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Pret a Manger - Global Entrepreneurship

Global Strategy Group
by

Uyen Le

on 3 March 2014

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Transcript of Pret a Manger - Global Entrepreneurship

First store
was launched
in London
Pret a Manger all over the world
Pret a Manger in Hong Kong
Valuable Lessons
The importance of cultural differences
Rapid expansion might lead company fall into dilemma
The two sides of partnership
-> Advantage vs Disadvantage
T he importance of locational selection
First shop: 2002
Operation Shops: 14

Success factors
Central business location
Adapt local culture
Pret a Manger in France
First shop: 2012
Operation Shops: 9

Success factor
Average lunch for 30 minutes
Outlines
I. Introduction
II. UK - The COO
III. US - A successful story
IV. Japan - A failed attempt
V. Conclusion
Pret a manger overview
The company


Founder: Julian Metcalfe and Sinclair Beecham
With its international expansion, the
founders of Pret-a-manger correspond
with the particular features of being
the successful international entrepreneurs

Embrace changes
Desires to achieve
Establishes a vision
Focus on well-being


The entrepreneurs
Why did we choose this company ?
The Country of Origin
Japan - A failed attempt
The Fast Food and Take Away market
Political
Economic
Social
Technological
Government's plan to fight against obesity
- Crisis consequences:
-> lower purchase power
-> cheap take-away options
more popular
- Entrance of international competitors
Positioning
Quality
Price
Sep 2002:
Entered Japan market
Entry strategy:
Joint Venture 50/50 with the Japanese McDonald
Opened
14 stores
in the first year
November 2003:
McDonald’s Japan announced
to pull out of the Pret partnership
April 2004:
Closed down all stores after
18 months operating
A promising yet challenging market
• Capital city: Tokyo
• Population 127.6 million (2012)
• Currency: Yen

Opportunity
for foreign food brands to enter the market
Challenge
There is no easy, quick, cheap way to succeed in Japan
Many proven “Global brands” have failed in Japan market
Why they failed?
Lesson learned
1. Inappropriate choice of entry strategy
Lack of market awareness
Lack of customer and culture understandings
2003 disintegration of joint venture with backer McDonald as the main cause of retreat
2002 not a right timing
mad cow disease in Japan
McDonald faced the reduce in turnover
McDonald's Japan wanted to cut cost asap
Pret a Manger was at too early stage to produce return to sustain
56
240
14
0
Values - USP
- Fresh & healthy food
- Friendly staff
- No queue
- Ethics
- Sustainability
- Awareness of the impact of food habits on health
- Growing concern about ethics & sustainability
- Connected customers
- Online ordering
- Delivery options
Target market
- socially & environmentally conscious
- middle-class
- prefers quality over less healthy options
- appreciates efficiency & a friendly environment
- young emerging professionals
- crowded areas (cities/train stations/airports)
Going global?
Why?
How?
2000: domestic factor
-> new entrants: high
competitive pressure
-> need to expand to face this new
competition
2002: external factor
-> identification of good market opportunities
NO
franchise!!
mid 1990s: Internet, technology such as computers, faxes ...
1990s: Transportation cost

The Entrepreneurs
- Pret is knowledege - intensive firm
(Bell, Mc Naughton, Young and Crick, 2003)
- Operation method, ethical culture with high standard customer service
- Lead to strategic alliances with Mc Donald -> develop more


3. US - a successful story
2004
2013
2001
2000
Cultural Problems and Improvement

New York: 36 stores
Boston: 3 stores
Chicago: 9 stores
Mc Donald bought 33% stake
* Money
* Expertise
* customers taste, country knowledge
* networks in food industry, especially fast food
* Future plan - go global

* First shops in New York
* Challenges:
- Suppliers
- New Yorker Staffs


Cultural Problems

Improvement

* Reformulate menu
adding soups, drip coffee, Slim Pret (half-sandwiches for mix and match)
* Branding:
Emphasize freshness, natural and high - quality ingredients in packages to overcome grab-and-go sigma.

* "bespoke" v.s. "Premade"
* Drip coffee v.s. Latte

7 stores in New York
Pret's story
Our story
It's time to go global
Going Global : A model of forces influencing internationalization (Oviatt&McDougall, 2005)
Market Choice
Entry Mode
Strategic Alliances
Mc Donald

Competitive

- Starbucks and Subway entered and gain success
- Besides, competitors in home country such as Eat


- Fill the gap in US market --> leader "grab - and- go" with freshness

Economy

Political and Legal

US
Cultural - Eating Habit
- General culture: Western culture like UK, language
- bespoke sandwich
- mix and match sandwich
- Fast food: burger chains
- drip coffee > latte
- do not like mayonnaise like British

Competitive Positioning
Industry

1. Introduction
2. UK - Origin Country
4. Japan - A failed attempt
5. Conclusion
Japan at a glance
Relied too much on market research and experience of McDonald's Japan
Failed to obtain market information needed
Too ambitious : expanded 14 stores at once with extremely high management cost
is Key
Japanese customer
- Picky
- Fickle shoppers
Taste
Cost
Ambiance
Pret a Manger
- On-the-go, cold sandwiches
- Pricy
* Before: 9/11 (2001)
* Legal: Common Law same as UK law system
US
UK
France
UK
France
USP
(Elvis's part)
• The 2nd largest retail market after the USA

• Sophisticated, quality conscious consumers with high purchasing power

• Japanese consumers spend more than 20 % of their budgets on FOOD
-The spectacular beginning in the UK

-The successful expansion to the USA,
Hong Kong and France.

