Outback Steakhouse – "Going International" Individual Case Study Uwe Wehner June 20, 2010 06/20/2010 2  Uwe Wehner I. Preface: This individual case study concentrates only on the most important facts mostly in bullet point style and not in essay style, to get a quick overview. It gives you a view about the conent of the text and the possible strategies. The case study can support case study - presentations and/or exam preparation. Not all questions signed are answered as they are answered already by parts of the previous questions. The case study is based on the "Outback – Going International" case out of the book of Mr. Robert M. Grant "Contemporary Strategy Analysis and Cases – 7th Edition". The "Individual Case Study" represents the opinion of the Author and has no demand to completeness. 06/20/2010 3  Uwe Wehner II. Assignment Questions for Case Study: Outback Steakhouse – "Going International" 1. What are the principal features of Outback Steakhouse’s strategy in the US? Why has the strategy been so successful? 2. What are the key elements of the international expansion strategy being proposed by Hugh Connerty? 3. Assess the proposed strategy in relation to (a) Should Outback Steakhouse expand internationally, or would it be better to expand through starting new restaurant chains within the US? (b) Does the strategy outlined by Connerty make sense? 4. If Outback is to expand internationally, advise Chris Sullivan on (a) The optimal rate of international expansion. (b) The best mode of entry into foreign markets (e.g. direct management, JV (Joint Venture), franchise). (c) Which country(ies) to enter first. (d) Whether Connerty is the right person to head the International Division. Additional Questions: 5. Do a SWOT Analysis of Outback Steakhouse. What does it suggest? 6. What are the 5-Forces by Porter? 7. What are the key success factors in the casual dining portion of the restaurant industry? Build-up a strategy on the Key Success Factors. 8. What are the primary elements of Outback’s strategy in the United States? What resources/capabilities have been critical to Outback’s success? Possible further Questions (can be found as part of previous questions): 9. What are the standout business and economic characteristic of the restaurant industry? 10. Assess the alignment between Outback’s proposed international strategy and these key resources and capabilities developed in the United States. 11. If Outback does expand internationally, what would you recommend as far as which countries to pursue first, the best mode of entry into these countries, and the pace of international expansion? If you recommend that Outback not expand internationally, how might Outback further develop its business opportunities in the U.S. 12. What major issues and conditions is the restaurant industry facing in the US? 13. What recommendations would you make to Outback.

1. Outback Steakhouse –
"Going International"
Individual Case Study
Uwe Wehner
June 20, 2010
I. Preface:
This individual case study concentrates only on the most
important facts mostly in
bullet point style and not in essay style, to get a quick
overview.
It gives you a view about the conent of the text and the possible
strategies. The case
study can support case study - presentations and/or exam
preparation.
Not all questions signed are answered as they are answered
already by parts of the
previous questions.
The case study is based on the "Outback – Going International"

2. case out of the book
of Mr. Robert M. Grant "Contemporary Strategy Analysis and
Cases – 7th Edition".
The "Individual Case Study" represents the opinion of the
Author and has no demand
to completeness.
II. Assignment Questions for Case Study:
Outback Steakhouse – "Going International"
1. What are the principal features of Outback Steakhouse’s
strategy in the US? Why
has the strategy been so successful?
2. What are the key elements of the international expansion
strategy being proposed
by Hugh Connerty?
3. Assess the proposed strategy in relation to
(a) Should Outback Steakhouse expand internationally, or would
it be better to
expand through starting new restaurant chains within the US?
(b) Does the strategy outlined by Connerty make sense?
4. If Outback is to expand internationally, advise Chris Sullivan
on
(a) The optimal rate of international expansion.
(b) The best mode of entry into foreign markets (e.g. direct
management, JV (Joint
Venture), franchise).
(c) Which country(ies) to enter first.
(d) Whether Connerty is the right person to head the

3. International Division.
Additional Questions:
5. Do a SWOT Analysis of Outback Steakhouse. What does it
suggest?
6. What are the 5-Forces by Porter?
7. What are the key success factors in the casual dining portion
of the restaurant
industry? Build-up a strategy on the Key Success Factors.
8. What are the primary elements of Outback’s strategy in the
United States? What
resources/capabilities have been critical to Outback’s success?
Possible further Questions (can be found as part of previous
questions):
9. What are the standout business and economic characteristic
of the restaurant
industry?
10. Assess the alignment between Outback’s proposed
international strategy and
these key resources and capabilities developed in the United
States.
11. If Outback does expand internationally, what would you
recommend as far as
which countries to pursue first, the best mode of entry into
these countries, and the
pace of international expansion? If you recommend that
Outback not expand
internationally, how might Outback further develop its business
opportunities in the
U.S.
12. What major issues and conditions is the restaurant industry
facing in the US?
13. What recommendations would you make to Outback
Steakhouse to keep
increasing sales and profit margins in his stores?

