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Internationalization Strategy for Chick-fil-A Entering India
- 1. Chick-fil-A’s Internationalization Plan: India Emma Spitzley Rodriguez, Keemia Mesforush, Sophia Latt, & Veshal Arul Prakash International Business Spring 2019
- 2. 1 Table of Contents Introduction ………………………………………………………………………………………………………………………………………….. 3 History ……….……………………………………………...………………………...……………………………………………….... 3 Business Overview ……….………………………………………………………………………………..………...……………... 3 Cultural Overview …………………………………………………..……………………………………………...………..…...... 4 S.W.O.T Analysis ………………………………………………………………………………..…………………………………….. 5 Analysis of Location Choice ………………..…………………………………………………….………….……………….………………. 5 Country Choice ……….……………………………………………………………………………………..…...……………....... 5 Economic Conditions ……………………………...……………………………………………….……………...... 6 Political and Legal Conditions ………………………………………………………...………………………...... 7 People, Cultural Conditions, and Consumer Preferences ……………………………………………….8 Growth Opportunities for American Fast Food Chains in India ………………………… 8 Socioeconomics of the Changing Indian Lifestyle ……………………………………..……… 8 Religious Impact on Dietary Restrictions …………………………………………………….…. 10 Chicken Production and Consumption …………………………………………………………… 11 Porter´s Five Forces ………………………………...……………………………………..……………………...... 12 City Choice ……….……………………………………………...……………………………………………………….………...... 13 Factor Rating Method ……………………………...…………………………………………….……………...... 13 Locational Cost-Volume Analysis …………………...……………………………….……………………...... 14 Basic Decisions about Entering Foreign Markets ………………...……………………………………………………..………. 16 Type of Internationalization Strategy ………………………………………………………………………………..…... 16 Internationalization Strategy Selection: Localization Strategy ………………………..…………. 16 Product Offerings and Pricing Decisions for Transnational Strategy ……………………….…. 17 Analysis of Entry Mode Decisions ………………………………………………………………………………………….. 18
- 3. 2 Initial Entry Mode: Greenfield Investments ……………………………………………….………………. 18 Early Expansion: Franchising …………………………………………………………..……………………………20 Organizational Structure……………………………………………………..………………………………………………….. 20 Global Value Chain ……………………………………………………………………………………………………………………………… 21 Risks and Mitigations ……………....…………………………………………………………………………………………………………. 22 Cultural Fit ……………………………………………………………………………………………………………………………… 22 Growing Health and Wellness Trend ………………………………………………………………………………………. 22 Availability of Chicken: Shortage of Supply …………………………………………………………………………….. 23 Conclusion …………………………………………………………………………………………………………………………………………… 23 Works Cited ………………………………………………………………………………………………………………………………………… 24
- 4. 3 Introduction History Founded as “Dwarf House” in Hapeville, Georgia in 1946, Chick-fil-A is one of America’s most popular food chains. Fifteen years later, the company’s founder and former CEO, Truett Cathy, discovered that there was a certain pressure-fryer that was able to cook a chicken sandwich in the same amount of time that it took to cook a fast-food hamburger. As a result of this discovery, Cathy registered the name “Chick-fil-A”, as well as trademarked its slogan “We didn’t invent the chicken, just the chicken sandwich.” This original chicken sandwich solely consisted of chicken, and two pickles on a toasted butter bun. As the company continued to expand across America, its first advertising campaign, “Eat Mor Chikin”, was created in 1995 and is still an identifiable slogan for the company to date. In 1997, Chick-fil-A became the title sponsor of the Peach Bowl (an annual college football game played in Atlanta, Georgia on New Year’s Eve). Business Overview Chick-fil-A currently has over 2,400 locations serving across the United States and Canada. In 1994, Chick- fil-A opened its first location outside of the United States inside a student center food court at the University of Alberta in Edmonton, Canada, which did not perform well and closed within 2-3 years. Following the lack of success of this Canadian location, Chick-fil-A waited two decades before opening another location in Canada. With this location, the company was more strategic in that it placed this location inside Calgary International Airport, in a departure area for flights bound to the United States. Starting in 2019, Chick-fil-A has plans to open between 15-20 locations around the Greater Toronto Area over the next five years. Outside of North America, Chick-fil-A attempted to expand in South Africa by opening two locations in Durban and Johannesburg between 1996 and 1997. However, these locations were not profitable and eventually closed in 2001. In terms of its business model, Chick-fil-A chooses a location for a restaurant, builds it, and then franchisees become the operators. A Chick-fil-A franchise needs to have a $10,000 initial investment, go through interviews, and complete a rigorous training program which can take months. The company receives about 20,000 franchisee applications annually, but only approves of 80 franchisees. Chick-fil-A prohibits franchisees from owning more than one restaurant location because it believes that all thought and effort should be put into that location. This care for each restaurant location is reflective in the way that employees are treated and the way that employees treat customers. Since 2010, Chick-fil-A has been the leading fast food restaurant in average sales per restaurant at $4.8 million per restaurant in 2016. In 2018, the company reported an annual revenue of $10 billion, which has marked the 51st consecutive year of sales growth for the company.
- 5. 4 Cultural Overview Chick-fil-A has gained both positive and negative publicity for its corporate culture. The company is well recognized for its outstanding customer service. While on the other hand, Chick-fil-A has been criticized for the company’s strong ties to religion. Chick-fil-A’s customer service is arguably the best fast-food customer service in America. The company has earned the top spot in the American Customer Satisfaction Index’s survey of customer satisfaction for three years in a row as of 2018. Chick-fil-A’s customers regularly compliment the restaurants’ cleanliness, quick, convenient service, and hardworking employees (on top of the high quality food). This well-rated customer service can be tied to the company’s strict rules on franchisees, such as not allowing a franchisee operate more than one franchise. The company wants to make sure that its image is not tainted and that each Chick-fil-A location holds the same standards. Chick-fil-A’s founder, Truett Cathy, was a devoted Southern Baptist; these beliefs have had large impacts on the company. Chick-fil-A’s official statement of corporate purpose states that its mission is “To glorify God by being a faithful steward of all that is entrusted to us. To have a positive influence on all who come in contact with Chick-fil-A.” These beliefs are the cause of Chick-fil-A’s largest and most common complaint: Sunday closures. Sunday, being a day for relaxation and religion, was important to Cathy and his beliefs. The company stands strongly with the belief to close all locations on Sunday’s, even in football stadiums where many games are held on Sunday’s. The company doesn’t seem to mind the potential revenue that it would gain from opening on Sunday’s because it wants to respect Cathy’s beliefs. There have only been two instances where a Chick-fil-A location has opened on a Sunday. One of these instances occurred in 2017, when the company was opened on a Sunday to prepare meals for passengers who were left stranded at the Atlanta Hartsfield-Jackson International Airport during a power outage. The second instance is when a franchise in Mobile, Alabama opened on a Sunday for the birthday wish of a 14 year old boy who had cerebral palsy and autism. Aside from these instances, Chick-fil-A has had a firm belief on Sunday closures regardless of the amount of complaints it receives on this choice.
