General menu items were similar to those of McDonald’s and Burger King --- hamburgers, chicken sandwiches, and fries---- but Wendy’s also offered several unique products such as Frostys and Spicy Chicken Sandwiches, as well as many healthy alternatives like salads, baked potatoes and even chili. One very important innovation contributed by Wendy’s was a special value menu that consisted of about 10 items that could be purchased for 99 cents. Since its initiation in Wendy’s stores, the value menu had also been implemented in McDonald’s and Burger King’s restaurants in order to compete with Wendy’s. All fast-food hamburger chains, were now expected to meet new consumer health expectations without compromising the menu items on which the companies were founded. Following suit, soon Burger King’s menu also offered a few items that set it apart from other fast-food restaurants, thereby offering customers a varied menu and posing a serious threat to Wendy’s.

 

Founded in 1969 in Ohio by David Thomas, Wendy’s Old Fashioned Hamburgers was incorporated and in 1976 had its first public offering of 1 million shares at dollar 28 per share. By 1981 the company had been listed on the New York Stock Exchange and had built its 2,000th restaurant. Unlike a few of its competitors, Wendy’s faced difficulties with international expansion. Despite these failures, the corporation had grown by acquiring several smaller companies such as Tim Horton’s and Baja Fresh Mexican Grill.

 

Wendy’s, early on sought to distinguish itself in a rapidly growing industry by providing its customers with a unique fast-food experience. However, several of its unique features were embedded with both pitfalls and advantages. The company’s Super Value Menu was definitely one of its strongest asset, although the concept had been picked up by other major companies. Also, in 2002, most fast food chains were desperately slashing prices in a bid to go increasingly lower. However, Wendy’s chose that year as a time to focus on product quality and product expansion by offering its Garden Sensations, a new selection of fresh, healthy salads. One weak point in Wendy’s business plan was the lack of an easily recognizable product comparable to McDonald’s Big Mac or Burger King’s Whopper.

 

Unlike McDonald’s and virtually every other burger chain in the world, Wendy’s overlooked the shift in consumer preferences from indoor dining to drive-through windows at its restaurants. It did not respond well to the above mentioned shift in consumer preferences which soon started looming over as threats. In 1975, Burger King began to install and operate drive-through windows at its restaurants. Now customers who were busy with family, jobs, and children could buy a quality meal in a hurry without ever leaving the car. However, Wendy’s at that point of time in selecting potential acquisition targets, completely overlooked the concept.

 

As Wendy’s moved into the future without founder Dave Thomas, who passed away in 2002, it planned to add between 2,000 and 4,000 new Wendy’s locations in the next decade and to focus its international expansion in Latin America. However, the company’s chief executive officer and chairman, Jack Schuessler, stated that the company planned to increasingly use acquisitions of smaller brands and joint ventures as the primary driver of future growth. In selecting potential acquisition targets, Wendy’s was avoiding concepts that directly competed with core Wendy’s offerings and looking to the fast casual segment and to concepts that involved offering high quality food without table service.

 

Adapted for purely academic purpose: Marino L and Jackson K.B. ; McDonald’s : Polishing the Golden Arches; (pp. C-213 - C-223) ; Thompson, A.A.; et.al.; 2005; Crafting and Executing Strategy; McGraw-Hill, New York.

 

Answer Notes:

 

Students may begin by creating a grid to identify the SWOT components as Strengths, Weaknesses, Opportunities and Threats to construct the analysis text.

Students are required to identify 3 strengths, 3 weaknesses, 2 opportunities, and 2 threats. Then to write an analytical text for the case study .

Students are required to provide definitions for each SWOT factor by referring to different relevant external resources

Answer 1