4. III. Answers:
1. What are the principal features of Outback Steakhouse’s
strategy
in the US?
Outback Steakhouse's strategy in the US – Principle Features:
Strategy of Outback Steakhouse: Differentiation
Astute positioning within the intensely competitive US
restaurant business through
differentiation strategy.
Principle Features:
1- Differentiation Strategy (central of chain's differentiation:
High quality of food
and service, relaxed ambience and comfortable experience)
2- Limiting service to dinner (Outback serves only dinner)
3- Customer satisfaction
4- Outback Location and Australien Theme
5- Management and ownership structure, Benefits for employees
6- Human Resources - Selection of managers and employees
7- Long term relationship with suppliers and employees
8- Constant drive for innovation and improvement
9- Diversification: Entry into other market or restaurant
concepts besides the
traditional Steakhouse Market– JV with Carrabba's Italien Grill

5. In Detail:
1- Differentiation Strategy (central of chain's differentiation:
High quality of food
and service, relaxed ambience and comfortable experience)
o Consistently high-quality ingredients
o Hand made dishes
o Quality of food (central of chain's differentiation)
o Preparation of limited number of menu items that appeal to a
broad
array of tastes
o Generous portions at moderate prices
o Casual dining atmosphere and highly attentive service
attracting a
diverse mix of customers
o Bigger menue than the typical casual restaurants did in the
1980s
o Restaurants are "fully staffed and fully trained"
o Servers have not more then three tables to guarantee good
service and
provide familiar feeling to the customers
o Customer sets the time and speed of serving
o Provide relaxable and enjoyable experience, where customers
are

6. more likely to come back
2- Limiting service to dinner (Outback serves only dinner)
o Limiting service to dinner (generally from 4:30pm to 11pm),
which
reduces the hours of restaurant management and employees
o No lunch served
morning
3- Customer satisfaction
o Important: employees will do what ever is needed to meet the
needs
and preferences of customers
4- Outback Location and Australien Theme
o in residential areas rather then downtown
o low rents
o encourage of customer and employee loyalty,
"The suburbs are our outback"

7. 5- Management and ownership structure, Benefits for employees
• Management and ownership structure
o Providing restaurant management the opportunity to purchase
a 10%
interest in the restaurant they manage
o directly owned restaurants with 71% to 90% owernship of
Outback
steakhouse Inc. (Partnership)
o Each restaurant was headed by a "managing partner"
o 10-20 restaurants are overseen by a regional manger (Joint
Venture
Partner JVP)
• Extended Benefits to satisfy employees
o All employees were eligible for the company's stock
ownership plan
o Health insurance available for all employees
6- Human Resources - Selection of managers and employees
o "Tough on results, but kind with people"
o Carefully choice of franchisees to ensure that all were fully
committed
to Outback's principles and beliefs
o Aptitude tests

8. o Psychological profiles
o Interview with at least two managers
o The goal was to dreate an interpreneurial climate that
emphasized
learning and personal growth
7- Long term relationship with suppliers and employees
o Long term relationship with suppliers, viewed as "partners"
o Satisfied staff and sound equipment
8- Constant drive for innovation and improvement
9- Entry into other market besides the traditional Steakhouse
Market– JV with
Carrabba's Italien Grill
Why has the strategy been so successful?
• Differentiation to other competitors with high quality of food
& service and a
customer orientated atmosphere and relaxed ambience as a
comfortable
experience.
• Nevertheless the preparation of the food and high innovation

9. and
improvement
• Customer's needs as highest important value
• Limited service to dinner to reduce quantity of employees and
costs and to
guarantee quality of food
• Location of restaurants are in the suburbs, to reduce costs and
to improve
relaxed feelings due to more room and not directly in the city
• Management and ownership structure to guarantee self-
identification of
managers (to work for their own business) and benefit system to
increase
satisfaction of employees
• Selection of employees acc. to their standards, to guarantee
quality, same
spirit and synergy
• Long term relationship between supplier and employees which
creates a
good relationship between server and customer and guarantees
constant
quality of raw marterials
• Diversification: Entry into other markets or restaurant
concepts, as there is
a saturation of steakhouse market expected. Currently open if
the concept
will bring success