- 6. 5 S.W.O.T. Analysis Strengths ● Award winning service ● Restaurant ambiance - welcoming to customers ● High quality fast food ● Large US presence ● Strong corporate culture ● Continuous growth in revenue ● Offers alternative to red-meat focused competitors (i.e. McDonald’s or Burger King) Weaknesses ● Poor international presence ● Strong religious stance ● Smaller amount of locations within the US than competitors ● Sunday closures Opportunities ● International expansion ● Menu expansion ● Increasing health-conscious consumer trends à opportunity to capitalize on the trends Threats ● Rising trends in Vegetarianism & Veganism ● Competition from KFC & Popeye’s ● Increase in price of raw materials Analysis of the Location Choice Country Choice India is one of the most culturally rich countries in the world, and with that comes opportunities and challenges. Accounting for approximately 17.4% of the global population, India has the second largest population in the world at 1.3 billion. Knowing this, it is clear that if Chick-fil-A enters India, the company would have the opportunity to serve a massive market. Within this population, 22 languages are officially recognized, and English is the most important language for national level and commercial communication across India. Since English is widely spoken in India, there is a decently high degree of tolerance towards western influences, including cuisine. Additionally, about 80% of the population practice Hinduism, and 14% practice Islam. Understanding the practices and lifestyles of the different religious groups in India is imperative for foreign businesses, especially those in the food industry. In terms of surface area, India has
- 7. 6 a total area of 3.287 million square kilometers, ranking as the seventh largest country in the world by land. Chick-fil-A should expand into India due to its favorable economic, political, legal, and cultural Conditions. Economic Conditions Between 2800 BC and 1800 BC, the Indus Valley Civilization had a flourishing economic system, where people practiced agriculture, had domesticated animals, and used different metals such as copper, bronze and tin to create tools and weapons. During this time, the civilization traded its resources for goods from Middle Eastern civilizations. Today, India has a very diverse economy, compiling a wide range of industries and services, including traditional village farming, modern agriculture, and handicrafts. India’s main agricultural products include rice, wheat, oilseed, cotton, jute, sugarcane, lentils, onions, potatoes, dairy products, sheep, goats, poultry, and fish. India operates in industries, including textiles, chemicals, food processing, steel, transportation equipment, cement, mining, petroleum, machinery, software, and pharmaceuticals. It is now developing into an open-market economy, meaning that there are minimal barriers to free market activity - anyone can participate, and there are minimal tariffs and regulations that interfere with the operations. On the ranking of countries in the Economic Freedom Index - which measures how easy it is to conduct business in a country - India is ranked as the 129th freest. Now these are not necessarily ideal conditions, however, for the food industry specifically, there is an “Automatic Route” to enter into the market, meaning that there are minimal bureaucratic processes for international food businesses to endure when they seek entrance into the Indian food industry. This indicates a strong opportunity for Chick-fil-A to take advantage of the economic freedom that comes with this automatic route. In the past, India’s economy used economic liberalization measures including industrial deregulation, privatization of state-owned enterprises, and reduced regulations on foreign trade and investment, which ultimately led to the increase in the country’s GDP growth at a rate of around 7% from 1997 to 2017. Beginning in 1991, when the policy to create these reforms was initially introduced, it was widely opposed by the Indian National Congress and manufacturers within India, however, once P.V. Narasimha Rao’s government took power, it was able to advance the reforms and overcome the opposition. In regards to foreign direct investment, before 1991, not much foreign investment existed in India, however, following the first year of reform, foreign investments increased by $74 million, and as of March 2016, India has received a total of $371 billion. According to The Financial Times, In the year 2015, India surpassed China as the top foreign direct investment destination, and this highlights the significant opportunity for Chick- fil-A to capitalize on the investment opportunities in the region. Taking a closer look at the top economic indicators, it is clear that India’s economy is a strong fit to introduce Chick-fil-A. Since 2015, India’s overall GDP has increased exponentially, from $8.291 trillion in 2015, to $8.88 trillion in 2016, and $9.474 trillion in 2017. This data ranks India as the third highest GDP among all other countries in the world. In recent years, the GDP per capita has continued to increase, from $1939.61 USD in 2017 to $1,977.29 USD in 2017. It’s expected GDP for 2019 is $2,334.14, which
- 8. 7 proves that India is an emerging and growing economy. With an increase in disposable income, Indian consumers will be more willing to spend its money on more elastic goods. In 2019, India achieved its highest unemployment rate in 45 years- an unemployment rate of 6.1% of its population. Due to the huge population in India, this is not as worrying a factor. Looking at housing sales in the country, India’s housing sales increased 7% in 2019 in nine of its major cities, Gurugram, Noida, Mumbai, Kolkata, Pune, Hyderabad, Bengaluru, Thane, and Chennai. This indicates that India’s population is comfortable making large purchases, the population is centered around larger cities, and there is an opportunity for Chick-fil-A in India’s larger cities in terms of sales. Political and Legal Conditions India achieved its independence from the British in 1947, and since then has evolved into a constitutional democracy. This system of government goes hand-in-hand with the economic conditions in India, meaning that it is easier to conduct business in a country with this style of government. India’s political scene is dominated by two major parties- the Bharatiya Janata Party (right wing) and the Indian National Congress (left wing), and these parties remain in control by building relationships with other smaller parties, adopting them into its party, developing a multi-party system. The country held its first general elections in 1952. In recent years, in 1996, the Bharatiya Janata Party (a Hindu nationalist party) won the majority votes and two years later, created a coalition government, with Prime Minister Atal Bihari Vajpayee as its leader. In May 2004, the Indian National Congress party surprisingly won the general elections, and Manmohan Singh became the new prime minister. The current prime minister of India is a member of the Bharatiya Janata Party, Narendra Modi. During his reign thus far, Modi has implemented the Insolvency and Bankruptcy Code, which improved rural India’s electrical grid connectivity, heightened sanitary conditions by creating a system of public restrooms through the Swachh Bharat Mission, and developed long-term infrastructure initiatives for roads, highways, metro, and housing for the poor, allowing for easier transportation and connection between people across different regions of India. This code was mainly designed to help companies when they are in critical financial conditions, by tackling one of India’s major economic issues- non-performing assets, which are loans that have gone unpaid for over 90 days. These conditions make for an attractive country for an international company to enter. For Chick-fil-A, this means that in India, it has the ability to create strong relationships with consumers and suppliers. India’s legal system is a republic, and its legislature is the Parliament of India. The parliament has two houses - the Rajya Sabha or council of states, and the Lok Sabha or house of the people. The Rajya Sabha group (245 members, of 12 presidential appointments and 233 elected officials) is much smaller than the Lok Sabha (545 members.) One of the main responsibilities of the Lok Sabha is electing the Prime Minister and appointing the heads of the Council of Ministers, and it has the power to make final decisions on financial matters. The electoral college elects the President of India every five years, and this group is made up of members of the federal parliament and state assemblies.
