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MGT503 Principles of Management Assignment 1 May 13,2010
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“CASE STUDY”
Subway is the worlds’ second largest restaurant chain in the world (behind no.1 Mc Donalds)
with 27,189 restaurants in 85 countries including over 600 international stores. Every year it
adds more than 500 restaurants to the chain.
Many firms prefer customizing their products but subway requires each franchisee regardless of
location to include the same items. Local stores are allowed a mere 6 local items on the menu.
Ingredients such as meat, cheese and bread are standardized. Exceptions are made only in the
case of strict cultural or religious requirements. For example many Subway franchises in India
do not offer beef sandwiches while those in Muslim countries don’t offer pork.
Although these restrictions might seem harsh on the business but Subway is ahead of its
competitors in encouraging and supporting international franchises. For example, the
company’s website features investment information in French, German and Spanish in addition
to English.
Subways’ internal development agents assist the company and internal investors in developing
stores in a certain geographic location. These efforts and others ensure that Subway does not
lose touch with its local markets. The firm has developed a winning internal strategy:
combining standardization and customization.
1. How does Subway’s decision to enter foreign markets through franchising help it to
develop its business? What are some of the potential problems with this choice? (6)
2. How do the religious & cultural factors affect the working of subway in its franchises
located in over 85 countries? (7)
3. While expanding on the international level what are the various management challenges
which subway has to face, including challenges in POLCA. (7)
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[B]The more knowledge you have, the greater will be your fear of Allah.[/B]
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