10. All this is responsible for the success of the Outback
Steakhouse strategy with its
features. This is not only a success for the franchiser,
franchisees and their work-
satisfied employees, it is also a success for the customers who
are satisfied with the
product and re-visiting the restaurants. Nevertheless not to
forget the other
stakeholders e.g. suppliers.
Steakhouses are very popular, increasing growth and greater
affluence and a
declining role of family life resulted in increased eating away
from home. Furthermore
Outback Steakhouse fills the gap between high-priced and
budget steakhouses.
Using an Australien theme associated with the outdoor and
adventure, providing not
only excellent food but also cheerful, fun and comfortable
experience.
2. What are the key elements of the international expansion
strategy
being proposed by Hugh Connerty?
Hugh Connerty's Key Elements of International Expension
Strategy:
1- Find the right franchisee partner (for) abroad

11. • Franchise the international operation with domestic company-
owned stores
HERE and franchisees THERE (abroad)
• Biggest decision is how to pick the franachise partner (he will
concentrate on)
• "We are going to select a person who has synergy with us,
who thinks like us,
who believes in the principles and beliefs."
I have learned that people (in other countries) think very
different than
Americans."
2- Focus on the strength – Support Operation
• Suppliers have to check to build up plants abroad
o Outback wants to be a opportunity for our suppliers
internationally
o Outback has a high loyality to their suppliers (never changed
suppliers)
and expecting the same of them
3- Geographical expension – first close to home, then tackle
Latin America
and the Far East
• Going International as very long-term project:
o "The first year will be Canada. Then we'll go to Hawaii. Then
we'll go to
South America and then develop our relationships in the Far
East,

12. Korea, Japan ... the Orient."
o "The secound year we'' begin a relationship in Great Britain
and from
there a natural progression throughout Europe
• Connerty believed that his experience in developing outback
Franchisees in
the US would provide the guidelines for overseas expension
• "That isn't different than the rest of the world"
Wehner
3. Assess the proposed strategy in relation to
(a) Should Outback Steakhouse expand internationally, or would
it
be better to expand through starting new restaurant chains
within
the US?
Internation Expansion Strategy of Connerty:
1- Find the right franchisee partner (for) abroad
2- Focus on the strength – Support Operation
3- Geographical expension
To 1 - Find the right franchisee partner (for) abroad:
• difficult, because Outback Steakhouse is not present in
countries abroad
o intensive control of standards necessary

13. o regulations and trade restrictions in foreign countries
• nevertheless interviews of applicants possible in the US for
abroad or in the
internatinally, but problems as above
-> very good Human Resource Department of Outback
Steakhouse
To 2- Focus on the strength – Support Operation:
• Forcing suppliers to build up plants abroad could exceed their
abilities
o Bankruptcy of suppliers could lead to shortage of supply
abroad and in
the US
• Large distance abroad, instead of nearer location to USA leads
to higher cost
and being present at the location abroad
• Easier handling and control of suppliers closer to home
country (e.g. Canada,
Mexico or Latin America)
• Searching of new supplier abroad would increase costs due to
controlling,
bulding-up same understanding of business and quality, to get
same standard
and "to get together".
• Only to support operation instead of active handling and

14. providing solutions for
franchisees the "going international" project will not succeed
To 3- Geographical expension:
• Saturation of US Market within approx. 5 years
• During that time international expension needs to be well
situated
• Starting with closed countries to US first and then anglo-saxon
countries
abroad, 2nd other suitable countries (needs to be investigated,
acc. to
marktet)
• First get experience internationally with one project (pilot-
project) and then
build-up step-by-step
• Franchisees or joint venture depending on country
Due to all these facts, Outback Steakhouse should expend fistly
national in the US
than expend close to the US-Market in Canada and Mexico
(NAFTA) or Latin
America, as this is easier to control. But Mexico and Latin
America Market needs to
be investigated if suitable. Nevertheless, the expension needs to
be properly
planned.