- 9. 8 Regarding laws and regulations surrounding food, food products imported into India must follow the Food Safety Standards Act (FSS Act), enacted in 2006, which categorizes food as standardized and non- standardized. Food and beverage ventures looking to enter India with its products must comply with any regulations that the FSS Act sets forth, and ensure that its products are aligned with these regulations. People, Cultural Conditions, and Consumer Preferences Due to the current position and expected growth of the Indian fast food market, changing consumer needs, religious impacts on chicken consumption, and preference for spicy foods, Chick-fil-A should experience relatively high success in the Indian market. 1. Growth Opportunities for American Fast Food Chains in the Indian Market Although India has a reputation of being cold towards foreign companies that enter the country, foreign fast food chains have enjoyed a positive response from Indian consumers. Examples of American fast food companies that have store locations in India include McDonald’s, Taco Bell, Domino’s, Burger King, KFC, and Krispy Kreme. One of the first entrants of the fast food market in India was McDonald’s in 1996. Two takeaways from this are that the fast food industry is an established market in India, as it has been available for over two decades; however, it is still at the nascent stage with a low level of saturation and large growth opportunities. In 2013, Technopak valued the Indian market for fast food chains at USD $2.5 billion and expected it grow into a USD $8.0 billion market . However, some estimates project the Indian fast food market to be valued as high as USD $27.6 billion by 2020. The Quick Service Restaurants market is expected to increase at a CAGR of 20% between 2019 and 2020. As evident here, the market steadily grew in its first 15 years, but it has rapidly risen in recent years and will continue to grow fast in the next couple of years. Currently, there’s approximately 3,000 fast food chain locations in India. 3,000 outlets is a high number, but when contextualizing it with a 1.3 billion population, the number is relatively low, unable to reach the majority of the market. In fact, McDonald’s realized this. The company had 369 outlets in 2015, but it set the goal of adding 175 to 250 locations - anywhere between a 47% - 68% increase - in the western and southern regions of India by 2020. Almost all of the outlets for these American fast food chains are located in urban areas, as opposed to rural regions. Based on these market size predictions and the corporate strategy of other quick service restaurants, Chick-fil-A has a high potential to succeed in India. Changing consumer needs have played a role in developing the Indian fast food market, which will be further discussed. 2. Socioeconomics of the Changing Indian Lifestyle
- 10. 9 The demographics in India and the roles and necessities have vastly changed due to socioeconomic factors, such as population age, consumer spending power, gender roles, and work lifestyle. The fast food industry in India is rapidly growing due to these recent socioeconomic developments, which Chick-fil-A should see as an international expansion opportunity. India has a large population, but a determining factor for the success of the country’s fast food industry is the age breakdown of the population. Approximately 65% - or 845 million - of the population is under the age of 35. Of that, almost 360 million people are between the ages of 10 and 24. That is the largest youth population in the world. To put it in perspective, just its youth population alone is larger than the entire United States population and 7.6x that of the entire Spain population. Fast Food is generally most popular among this segment of the population because it is inexpensive and convenient. This is supported by a study in India conducted by Assistant Professor Priyadarshini, in which 100 people who entered major fast food outlets were randomly selected to respond. According to this study, 62% of fast food restaurant customers visit these outlets for just these two factors alone. Many of these young people either do not have the time, preference, and/or skills to prepare home-cooked meals for every instance, and they choose fast food restaurants instead. Its preference for fast food is evident as 64% of the respondents visit these outlets weekly, and another 25% visit them monthly. Also, 70% of the respondents spent more than 15% of its income at these fast food outlets. These data points validate how fast food outlets have become an integral part of its lifestyle. On this note, disposable time is a limited attribute for young working adults in urban India. This is mainly a result of long working hours and commute times. Employees in Indian cities work an average of 54 hours per week, which is significantly higher than the standard 40-hour work weeks present in the United States. In fact, based on a UBS survey, Mumbai ranks highest among all global cities for the longest work hours - 64 hours per week. New Delhi is ranked fourth on the same list. Regarding commute time, employees in Indian cities experience the third longest commute of 1.5 hours. According to an IBM Global Commuter Pain survey, New Delhi and Bangalore both rank in the top ten. Both these factors indicate that young working adults are strapped on sufficient disposable time, which may be necessary to prepare quality home-cooked meals. Therefore, fast food restaurants help accommodate for the hectic schedules of young working professionals. Multiple transformations have occurred in the Indian family model over recent decades. For many years until the 1980’s, the majority belonged to a joint extended family. Within extended families, the elders are responsible for teaching religion and traditions, the female members handled cooking, maintaining the house and other domestic responsibilities, and the male members managed its family business. However, with modernization and urbanization, many younger men began migrating to larger cities that offered better compensation, which eventually lead to the nuclear family model that is present in many western countries. From the 1980’s to 2000’s, most nuclear families featured the parents and kids, with the father attending work and the mother handling domestic responsibilities. In the past 15 years though, women began working outside of