- A doomed venture in Japan .

- A successful international business
venturing process??
9
The "Pret" customer
(healthiness/freshness)
Biggest competitor
as ethical brand
=
Niche market
Direct competitors
No competitors
2012: a logical expansion to similar markets
-> limited expansion in UK market
-> profit-driven decision
-> subsidiaries
-> joint venture
-> strategic alliances
But :
1986
1990s
Mission
Made today
Gone today
2000
Move from plastic
box to cardboard
Internationalization
Successful international
entrepreneurs
Entry modes
strong company culture
control
no rush
low risk
gain access
Subway
Starbucks
Pret
1.
World Bank
UK World Development Indicators. Available from : <http://data.worldbank.org/country/united-kingdom#cp_wdi> [Accessed 23 February 2014]
2.
World Bank
US World Development Indicators. Available from: <http://data.worldbank.org/country/united-states> [Accessed 22 February, 2014]
3.
The Guardian (2001)
Pret a Manger goes global. Available from : <http://www.theguardian.com/world/2001/feb/01/globalisation.foodanddrink> [Accessed 27 February 2014]
4.
This is Money (2012)
Sandwich chain Pret A Manger adds some filling to figures. Available from :
<http://www.thisismoney.co.uk/money/markets/article-2151707/Sandwich-chain-Pret-A-Manger-adds-filling-figures.html> [Accessed 27 February 2014]
5.
Financial Director (2012)
Interview: Pret A Manger FD Nick Candler . Available from : <http://www.financialdirector.co.uk/financial-director/interview/2189135/interview-pret-manger-fd-nick-candler> [Accessed 25 February 2014]
6.
Wikipedia
Pret A Manger. Available from : <http://en.wikipedia.org/wiki/Pret_a_Manger> [19 February 2014]
7.
The Telegraph (2008)
Pret a Manger to be sold to private equity . Available from: <http://www.telegraph.co.uk/finance/markets/2784918/Pret-a-Manger-to-be-sold-to-private-equity.html> [Accessed 22 February, 2014]
8.
CSP (2011)
The British are coming. Available from: <http://www.cspnet.com/sites/default/files/magazine-files/F5_CSP_1211.pdf> [Accessed 25 February, 2014].
9.
World Franchise Associates (2011)
Pret A Manger (UK) Expands in the U.S. with a Service-Centric Model. Available from: <http://www.worldfranchiseassociates.com/franchise-news-article.php?nid=1129> [Accessed 23 February, 2014].
10.
United States Department of Agriculture, Food Service Industry
(2013). Available from: <http://www.ers.usda.gov/topics/food-markets-prices/food-service-industry.aspx#.UxEPbHna4y4> [Accessed 22 February, 2014].
10.
Hisrich and Robert D. (2013)
International entrepreneurship : starting, developing, and managing a global venture, 2nd ed. London: Sage.
11.
Verbeke, Alain. (2011)
Entrepreneurship in Global Firm. Bingley : Emerald. Available fro: <http://lib.myilibrary.com/Login.aspx?ReturnUrl=%2fOpen.aspx%3fid%3d335474&id=335474> [Accessed 22 February, 2014].



REFERENCES
REFERENCES
12. Bureau of Labor Statistics (2009)
How do U.S. expenditures compare with those of other countries
? Available from http://www.bls.gov/opub/focus/volume2_number16/cex_2_16.htm [Accessed 23 February]
13. Japan Retail News (2009)
Retails & Consumer Goods in Japan
. Available from http://www.japanretailnews.com/retail--consumer-goods-japan.html [Accessed 23 February]
14. Japan Retail News (2009)
Companies that failed in Japan
. Available from http://www.japanretailnews.com/2/post/2009/12/companies-that-failed-in-japan.html [Accessed 23 February]
15. Just Food (2004)
A doomed venture: How Pret A Manger failed in Japan
. Available from http://www.just-food.com/analysis/how-pret-a-manger-failed-in-japan_id94145.aspx [Accessed 23 February]
16. Kam City (2004)
Japan: Pret a Manger retreats from Japanese Market
. Available from http://www.kamcity.com/namnews/asp/newsarticle.asp?newsid=17884 [Accessed 23 February]
17. London Evening Standard (2002)
Pret to join McDonald’s in Japan
. Available from http://www.standard.co.uk/news/pret-to-join-mcdonalds-in-japan-6309853.html [Accessed 23 February]
18. The Japan Times News (2002)
McDonald’s logs’01 sales decline on mad cow scare
. Available from http://www.japantimes.co.jp/news/2002/02/16/business/mcdonalds-logs-01-sales-decline-on-mad-cow-scare/ [Accessed 23 February]
19. The Japan Times Community (2003)
Sandwich bars spread thick and fast
. Available from http://www.japantimes.co.jp/community/2003/03/09/general/sandwich-bars-spread-thick-and-fast/ [Accessed 23 February]
20. World Bank
Japan World Development Indicators
. Available from http://databank.worldbank.org/data/views/reports/tableview.aspx [Accessed 23 February]

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