15. (b) Does the strategy outlined by Connerty make sense?
No, the strategy of Connerty does not make sense and is only
from his intuition.
He didn't do any investigations about the following:
• Where are the growing steak restaurant markets abroad?
• Where do we have suffiecient demand? And is our
differentiation strategie
suitable in these countries. Do we need to change our strategie?
• Is a diversification abroad maybe useful? Are there growing
markets of other
restaurants (e.g. fish, turkey, ...)?
• What are the regulations and trade restrictions abroad? What
countries do
make problems in kind of franchising, JV etc.?
• What about the supply chain in the foreign countries and
supply
• What are the cultural and social factors in possible countries?
• Where should the location be selected acc, to demand,
infrastructure, supply
and raw materials?
Connerty has only experience in franchising and not in JV and
thinks the business it
every where the same as in the US, just adaptation. This is
wrong and not
professional. All the above questions need to be taken into
consideration and well

16. thought before acting. A strategy from intuition without
analysis will mostly lead to a
failure.
4. If Outback is to expand internationally, advise Chris Sullivan
on
(a) The optimal rate of international expansion?
Firstly it is advisable to start with a pilot project in one country
abroad for example in
the UK as it is an anglo-saxon country and similar to the US.
The expension in closed
to US countries like canada the expectation of the growth rate
there will be the same
as in the US, approx. 27%. Beside the expension in the US the
expension in Canada
should be lower as we entry the market there. I would suggest
15-20 new frenchised
Outback Steakhouse Restaurants. Firstly supplied by the US
suppliers and build up
step-by-step local supplier system.
(b) The best mode of entry into foreign markets e.g. direct
management, JV (Joint Venture), franchise
First entry into the UK market with a direct management to
increase experience
abroad with location in London. After build-up of a proper
supply chain to expend in
the UK with franchising.

17. In Canada by franchising and control firstly through US
management. Build-up of a
supply chains in Canada and afterwards control through local
management.
(c) Which country(ies) to enter first
As already discussed, Canada and UK first. This needs to be
further investigated.
(see further questions).
(d) Whether Connerty is the right person to head the
International
Division?
Connerty is not the right person for the job as "Head of the
International Division"/
"President of Outback International" as he has no experience
abroad and not the
experience to lead organisations abroad. His experience is
limited to the US
(Northern Florida and Southern Georgia) as franchisee of a
number of Outback
restaurants.
Acc. to his understanding of building up business abroad –
• "The first year will be Canada. Then we'll go to Hawaii. Then
we'll go to South
America and then develop our relationships in the Far East,
Korea, Japan ...
the Orient.",
• "The secound year we'' begin a relationship in Great Britain
and from there a
natural progression throughout Europe",

18. • "That isn't different than the rest of the world",
• "I have learned that people (in other countries) think very
different than
Americans"
he seems not to have the right awareness of the problems
coming up in this field of
business and not the experience. Neverthless his way of
investigation is wrong as
well.
5. Do a SWOT Analysis of Outback Steakhouse
5.1. External Analysis:
5.1.1. Definition of the market:
• Casual dining restaurants
• Class market
• Medium price segment
5.1.2. What are the 5-Forces (by Porter) of the Restaurant
Market/
Steakhouse Market
National and international

19. Rivalry: HIGH
Competitive Rivalry
• Competition in the restaurant industry is very strong due to
the fact that all
restaurants are basically going after the same potential
customer.
• Fragmented restaurant industry (high Segmentation of the
industry)
• Many global restaurant chains
Buyer Power: HIGH

20. • Buyers do not depend on suppliers (restaurants)
• Alternative sources are available for the customers
• Low switching costs for the buyers
• High concentration of buyers/customers
• Loyalty customers come back
Market
Attractiveness
Supplier
Power
Entry
Substitutes
Buyer
Power
Rivalry
Threat of Entry (Most important): LOW
Depending on barriers to entry
• low capital investments necessary
• customer loyalty moderate
• (Differentiation of Outback Steakhouse is moderate) <- not
generally based

21. on market
• Economies of scale available for large restaurant chains.
Outback steakhouse: economies of scale for advertising and
purchasing
• Entry barriers for franchising possible, depends on country
The possibility of new entrants joining the industry is high as it
does take a low
investment to start a restaurant.
The customer loyalty is moderate, as customers change behavior
and taste.
The differentiation of Outback Steakhouse is moderate,
nevertheless apart from
steak houses and grills, competitors are casual diners, fast food
chains and goceries.
Threat of Substitutes: HIGH
Reduction in demand for products as customers switch to
alternatives
• Many substitutes with similar products available (apart from
relaxing and
outback concept), e.g. grills, other steak houses, diner segment,
fast food
chains and grocers
• (Any restaurant can satisfy basic human need to "satisfy
hunger") ->
generall
• Cooking at home
Supplier Power: MEDIUM