- 11. 10 traditional domestic responsibilities to also contribute to the family paycheck. The rise in working women is mainly due to western cultural influences and improvements in female education. As a result of these transformations in gender roles, there is much less time to manage certain domestic tasks like cooking, so fast food is a convenient solution for nuclear families in which both parents work. Also, with women also working, there is essentially a “double income”- or higher disposable income - in nuclear families, thereby enabling the families to spend more on fast food. Thus, in general, the consumer spending power has drastically increased and will continue to do so in the near future. For these socioeconomic reasons, Chick-fil-A would enjoy a successful venture in India just like many other fast food brands in this market. Having said that, more cultural aspects must be considered. 3. Religious Impact on Dietary Restrictions The prominence of Hinduism and Islam in India is a major reason behind its popularity of chicken. Hindus comprise of 80% of the population, while Muslims comprise of 14% of the population. Since Chick-fil-A is known for its chicken burgers, the American fast food giant would serve India’s protein interests well. According to Hinduism, cows and bulls are divine beings. Although beef consumption was common and acceptable based on ancient Vedic texts, the Sanskritization of the religion was rooted in the idea of not causing harm to any animals. Cows and bulls, especially, hold special value in Indian society. A bull, known as “Nandhi”, is considered as the messenger of one’s prayers to Lord Shiva. Consuming a bull for meat would be considered equivalent to eating Nandhi, and thereby removing the path to communication with Lord Shiva. Cows became revered due to the popularity of the Mahabharata, the most famous Sanskrit epic poem. In many instances within this epic, the cow is perceived as a symbolic animal that provides milk without being slayed. Eventually, cows became associated with the caste system, in which the “Untouchables” eat beef but the “Brahmins” (highest caste) refrain from eating meat, especially beef. To scale up the caste system, one had to sacrifice the consumption of beef. Brahmins even owned cows as a status symbol. Thus, eating beef is generally considered as a taboo in India - at least among the Hindus. Islam, in contrast, restricts Muslims from eating pork. The Qu’ran explicitly states, “Forbidden to you are: dead meat, blood, the flesh of swine…”. There’s a negative cultural perception about pork too, as pigs are scavengers unlike most other livestock. Pigs are raised in generally unsanitary conditions, in which they consume dirt and feces, so they are seen as filthy animals. Additionally, research discovered a correlation between eating pork and several diseases (e.g. helminthes). Pork also provides limited protein-related benefits and is excess in fat, which could cause health issues in the future, like hypertension and heart attack. Although most Muslims refrain from consuming pork due to religious reasons, many other people in India also avoid eating pork due to its perception of pigs being “filthy” animals and because of pork’s health-related issues.
- 12. 11 Chick-fil-A, in particular, does not serve pork or beef even in the United States. The only meat option that the restaurant chain offers is chicken. In fact, the company’s logo is a happy-looking cow since it’s not offered on a plate at Chick-fil-A. Thus, the company seamlessly fits the dietary restrictions and preferences of the Indian market for the most part. 4. Chicken Production and Consumption Chicken is considered the most popular meat in India, perhaps due to the religious taboos associated with other popular meats, the perceived health benefits of chicken, and its availability. The Indian poultry industry is among the world’s largest due to a high level of consumption and production, and it is rapidly growing due to the changing dietary preferences of the demographics and the popularization of fast food chains. India has the fifth-largest poultry industry in the world with an approximate broiler (meat) market size of $9 billion. In 2017, the broiler meat gross consumption in India was 4.85 million metric tons. The broiler meat consumption is expected to grow at a 7.5% CAGR to 8.65 million metric tons by 2025. However, processed chicken meat, specifically, is growing at a 15-20% CAGR. As evident, chicken consumption is rapidly increasing in India, possibly because of the urbanization and westernization of lifestyle. In comparison to other meats in India, about 2.5x, 3.4x, and 10.7x more chicken is consumed than beef, mutton, and pork, respectively. Additionally, based on Priyadarshini’s study, 32% of the respondents preferred KFC the most among the most prominent American fast food outlets. No other brand achieved a higher preference than KFC, which suggests the success of chicken-focused menus and the popularity of chicken in India. Chick-fil-A, therefore, can take advantage of the preference for and popularity of chicken in India. Furthermore, to support the popularity of chicken among Indians, there is an abundance of broiler meat production happening within the country. Poultry is the most developed animal agriculture sector in India. In fact, India is the fourth-largest chicken producer in the world. Approximately, 90,000 farmers are currently involved in the broiler meat production processes. Of these farmers, almost 67% are contract farmers and 33% are individual farmers. On average, each broiler farm holds around 7,500 chickens. All of this information suggests that the poultry production industry in India is relatively formally structured, which enables mass production of broiler meat. Hence, India would be a promising country to expand to for Chick-fil-A as there is an immense popularity of chicken, which is the restaurant’s core product featured in most offerings. The company would also be able to comfortably meet the market’s demand for its menu offerings by solely sourcing broiler meat produced in India.
