Bubba Gump Shrimp Co. – Background The Bubba Gump Shrimp Co. Restaurant and Market is a chain of seafood restaurants inspired by the 1994 film Forrest Gump. As of January 2009, 31 Bubba Gump’s restaurants operate worldwide. Twenty-two of these locations are in the United States, two are located in Mexico, and seven are in Japan, Indonesia, the Philippines, Malaysia and Hong Kong. The first Bubba Gump’s restaurant opened in 1996 in Monterey, California by Viacom Consumer Products. Viacom is owner of Paramount Pictures (the distributor of Forrest Gump), and also owns the Rusty Pelican restaurant chain.
The Bubba Gump restaurant is named after the movie’s main characters Benjamin Buford “Bubba” Blue and Forrest Gump. Bubba suggested the shrimping business and ultimately Forrest pursued the idea after Bubba’s death when they served in the Vietnam War. Bubba Gump Shrimp Co. – History In 1995 Viacom Consumer Products, the licensing division for Paramount Pictures, approached Rusty Pelican’s CEO, Scott Barnet, and partner, Gordon Miles, with the idea of a chain of family-style shrimp restaurants carrying out the “Forrest Gump” theme. Soon after, Bubba Gump Shrimp Co.
Restaurants, Inc. was formed as a new restaurant chain in a joint enterprise with Paramount Pictures. San Clemente, California-based Bubba Gump Shrimp Co. Restaurants, Inc. and Bubba Gump Shrimp Co. Intl. LLC operate or franchise the like-named restaurant as well as “Capi’s Italian Kitchen”, “Mai Tai Bar”, and the sole-remaining Rusty Pelican restaurant in Newport Beach, California. Rusty Pelican locations in other cities were sold to Landry Seafood Restaurants and are no longer related. Bubba Gump Shrimp Co. – Introduction Bubba Gump Shrimp Co. s basically selling mostly of shrimp dishes, but also other seafood, as well as Southern and Cajun cuisine, inspired by the main character Forrest coming from Alabama. They have been aggressively expanding the business around the world in less than 20 years. Entry modes Bubba Gump Shrimp Co. is expanding their market share by giving franchise opportunity to the international market in order to provide high quality food at a reasonable price to all. As well as building up their brand to become a worldwide brand recognize restaurant. Management philosophies Bubba Gump Shrimp Co. s practicing geocentrism where everything is monitor by them if people are interested to have partnership with them. Provide everything include design and construction support, full set of “build-out” specification, full set of operating manuals, full set of kitchen operations systems and recipes, marketing support and personalized manager training in US. They are having a centralized management where everything is done by Bubba Gump Shrimp Co. Providing tools for franchiser and training for workers. Advantage of venturing abroad Expand to gain more market share
Bubba Gump Shrimp Co. is already saturated at their home market having their brand established for more than 15 years and located at strategic places. Although they can still increase market share at USA by opening new restaurants at other areas but they may not get a significant growth on market share reason is they already located 22 restaurants at 10 main cities at USA. Over the few years Bubba Gump Shrimp Co. have been offering franchise opportunity to many international markets extending its market activity to places such as Japan, Hong Kong, Malaysia, Philippines and Indonesia.
By locating their new outlet in famous cities, people will be more aware about their brand and gain more market share. Creating Brand Identity Brand is important nowadays, reason is because there are too many companies offering similar products or services. In order Brand Identity is one of the strongest competitive advantages because a brand is the only thing that you can own that nobody can take away from you. Everything else competitors can steal, trade secrets, ingredients, strategies. But the brand can go on and live. It creates a lasting value above and beyond all the other elements of a business.
In nowadays, brand is more important than the products or services itself. People first will think about the brand, if it is branded people will gain more confidence on the product or service. So creating brand identity is a vital part in business. Competition may be less intense In overseas, competition may be less intense than in the domestic market. In USA there are too many competitors and substitute product that is competing in the market. The market is huge but gaining market share is tough with the high competition. Although it may benefits the customers but it was hard for the organizations.
So, they have decided to offer franchise opportunity to places other than USA in order to expand their market. Comparative advantage in product Bubba Gump Shrimp Co. menu is quite different compare with other restaurants. They are selling mostly shrimp dishes and also their signature dish, including other seafood, and other southern and Cajun cuisine as well. They can gain comparative advantage facing their competitors with their special menu that normally other restaurants do not offer, by selling shrimp dishes as their signature dishes.
Which is unique and they even sell their own products specially design with their logo on it. The products include t-shirts, hats, cups and souvenirs. This is a very special concept that is not popular in the market yet. They are combining food and fashion together. Economies of scale Increased sales opportunities help spread fixed costs, leading to lowering average costs and increased profits to obtain economies of scale. Because Bubba Gump Shrimp Co. offers the same menu and selling the same product no matter which restaurant. Their fixed costs for production can be decrease by producing more at a time.