22. • Concentration of suppliers is low/medium (internationally
depending of
country)
• Many suppliers are available (internationally depending of
country)
• Switching costs are moderate (but needs to be considered that
quality of
beef is important)
• (Very high linkage of Outback Steakhouse to their supplier
acc. to the
high quality) <- nnot generally based on market
Looking at the five forces by porter, the market is a ½ Star
Market and
therefore not attractive.
5.1.3. What are the key success factors in the casual dining
section of
the restaurant industry? What are the driving forces?
5.1.3.1. Key Success factors of restaurant industry – casual
dining
/(differentiation):
• Convenient Location

23. • Maintaining brand reputation and Marketing
• Familiarity with local customers preferences (differentiation –
steak restaurant)
• Innovation of menu
• Operational efficiency
• Human resources
• Price-performance relation
• Service and Food Quality (differentiation - steak restaurant)
5.1.3.2. Driving forces of restaurant industry – casual dining –
National/International: PESTEL - Analysis
Possible Driving forces:
• Political
o Taxation
o Foreign trade restrictions
• Economic Factors
o Interest rates
o Money suply
o Inflation
o Unemployment
o Income
• Sociocultural
o Population (demographics)
o Income distribution
o Lifestyle changes
o Attributes to work and leisure
o Consumerism
• Technological
o Industry focus of government

24. o New discoveries (food)
• Environmental
o Waste disposal
o Energy consuption
o Environmental laws
• Legal
o Competition law
o Employment law
o Health and safety
o Product fafety
Important Driving forces - NATIONAL:
• Changing consumer tastes, lifestyles, consumption
• Income distribution
• Laws and restrictions (Environmental laws, competition laws,
employment
laws, health and safety laws, ...)
• Macro-economic conditions (frequent of customers, prices
paid by
customers/income of customers, unemployment...)
• Micro-economic conditions (Raw material prices, ...)
Additional Important Driving forces - INTERNATIONAL:

25. • Foreign trade restrictions
• Population (demographics), ...
Factors for Market Selection and Entry: (Beri-Index)
• Macro-economic conditions
• Political environment
• Infrastructure
• Cultural norms and social structures
• Political and legal risks
Available Information/Determinants choosing a country:
• Demographics
• Infrastructure
• Income
• Trade laws
5.2. Internal Analysis (SW):
5.2.1. What are the "Key Success Factors"? How to increase
customer
value?

26. Key Success factors of restaurant industry – casual dining
/(differentiation):
• Convenient Location
• Maintaining brand reputation and Marketing
• (Experience in franchising (franchising industry))
• Familiarity with local customers preferences (differentiation –
steak restaurant)
• Innovation of menu
• Operational efficiency
• Human resources
• Price-performance relation
• Service and Food Quality (differentiation - steak restaurant)
Key success factors can be different from country to country
and needs separately
investigated.
The key success factors include "how to increase customer
value".
5.2.2. What resources and capabilities do we need to deliver
these "Key
success factors"?
1- Resources - What Resources do we need to deliver KSFs?
• Buildings and equipment (interieur)
• Location
• Distribution (supply network)
• Reputation
• Human resources (Capacity of: R&D, preparation of meals,
Service,

27. managers, marketing)
2- Capabilities - What Capabilities do we need to deliver KSFs?
• (Strategic Management – Business Development)
• Administration and Management – Operational efficiency
• Quality Management of supply and finished product
• Human Resource Management to get the right managers and
employees
• Marketing (Brand reputation abroad, ..)
• Product Development (Menu, meals, ...)
• Research & Development (Research, New Product
Development
Innovations, Research of customer's preferences, Innovation of
menu)
• Production – efficiency, quality
• Procurement/Supply, decrease of procurement prices
• Logistics (Shipment, Storage, Inventory Control, Planning,
Coordination)
• Sales
Looking at the "Resources" of Outback Steakhouse, all pre-
requisites are available
and well selected. At the "Capabilities" the following needs to
be improved or
integrated to get a competitive advantage:

28. • Administration and Management – Operational efficiency
• Product Development (Menu, meals, ...)
• Research & Development (Research, New Product
Development
Innovations, Research of customer's preferences, Innovation of
menu)
• Production – efficiency
• Procurement/Supply, decrease of procurement prices to get
higher profits
and decrease prices.
As there are to less information about the direct competitors, we
can not say more
about the necessary improvements.
5.3. Conclusion of SWOT – Analysis:
5.3.1. Internal Analysis (SW):
Strength:
• High quality to affordable prices and innovative concept
(price-performance relation)
• Good reputation, brand awarness and image in the US
• Excellent Human Resources Department
• Differentiation Strategy (customer orientation)
• (Strong entrepreneurial spirit)
• Good supplier relation
• Experience in local franchising (US-Market) -> going
international
• Relaxing atmosphere (Australian Theme)
• (Location of restaurants (suburbs))

29. Weaknesses:
• No menu inovation (R&D, Product Development)
• No international experience -> "going international"
• No brand awareness in foreign countries -> "going
international"
• Very tight linkage to suppliers (dependency) -> "going
international"(prices, ...)
• Partial product line, reduced to beef (apart from Carrabba's
Italien Grill)
• (Serving only dinner (not serving lunch crowds))
• operational inefficiency compared to competitors
5.3.2. External Analysis (OT):
Opportunity:
• Add. Diversification through JV/acquisitions/alliances apart
from "Carrabba's
grill (Horizontal Integration)
• Purchasing of small companies that supply products of need
(Backward
Integration)
• Integration of a delivery service with Internet Ordering
System (Forward
Integration)

30. • Expension of offered menu
• Expend business internationally
• Additional opening hours for lunch crowds (also partly or as
pilot projects)
Threat (Bedrohung):
• Saturation of US-Market within five years
• Competitors with new concepts and innovations (national and
international)
• Concept may not work in every foreign country (rejection)
• Cultural differences and economic barriers (tariffs,
regulations, laws, labor
laws and unification, ...)
• Inability of suppliers to follow internationally, host suppliers
need to be found
• Health concern about red meat consumption
What does it suggest?
The SWOT analysis shows, where Outback Steakhouse has got
it strengths and
where its weaknesses and especially where they are good in.
They are completly
focused on US-Market and the have to master high barriers to
be successful in future
to go international. Especially the country selection for
international expension is a
key element of success.

31. 6. What are the 5-Forces (by Porter) of the Restaurant Market/
Steakhouse Market
National and international
Rivalry: HIGH
Competitive Rivalry
• Competition in the restaurant industry is very strong due to
the fact that all
restaurants are basically going after the same potential
customer.

32. • Fragmented restaurant industry (high Segmentation of the
industry)
• Many global restaurant chains
Buyer Power: HIGH
• Buyers do not depend on suppliers (restaurants)
• Alternative sources are available for the customers
• Low switching costs for the buyers
• High concentration of buyers/customers
• Loyalty customers come back
Market
Attractiveness
Supplier
Power
Entry
Substitutes
Buyer
Power
Rivalry
Threat of Entry (Most important): LOW
Depending on barriers to entry

33. • low capital investments necessary
• customer loyalty moderate
• (Differentiation of Outback Steakhouse is moderate) <- nicht
generell auf
Markt bezogen
• Economies of scale available for large restaurant chains.
Outback steakhouse: economies of scale for advertising and
purchasing
• Entry barriers for franchising possible, depends on country
The possibility of new entrants joining the industry is high as it
does take a low
investment to start a restaurant.
The customer loyalty is moderate, as customers change behavior
and taste.
The differentiation of Outback Steakhouse is moderate,
nevertheless apart from
steak houses and grills, competitors are casual diners, fast food
chains and goceries.
Threat of Substitutes: HIGH
Reduction in demand for products as customers switch to
alternatives
• Many substitutes with similar products available (apart from
relaxing and
outback concept), e.g. grills, other steak houses, diner segment,
fast food
chains and grocers

34. • (Any restaurant can satisfy basic human need to "satisfy
hunger") ->
generall
• Cooking at home
Supplier Power: MEDIUM
• Concentration of suppliers is low/medium (internationally
depending of
country)
• Many suppliers are available (internationally depending of
country)
• Switching costs are moderate (but needs to be considered that
quality of
beef is important)
• (Very high linkage of Outback Steakhouse to their supplier
acc. to the
high quality) <- nicht generell auf Markt bezogen
Looking at the five forces by porter, the market is a ½ Star
Market and therefore not
attractive.
7. What are the key success factors in the casual dining section
of
the restaurant industry? Build-up a strategy on the Key Success