- 13. 12 Porter’s Five Forces New Entrants: Low threat of new entrants Easy for new entry into the market but there is a high amount of hesitation due to the intense industry competition. Substitution: Medium threat of substitutes High amount of competition causes a high risk of substitution Very prevalent in high volume locations Buyer Power: Medium buyer power Lack of locations in comparison to competitors leads to high buyer power as there is a higher need to sell more in each location in comparison to competitors with more locations. Suppliers: Low supplier power Short-length contracts with suppliers to ensure high product quality. Chick-fil-A changes suppliers more frequently to ensure best quality over competitors. Competitors: Medium threat of competition from: McDonald’s, KFC, Popeye’s, Burger King
- 14. 13 City Choice India is a large country with different cultural traditions, varying levels of economic and political infrastructure, and diverse lifestyles throughout its regions. Therefore, the exact location chosen to launch Chick-fil-A is a determining factor in the success of the company within India. This section features different operations management location strategy models to determine the best city to launch the first two to four Chick-fil-A outlets in India. Factor-Rating Method Key Success Factor Weight Mumbai Score (out of 100) New Delhi Score (Out of 100) Bengaluru Score (Out of 100) Mumbai Weighted Score New Delhi Weighted Score Bengaluru Weighted Score Young Demographics 0.30 55 45 70 16.5 13.5 21 Openness to Western Lifestyle 0.40 60 40 80 24 16 32 Accessibility to Supplies 0.20 65 50 75 13 10 15 Work and Commute Time 0.10 80 75 60 8 7.5 6 Total 1.00 260 210 285 61.5 47 74 ● Factor-Rating Method is subjective in nature, especially with the weights assigned for each factor and the points assigned. ● Information and ratings were validated by an expert in the restaurant services industry in India. According to the factor-rating method, Bengaluru is the clear city winner among the options of Mumbai, New Delhi, and Bengaluru. The four factors considered are “young demographics”, “openness to western lifestyle”, “accessibility to supplies”, and “work and commute time”. As mentioned earlier, young people, under the age of 35, are typically the most attracted to fast food chains due to its convenience and pricing. Bengaluru scored the highest in this category because it has a higher composition of young adults than the other two cities. Bengaluru also ranked first among the three cities for “openness to western lifestyle” primarily due to the large IT corridor hub, which has attracted western cultural influences (e.g. movies, pop culture, apparel, cuisine, etc.) and expats too. The “accessibility to supplies” factor is comprised of two separate elements - versatility of trade routes
- 15. 14 infrastructure and proximity to broiler meat production. New Delhi scored the lowest here because it is landlocked, whereas Mumbai and Bengaluru are along the western coast, which enables the option of water transport. The reason Bengaluru scored higher than Mumbai is because the majority of broiler meat production occurs in the southern half of India, where Bengaluru is located. Bengaluru, though, scored lowest among the three cities for the “work and commute time” category. New Delhi and Mumbai have longer overall work and commute times, which increases the attractiveness of fast food chains for those with limited wait times. However, although Bengaluru placed last in this category, the sum of all the scores suggested that Bengaluru is the most appropriate city choice for Chick-fil-A in India. Locational Revenue-Cost-Volume Analysis City Expected Volume Of Main Item Sales Expected Unit Sales Price Expected Fixed Cost Expected Unit Variable Cost Expected Total Revenue Expected Total Cost Expected Total Profit Mumbai 150,000 114 Rs. 97,786,560 Rs. 49 Rs. 17,100,000 Rs. 105,136,560 Rs. -88,036,560 Rs. New Delhi 127,100 114 Rs. 133,390,560 Rs. 49 Rs. 14,489,400 Rs. 139,618,460 Rs. -125,129,060 Rs. Bengaluru 139,000 114 Rs. 66,682,560 Rs. 49 Rs. 15,846,000 Rs. 73,493,560 Rs. -57,647,560 Rs. ● McChicken is used as a reasonable comparable to Chick-fil-A’s Original Chicken Burger. ● Mumbai is expected to have the highest volume of main item sales because it is the most cosmopolitan city. Bengaluru is expected to have the next highest volume of main item sales because the Chick-fil-A would most likely be located in the tech corridor of the city. ● Note that the expected total profits are negative because the revenue of only the McChicken was considered, whereas all of the fixed costs were absorbed. ● Fixed costs considered land area costs and all costs associated with starting the business. Assumptions for Calculations (Comps Used) ● Expected Volume of Main Item Sales for One Location: ○ Using McChicken burgers of McDonald’s as the comparable ○ Assumption: 12-hour work days and opened seven days per week for all 365 days in the year. ○ Assumption: 8 “peak hours” per day. During “peak hours”, 40 McChicken burgers sold per hour. ○ Assumption: 4 “non-peak hours” per day. During “non-peak hours”. 15 McChicken burgers sold per hour. ○ Calculation: 380 McChicken burgers sold per day on average
- 16. 15 ○ Calculation: 138,700 McChicken burgers sold per year in one outlet on average. ● Expected Unit Variable Cost ○ Using McChicken burgers of McDonald’s as the comparable ○ Given: Unit variable cost of McChicken in Canada ($0.73 CAD), Unit sales price of McChicken in the United States ($1.29 USD), Unit sales price of McChicken in India (114 Rupees) ○ Calculation: $0.73 CAD in Unit variable cost —> $0.55 USD in Unit variable cost. ○ Calculation: $1.29 USD - $0.55 USD = $0.74 USD in Unit contribution margin. Contribution margin percentage = $0.74 USD / $1.29 USD = 57% ○ Assumption: Same desired contribution margin percentage in India as in the United States for McChicken ○ Calculation: 114 Rs. * 57% = 65 Rs. in Unit contribution margin. ○ Calculation: 114 Rs - 65 Rs. = 49 Rs. in Unit variable cost for McChicken in India ● Expected Fixed Cost ○ Land Purchase • Assumption: Using average price per square foot in each of the three cities (17,888 Rs. for Mumbai, 25,800 Rs. for New Delhi, and 10,976 Rs. for Bengaluru) and the average square footage for a Chick-fil-A location (4,500 square feet). • Calculation: 17,888 Rs. * 4,500 = 80,496,000 Rs. to create a Chick-fil-A location in Mumbai. • Calculation: 25,800 Rs. * 4,500 = 116,100,000 Rs. multiplied to create a Chick-fil-A location in New Delhi. • Calculation: 10,976 Rs. * 4,500 = 49,392,000 Rs. to create a Chick-fil-A location in Bengaluru. o Fixed Cost • Looking at beginning fixed costs for opening & operating a Chick-fil-A location, the factors of machinery, opening inventory, insurance, and miscellaneous costs are considered. • Given: For one location, the cost of purchasing machinery for a Chick-fil- A is $75,000 USD, the cost of opening inventory is $75,000 USD, the cost of an one-year insurance is $24,000 USD, and other miscellaneous costs add up to $75,000 USD. • Calculation: $75,000 USD + $75,000 USD By adding all of these costs together, these fixed costs become $249,000. When converting to Rs, these costs become 17,290,560 Rs. According to the locational revenue-cost-volume analysis, Bengaluru is the strongest option due to extremely reasonable land area costs despite the Chick-fil-A being located in the tech hub of the city and the relatively high volume of sales, since the tech hub is filled with younger and busy professionals who
- 17. 16 are likely to eat at fast food restaurants. Since Bengaluru emerged as the winner in both of the Location strategy models, Chick-fil-A should enter India by first launching outlets in Bengaluru. Basic Decisions about Entering Foreign Markets Type of Internationalization Strategy In order for Chick-fil-A to expand the market for its domestic product offerings, realize location and cost economies, and leverage valuable skills developed in foreign operations, Chick-fil-A must go global. Determining the appropriate internationalization strategy will set them on the path to accomplishing these goals. Selecting the best-fit internationalization strategy for a company’s entrance into a region is reliant on the competitive pressures of the given area - including the pressure for cost reductions and pressures for local responsiveness. We have determined that since there are high adaptation pressures initially, the best strategy for Chick-fil-A’s internationalization into India is a localization strategy. However, later on, as Chick-fil-A expands into more countries and faces more cost pressures, the company will need to implement a transnational strategy. Internationalization Strategy Selection: Localization Strategy When using a localization strategy for internationalization, companies should have one headquarters in one country and utilize a few subsidiaries in another country where they have presence. These subsidiaries offer differentiating products according to certain factors, including local laws, culture, local market, and demand in the region. Internationalization, in general, allows a company to expand its market and be recognized on a global scale, positioning it in a comfortable way to introduce new products to the market. One of Chick-fil-A’s biggest competitors in the United States, McDonald’s, entered India in 1996, and it faced adaptation challenges upon entrance, as the eating habits and expectation of ingredients in India varied greatly from those of other countries. These eating habits included a high population of vegetarians, high demand for spicy and hot products, and extremely low demand for beef and pork due to religious reasons. Given the fact that the Big Mac is McDonald’s flagship product, there were adaptations to be made which would be pivotal to McDonald’s success. In order to fit local consumers’ tastes, it introduced new products to the market, including Maharaja Mac, Vegetarian Salad Sandwich, McAloo Tikki. It created dishes or components including McMasala, McIdli, and focused on chicken and fish products over beef and pork products, as mentioned before, due to religious reasons. By offering a localized menu to meet consumers’ demands, McDonalds has garnered more than 320 million orders each year. Given this fact, as Chick-fil-A moves forward with entering India, it will be crucial for the corporation to understand local consumers’ needs and preferences and adapt its available product mix accordingly. On the other hand, utilizing a localization strategy poses several risks, including the lack of control of operations from headquarters’ point of view in some countries, rising political and legal issues varying by
- 18. 17 region, and the misunderstanding of cultural norms. Given these risks, we believe that a localization strategy is still the most promising strategy for Chick-fil-A to pursue, as the risks can be mitigated by taking careful measures. These measures could be regarding selection of entry mode, or partnering Chick-fil-A with local firms in order to understand the local culture and make business decisions which satisfy and exceed the demand of local consumers. As Chick-fil-A expands into more countries in the future, the company will require a more sophisticated internationalization strategy to balance the cost pressures as well. Even when the company launches more outlets in multiple cities in India, the localization strategy must evolve into a transnational strategy. With internationalizing through a transnational strategy comes advantages which impact a company’s overall successes. Since transnational corporations have a decentralized structure, they realize cost savings by distributing labor, materials, transportation, distribution costs, and real estate costs to areas of the world which are more cost-efficient. Also, a key point of sale in the Indian food industry is the street food vendor market. Street food vendors sell foods at extremely low prices, which may eventually also be a major price and cost pressure on Chick-fil-A. Product Offerings and Pricing Decisions for Transnational Strategy Many Chick-fil-A classics that are found in the United States can be retained because chicken, fries, and ice cream are widely popular and consumed in India. However, a few adaptations are made to cater to the vegetarians, as well as the flavor and spice preferences of the Indian market. For example, Chicken Tikka is a popular dish in India, and chickpeas are liked among vegetarians. Chili-based spices are very common in Indian cuisine, so that’s why they should be introduced with particular dishes on the menu. Lassi is a popular yogurt drink in India that could serve as a replacement for milkshakes. Mango, malai, and rose are some of the preferred flavors for dairy-based beverages or desserts. Regarding pricing, although Chick-fil-A may face cost pressures from the street food vendors, its main source of competition is the other American fast food restaurant chains since they are targeting the same market of urban young professionals. Thus, the prices listed below for each offerings should enable Chick- fil-A to be competitive with its rivals. The prices were determined by observing the price of similar dishes at these other fast food chains. While the prices may seem unreasonably low from an American or European business perspective, these numbers are reasonable especially when considering that the ingredients and supplies would be sourced from within India, so the costs would also be significantly cheaper. Decentralizing the operations and distributions from the home country, as discussed earlier, would decrease the costs.
- 19. 18 Burgers Price Original Chicken Burger 114 Rs. Spicy Chicken Burger 114 Rs. Grilled Chicken Tikka Burger 130 Rs. Spicy Chickpea Burger 100 Rs. Sides Price Original Chicken Nuggets 75 Rs. Chili Chicken Nuggets 85 Rs. Original Waffle Fries 55 Rs. Chili Waffle Fries 60 Rs. Drinks and Desserts Price Coca-Cola Drinks 55 Rs. Mango Lassi 70 Rs. Rose Lassi 70 Rs. Vanilla Soft-Serve Ice Cream 40 Rs. Mango Soft-Serve Ice Cream 50 Rs. Malai Soft-Serve Ice Cream 50 Rs. Analysis of Entry Mode Decisions The entry mode into India for Chick-fil-A is tricky, so there should be a two-part entry. The two-part entry mode would first consist of Chick-fil-A opening a couple corporate-owned outlets, followed by launching a franchising option. Initial Entry Mode: Greenfield Initially, Chick-fil-A should make Greenfield investments to enter India. The Greenfield investments should be allocated towards in-depth market research, opening a corporate office and three Chick-fil-A restaurant locations in the IT corridors of Bengaluru, purchasing and developing the lands for broiler meat
- 20. 19 production and a packaging/manufacturing center, and short-term contracts with certain suppliers and distributors. Many foreign companies in the past have been unsuccessful in entering India. Thus, Chick-fil-A must be agile in adapting and executing. Making greenfield investments would enable Chick-fil-A to have a high degree of control over its business operations, manufacturing, brand, and hiring, which is necessary for the company to experiment with its menu offerings and pricing. If Chick-fil-A does not have this high degree of control, then the company may not be able to respond fast enough to the consumer preferences and tastes, potentially losing prospective consumers permanently. While greenfield investments are generally highly risky, Chick-fil-A will make relatively low investments especially because only three corporate-owned outlets will be opened initially and the U.S. Dollars to Indian Rupees conversion is favorable. Hence, the possible opportunity outweighs the risk stemming from making greenfield investments. Also, entering India through an acquisition or merging is not a reasonable option for Chick-fil-A. This is because there are only a few American fast food chains operating in India. The vast majority of restaurants are based on Indian cuisine and are small family-owned businesses. Of the American fast food chains, only KFC has a chicken-focused menu. However, the chances of Chick-fil-A acquiring KFC from YUM! Brands is extremely low because YUM! Brands will not gain much value from selling the KFC India brand, especially when KFC is performing well there. Thus, there are not any practical options for acquisitions either. From a legal and economic standpoint, India is a popular country for greenfield investments. Foreign companies in the food processing sector, specifically, enjoy the option of entering India via the “Automatic Route”, in which the company and investors do not need approval from the government of India for the investment. This would allow Chick-fil-A to focus its energy and budget on purely operations-related activities, rather than legal bureaucratic processes. Lastly, Chick-fil-A must take advantage of multiple channels to market to Indian consumers. TV ads can be shown on the most popular South Indian channels, such as Sun TV and Vijay TV, to reach a mass market. In terms of digital platforms, Chick-fil-A could publish ads via YouTube and Saavn (popular Indian music streaming app that is similar to Spotify) to target the younger population, which is also the segment that finds American fast food the most appealing. Additionally, since cricket is a very popular sport in India, Chick-fil-A should consider sponsoring the Royal Challengers Bangalore team for one season of the Indian Premier League. Entering India with greenfield investments and corporate-owned restaurant outlets is the most appropriate strategic entry mode for Chick-fil-A. However, once the market is tested and Chick-fil-A is sufficiently prepared to expand, the company should open up franchising options.