35. Factors.
7.1. Key Success factors of restaurant industry – casual (lässig)
dining
/(differentiation):
• Convenient Location
• Maintaining brand reputation and Marketing
• Familiarity with local customers preferences (differentiation –
steak restaurant)
• Innovation of menu
• Operational efficiency
• Human resources
• Price-performance relation
• Service and Food Quality (differentiation - steak restaurant)
7.2. Driving forces of restaurant industry – casual dining –
National/International: PESTEL - Analysis
Possible Driving forces:
• Political
o Taxation
o Foreign trade restrictions
• Economic Factors
o Interest rates
o Money suply
o Inflation
o Unemployment
o Income
• Sociocultural

36. o Population (demographics)
o Income distribution
o Lifestyle changes
o Attributes to work and leisure
o Consumerism
• Technological
o Industry focus of government
o New discoveries (food)
• Environmental
o Waste disposal
o Energy consuption
o Environmental laws
• Legal
o Competition law
o Employment law
o Health and safety
o Product fafety
Important Driving forces - NATIONAL:
• Changing consumer tastes, lifestyles, consumption
• Income distribution
• Laws and restrictions (Environmental laws, competition laws,
employment
laws, health and safety laws, ...)

37. • Macro-economic conditions (frequent of customers, prices
paid by
customers/income of customers, unemployment...)
• Micro-economic conditions (Raw material prices, ...)
Additional Important Driving forces - INTERNATIONAL:
• Foreign trade restrictions
• Population (demographics), ...
Factors for Market Selection and Entry: (Beri-Index)
• Macro-economic conditions
• Political environment
• Infrastructure
• Cultural norms and social structures
• Political and legal risks
Available Information/Determinants choosing a country:
• Demographics (Bevölkerungsstatistik)
• Infrastructure
• Income
• Trade laws

38. 7.3. Possible Strategies besides Diversification and opening
hours:
a) Marketing campain
• Pros:
o Higher market share through more restaurants
o More frequent visits (loyality of customers)
o Long term relationships build
• Cons:
o Marketing costs
o Service needs to takle boom
b) Going International
• Pros:
o Increased global Market share
o Lower raw material and employee cost (depending on country)
o Economies of scale
o economies of scope
• Cons:
o High entry costs
o Unfamiliarity with culture
o Different laws
o Different culture and tastes
o Different customer needs and expectations

39. o Time and cost consuming
06/20/2010 2
8. What are the primary elements of Outback’s strategy in the
United States? (see above)
What resources/capabilities have been critical to Outback’s
success?
8.1. What are the "Key Success Factors"? How to increase
customer
value?
Key Success factors of restaurant industry – casual (lässig)
dining
/(differentiation):
• Convenient Location
• Maintaining brand reputation and Marketing
• (Experience in franchising (franchising industry))
• Familiarity with local customers preferences (differentiation –
steak restaurant)
• Innovation of menu
• Operational efficiency
• Human resources
• Price-performance relation
• Service and Food Quality (differentiation - steak restaurant)
Key success factors can be different from country to country
and needs separately

40. investigated.
The key success factors include "how to increase customer
calue".
8.2. What resources and capabilities do we need to deliver these
"Key
success factors"?
1- Resources - What Resources do we need to deliver KSFs?
• Buildings and equipment (interieur)
• Location
• Distribution (supply network)
• Reputation
• Human resources (Capacity of: R&D, preparation of meals,
Service,
managers, marketing)
2- Capabilities - What Capabilities do we need to deliver KSFs?
• (Strategic Management – Business Development)
• Administration and Management – Operational efficiency
• Quality Management of supply and finished product
• Human Resource Management to get the right managers and
employees
• Marketing (Brand reputation abroad, ..)
• Product Development (Menu, meals, ...)
• Research & Development (Research, New Product
Development
Innovations, Research of customer's preferences, Innovation of
menu)

41. • Production – efficiency, quality
• Procurement/Supply, decrease of procurement prices
• Logistics (Shipment, Storage, Inventory Control, Planning,
Coordination)
• Sales
Looking at the "Resources" of Outback Steakhouse, all pre-
requisites are available
and well selected. At the "Capabilities" the following needs to
be improved or
integrated to get a competitive advantage:
• Administration and Management – Operational efficiency
• Product Development (Menu, meals, ...)
• Research & Development (Research, New Product
Development
Innovations, Research of customer's preferences, Innovation of
menu)
• Production – efficiency
• Procurement/Supply, decrease of procurement prices to get
higher profits
and decrease prices.
As there are to less information about the direct competitors, we
can not say more
about the necessary improvements.