- 21. 20 Early Expansion: Franchising After successfully entering India through corporate-owned, greenfield investments, the next most suitable step would be to franchise. Previously argued is the reasoning for why each other option is invalid for this pursuit of Chick-fil-A’s entrance into India. Franchising a business comes with many advantages, which outweigh the cost of the disadvantages. Arguably the strongest reason to franchise is the fact that the risk of the business failing is exponentially reduced, due to the fact that the business is based on a proven idea, and it’s possible to analyze other franchises before pursuing one yourself. Another major strength to franchising is the fact that franchises operate under a recognized brand name is a powerful tool. Franchises are also easier to finance, since the brand has a previously existing reputation, as well as relationships with suppliers, which a bank will be more likely trust when lending. In regards to disadvantages, with franchising, there are a few, however, they can be easily mitigated by taking proper actions and paying close attention. Within the agreement to franchise itself, there should be many restrictions, instructions, and orders for the franchisee to follow. However, these guidelines only ensure the consistency and structure of how the business is run, and it ensures that the franchise operates according to the core values and principles expected by the brand itself. The initial costs to franchise can also be very demanding, however, these costs are only upfront, and by having the support and resources of a franchisor, the franchisee should have confidence in running its franchise. To get started with franchising, Chick-fil-A will need to develop several guidelines from the start. This means that Chick-fil-A will need to determine which cities to limit franchises to according to demand for the product and population size. It will also need to regulate by creating franchising contracts which outline a franchising fee, sales commissions, and other important rules and regulations which the franchisee must follow. Looking ahead, once Chick-fil-A analyzes the success of each franchise and determines the time to continue its franchising expansion, it will need to market to potential future franchisees, perhaps by infiltrating into the crowd of wealthy and elite locals who will have the resources and power to maintain and properly operate Chick-fil-A franchises. Organizational Structure Every company needs a specific organizational structure that matches its strategy to work successfully. Chick-fil-A is a company that operates in the United States, has one store in Canada, and is planning to open more there in the future. Expanding into India, we would suggest as previously stated in the beginning a localization strategy, and in the future, Chick-fil-A should move towards a transnational strategy. Having in mind that Chick-fil-A to this date only has stores in North America, and India would be the first country outside of this continent, the global area structure would be suitable in the beginning of its internationalization. The global area structure has on top its home office departments and for each country a new operating division. In this case, India would have its own operating division with a
- 22. 21 production, marketing, operations and finance manager. These managers are only in charge for India. Therefore, the company can give its whole attention to the local demands which is the most important element of the localization strategy. Accordingly, Chick-fil-A should have a polycentric staffing approach, where it recruits host country nationals to manage subsidiaries in its own country. If in the future Chick-fil-A moves towards a transnational strategy, the company should also adjust its organizational structure. In the global area structure, each operating division of each country works alone and thus they do not take advantage of possible synergies. The matrix structure would be more fitting for the transnational strategy because different divisions cooperate together, so they can respond faster to new strategic needs of the company. The authorities, divided by areas and departments, and the firm can adapt better to local demands. Every matrix interface has two managers with a dual reporting line. Thus, there can be conflicts and misunderstandings because the employees in the matrix interfaces have two authorities. In addition they can experience more stress with having two bosses. For the purpose of solving these problems there is a need for more meetings and reports to work efficiently. In general though, the advantages outweigh the disadvantages in the matrix organization. Furthermore, the company should change its staffing approach from polycentric to geocentric. In this case the matrix is split between Chick-fil-A´s locations on one side, and the different departments on the other side. For expanding into India, they need to add India as another division and hire a new manager for each interface. Additionally, the company needs a general manager for India who is in charge of the country as a whole. In conclusion, the company should start off with the global area structure and later transform into a matrix structure once a transnational strategy is followed. Global Value Chain From the chicken on the farm to the actual chicken sandwich on the menu of Chick-fil-A, it is a long process and requires various activities. The global value chain covers all these steps from the conception to the final product. The managers need to decide from which supplier they should get the fresh produce and all the logistics that come along. The overall goal is to increase the product quality and lower the costs. Above all, Chick-fil-A needs to focus on the production and logistics as well the marketing and sales activities in India. Since Chick-fil-A is a fast-food chain, it is important for them to have fresh products. Therefore outsourcing the supplier would not be the ideal choice. In the United States, the company gets its produce and chicken from farms located within the country. The company can ensure that the products are fresh because the route from there to the restaurants is relatively short. Expanding into India, Chick-fil-A needs to find trustworthy suppliers located in the country. As mentioned before, we suggest the company open its first store in Bengaluru, thus finding suppliers in the south of India is ideal. Suguna Foods is located close to Bengaluru and could be a a good option for being its broiler meat producer. Furthermore, the company needs to buy the fresh produce in India, as the climate allows India’s agriculture to thrive. This means that it is easy for Chick-fil-A to find fresh produce for its customers.