42. 3- General:
General Resources:
• R1 – Finance (Capital, Cash, Debitors/Creditors, Suppliers of
Money,
Securities, Borrowing Capacity)
• R2 – Physical (Plant, Labor, Buildings, Equipment, Machines,
Land,
Production Capacity)
• R3 – Location
• R4 – Distribution (dealership network)
• R5 – Technology (Patents, Copyrights, Trade Secrets,
Business Systems,
Databases, Intellectual Property)
• R6 – Reputation (Brands, Relationships
Customer/Supplier/Dealer)
• R7 – Culture
• Human Resources (Skills, Capacity, Motivation)
General Capabilities:
• C1 - Strategic Management
• C2 - Financial Management
• C3 - Quality Management
• C4 - Government Relations
• C5 - Human Resource Management
• C6 - Product Development
• C7 - Research & Development (Research, New Product

43. Development
Innovative/Fast Cycle)
• C8 – Engineering
• C9 – Procurement
• C10 – Logistics (Shipment, Storage, Inventory Control,
Planning, Ins/Outs
Coordination)
8.3. What are the key drivers for Outback steakhouse to go
international?
Key drivers of globalization – go international:
• Global market convergence
o Global customers
o Transferable marketing
o Similar customer needs
• Cost advantage
o Economies of scale
o Economies of scope
o Country specific costs
• Global competition
o Competitors global
• Government influence

44. o Trade policies (e.g. South Korea/Japan no customs)
• Satisfaction of US market within five years
Overseas Strategy:
• Multi domestic strategy with menues configured to appeal
local tastes
• Leverage: Australien Theme and American Brand name
o International strategy
o Need local knowledge on permits, marketing & wholly owned
subsidiary/JV/franchising
Markets to Enter:
• Canada
o Similar in purchasing power and infra structure to UK
• UK
o Leave as it is
• Germany
o Overcoming perceptions (Wahrnehmung) and competition in
Germany
• Japan
o Incurring high costs, no customs

45. • South Korea
o Standards similar to Europe
• Mexico
o Economy, tastes, recession, infrastructure -> could be better
• Dubai
o Diverse immigrants
o Tourists destination
o Sea food imports
GENERAL INFORMATION:
Overseas Expension by US Restaurant Chains – Overview of the
text:
• International Marktet offered substantial growth opportunities
for US restaurant
chains
• See Table 17.2
• Attraction of overseas market:
o Less saturation compared to the US
o Local competitors are independent, family owned restaurants
rather

46. then large chains
o Anticipation/Expectations that market trends would follow
those of the
US
and declining role of family life would
result in
increased eating away from home
• Reason/Key Impetus to overseas expansion – maturing US
market
• Not only competition intense, but growth was slowing in the
US
• Overseas markets also represented a substantial management
challenge
• Encountered Problems Overseas of other restaurant chains:
o Market Demand
• Disposable income of customers
• Urbanization
• Demographics
• Host social, economic and lifestyle factors
• National preferences – Adaptation to local differences
necessary
o Cultural and social factors
menus, restaurant facilities and overall ambience

47. t entrepreneurial potential
o Infrastructure
decision to introduce a particular restaurant concept
o get resources to its location
• Raw materials for food preparation
• Equipment for manufacture of food served
• Mobility for employees and customers essential
o Raw material supplies
supplies in:
• Sufficient quantity
• Of consistent quality
• And at stable prices
and
arrangement
problems

48. -> complex process of sourcing supplies
-> overseeing operations
-> providing quality management services to franchisees
• Management Time
• Money and could be substantial
o Regulations and trade restrictions
locally
sourced
expensive
countries
ulations relating to food standards, business
licensing and business contracts (far more challenging)
difficult acc. to regulations
• Complex contractual agreements between franchisor and
franchisee
• Regarding trademark licensing, royalty payments,
requirements for Quality Control and Quality Monitoring
• Mostly no restrictions on franchising of foreign countries

49. published and usual franchise terms are viewed as
restraints on commerce
• dismiss or lay off employees
• requirements for union recognition and national
bargaining arrangements over wages and work conditions