- 23. 22 Chick-fil-A can make certain ingredients in India, like the buns for the sandwiches and the sauces. Additionally, in the beginning, there would be a high fixed cost for the required machines to efficiently make the products, but in the long run, this is a necessary investment for them. Risks and Mitigations With globalization and entrance into a new country, there will of course be several risks. However, Chick- fil-A will be able to easily mitigate the risks outlined below by being aware of the possible risks that pose a threat and taking measures to reduce them. Potential risks include cultural fit, the growing health and wellness trend, and the availability of chicken. Cultural Fit One issue that Chick-fil-A may face upon entrance into India is the fact that the majority of the consumers prefer home-cooked meals over a fast, quick option to take on-the-go. On top of this, Chick-fil-A is a Christian brand, and its stores in the United States are habitually closed on Sundays to pay respect to its “company values.” The reason why this directly impacts Chick-fil-A’s entrance into India, is because Sundays are historically a commercial day in the Indian market. As many smaller shops in the Indian market are closed on Sundays, the fast food businesses can relish high sales on this day each week. In order to tackle this issue, what Chick-fil-A can do is ensure that it offers a targeted product line which fits the local consumers’ specific tastes, such as chili and other spicy flavors which the region has a high demand for. In regard to the business closures on Sundays, this is something Chick-fil-A headquarters will need to consider. Is it worth it to close its businesses and miss out on an opportunity to earn great profits while small businesses are closed? Is it worth it to reconsider its company values to ensure that its competitors such as McDonalds and KFC don’t surpass them in this region of the world? The final word on this will have to come from the upper management of Chick-fil-A. Growing Health and Wellness Trend After the liberalization policy was enforced in 1991, India’s fast food industry took off at full force. Specifically, vegetarian food constitutes around 45% of the entire fast food market in India, and is expected to grow at a CAGR of 18% by 2020. However, all things considered, research has proven that standard fast food has very high density, and foods with high density cause people to consume more than they usually need, consequently consuming more calories than recommended in a given day. Research has also proven that fast foods are a major cause of obesity and other health issues, and given its high fat content, it is not recommended to eat on a regular basis. The question here is, if vegetarian fast food is growing at such a high rate, is there demand for Chick-fil-A, a chicken product-based company? If there is increasing research about the poor impact of fast food
- 24. 23 products on consumers’ health, will Indian consumers still demand Chick-fil-A products? The answer is “yes,” and the solution to this issue is Chick-fil-A’s creativity. With Chick-fil-A’s adaptability and creation of local product mixes, it will be able to mitigate this risk. For example, Chick-fil-A can introduce more wholesome and nutritious options to its Indian menu, such as the Grilled Chicken Tikka Burger. Chick-fil- A can reduce the amount of fat in its products, to increase the healthy component of the products, without compromising its spicy flavors which the locals enjoy. To cater to the growing vegetarian demand, Chick- fil-A can offer vegetarian-friendly products, including the Spicy Chickpea Burger. In addition to this, diets are impacted by income, prices, individual preferences and beliefs, geographical, environmental, and social and economic factors. As Indian consumers’ incomes have increased, they will put less pressure on food cost savings. As mentioned before, India has one of the longest commute times in the world, and it is a huge time-saving option for Indians to be able to purchase food during their commutes. With this additional income, Indian consumers are able to more comfortably spend their income on food at restaurants. Availability of Chicken: Shortage of Supply An additional concern which Chick-fil-A must be wary of making a priority in terms of risk management is ensuring that it guarantees its supply of chicken. In February of 2018, KFC had to temporarily close many of its locations in the United Kingdom when it had problems with its delivery service, DHL, which had “operational issues” and was unable to complete several deliveries of chicken. Given the fact that India has a population of 1.3 billion people, and the United Kingdom has a population of 66 million, this is a legitimate concern. Chick-fil-A is taking on a risk by trusting in a third-party service to deliver its products from one place to another. In order to make sure that there are no issues like that which happened to KFC in 2018, Chick-fil- A must maintain open communication with its delivery team and stay ahead of any orders which need to occur, to ensure that there will be no problems with transporting Chick-fil-A products from the supplier to the store. If there are any future “hiccups” to be expected, with sophisticated forecasting measures, Chick-fil-A will be able to ensure that it has enough chicken supply in its stores to meet the demand of the Indian consumers. Another factor to keep in mind is that India is one of the world’s largest producers of broiler meat. Conclusion Chick-fil-A transformed from being a small family-run restaurant into one of America’s largest and most popular fast food chains that serves chicken sandwiches. With the discovery of pressure-frying for chicken and the use of franchising, Chick-fil-A was able to expand quickly across the United States with over 2,400 locations currently. Having said that, the company does not have a strong international presence, as it only has a few locations in Canada. However, India presents itself as a remarkable international market for Chick-fil-A to expand into.
- 25. 24 The economic and political conditions, the American fast food market in India, and the cultural conditions present in India were evaluated to determine whether the country is an appropriate market fit for Chick- fil-A. India has a constitutional democracy with a parliament-led legislature. With the passing of the Insolvency and Bankruptcy Code and Food Safety Standards Act, companies, like Chick-fil-A, would be able to better serve its consumers and form stronger relationships with supplier through more effective infrastructure, while enjoying the backing of the government. This form of government helps establish a relatively open and free economy, especially for the food industry. Foreign businesses in the food industry can avoid the bureaucracy and enter India via the “Automatic Route”. With a population of 1.3 billion, India has a large American fast food market that is rapidly growing. The cultural conditions, such as the socioeconomics of the changing Indian lifestyle, the religious impact on Indian dietary restrictions, and Indian chicken production and consumption, makes India an appealing market for Chick-fil-A. Additionally, Bengaluru is the most practical city choice within India based on a Factor Rating Model and a Locational Revenue-Cost-Volume Analysis. Regarding internationalization strategy, Chick-fil-A should initially use a localization strategy when entering India. This is due to the high adaptation pressures in the Indian food market, as McDonald’s and other competitors have already experienced them. A global area structure and polycentric human resources management system would best suit the localization strategy. As Chick-fil-A expands within India and possibly other countries, the company may need to follow a transnational strategy eventually to counter the additional cost pressures. Some of the Chick-fil-A classic menu offerings are retained, while other new ideas were generated in the drafted menu to better satisfy the Indian market’s tastes and preferences. For a transnational strategy, a matrix structure and geocentric human resources management system would be most appropriate. The initial entry mode for Chick-fil-A in India should be greenfield investments. Although it is risky, Chick- fil-A would have a better ability to allocate its energy and capital towards market research and can seamlessly experiment with its menu offerings to test which items are favorites among the consumers. However, once the menu and the business performance is stabilized for Chick-fil-A, the company could consider franchising options to quickly expand in India too. For Chick-fil-A, the global value chain is mostly local sourcing due to the vast availability of broiler meat production and fresh produce in the friendly agricultural conditions of India. Most of the ingredients would be bought from local suppliers, such as Suguna Foods, in the south of India. However, the bread for the bun and sauces can be made by the firm in India itself to ensure consistency. Advanced machines must be used to efficiently produce burgers at each of the locations, so technology would be an important factor in the success of the business in the Indian market.