This may help to reduce their costs and increasing their profit. Risk of venturing abroad Product does not suit the locals Based on different region, the food people are interested is different too. For instance, Asian countries main food is rice if they venture abroad they may face difficulties on attracting customers because of the food they offering does not suits people at Asia. Normally western cuisine is served in a larger portion, and people in Asia have smaller appetite. Another thing that they need to pay attention is the taste of their food; Asians normally like to eat hot and spicy food.
They may need to make changes in order to suit the local’s taste and attract more customers. Political factors Political environment of the country is the first thing to look at when venturing abroad. With a political environment that always goes war or having demonstrated all the time, business will not be able to succeed. When venturing abroad should choose country that has a stable political environment or else government policies may change all the time. Government policy is another factor that needs to be concern.
Factors here include system of government in targeted market. If the taxes and limitation is high in the particular country, it is hard to gain profit and expand the market share. For instance, paying high taxes to the government may result in less profit and high limitations will be limited by many rules such as not able to operate 24 hours and having extra cash in bank in order to operate in the country. Economic factors Factors in this area include disposable income and expenditure patterns of the local market, crucial part to take note when operating business in the country.
The greater a nation’s wealth, the more likely it will be that a new product or service can be introduced successfully. If the standard of living is high then people inside the country are willing to spend more. But there is always pros can cons, if standard of living is high the wages to hire workers is higher too including other subsidies such as medical and insurance. Inflation and currency of the country is crucial part to be focus on too. Reason is if the country is having inflation all the time people would not spend because level of prices of goods and services increase.
When the price level rises, each unit of currency buys fewer goods and services. If the country currency is fluctuating most of the time, it would not be recommended to invest in the country reason is because the profit earned is based on the country currency after converting to dollars (the most stable currency) it would affect the profit. For instance, when central bank prints money, money supply will increase. There will be more money in circulation. Inflation goes up, the currency value becomes weaker and this causes the currency to depreciate. This will cause the currency to drop and earn less.
But this normally affects mid or large organization because the trade they done each day are counted in millions. Social factors This category include a wide range of considerations, from language to culture of the local almost everything is included. Language is not the same due to different regions. For instance, in Japan the main language is Japanese where venturing abroad may have problems such as communication barriers or misunderstanding. Culture may be varying in different countries too, and this is also an important part to look into when communicating.
For instance, how people have their meal and how people talk to each other. All of these factors need to be considered clearly to not having misunderstanding when doing business. The behavior of the country religion is related too, because it affects what they can consume. For instance, in Muslim country does not sell pork. Technology factors It is important to have perfect road traffic and convenient public transport in that area in order for people to go to the location easily. Even the best restaurant but located at rural area without convenient transport or road traffic is hard to do business.
Providing wifi in the restaurant is also an important factor, where most restaurants provide this service. Competitors Analysis Venturing into a new market may get new opportunities, but it does include drawbacks. Brand identity is the most important factor to consider when we’re talking about competition in the industry. This is because our brand identity is not recognized yet in other countries therefore our competition is high. In order to counter this problem, we have to create a demand by the consumers and create awareness to the market by attracting consumers in order to compete with others.
Strategy used to penetrate foreign markets Bubba Gump Shrimp Co. has been using standardization as their global strategies. The food menu and products they offer are the same no matter in which outlet; it makes no difference for the taste and the looks of the food no matter people buying their product at USA or Malaysia. Being standardize has it advantage though, reason is because standardization can maintain their own style. Customers can get the same they get before even they are dining in other outlets. Providing better utilization of resources is nother advantage of standardization, having the same resources used in all outlets may reduce the cost because everything is produce in large bulk. Standardization has its advantage, but I would suggest Bubba Gump Shrimp Co. to practice the adaptation strategy. By making some changes to their menu and keeping their signature dishes, in this way they can meet local conditions or wants in foreign markets and having their original style at the same time. This may attract more customers because they having the local taste that the people likes in the country.
For instance, adding some spicy dishes at Malaysia outlet and having sashimi at Japan. Combine their dishes with other elements to create a different taste to suit the locals. Conclusion There are always pros and cons for venturing abroad. Many problems need to be solved in order to get success on operating business in other countries. It may expand the market share of the market and increase profit but it may not be easy though. Many problems need to be concerned. The major problem would be rules and regulation in the country set by the local government, the cultures and communication with customers and competitors in the industry.
There are restaurants all around wherever you go, in order to stand out from the crowd marketing strategy is a must to attract customers. By building up the organization reputation, customers will be confident on the product. If the organization can overcome all the problems stated above, venturing into other countries would be much easier as the experience and research gain will be useful for future venturing abroad to other countries. Reference Bubba Gump Shrimp Co. 2010, online, retrieved 27 July 2010, from http://www. bubbagump. com/ Growing Your Business – Venturing Overseas 2010, online, retrieved 27 July 010, from http://www. ace. org. sg/Site/Page. aspx? id=00000000-0000-0000-0000-000000013422 Ways to Venture Abroad 2006, online, retrieved 27 July 2010, from http://www. business. gov. sg/EN/ResourceLibrary/OnlineArticles/rl_va_ways. htm Teh, S N 2010, what firms want most when venturing abroad, online, retrieved 27 July 2010, from http://www. asiaone. com/Business/News/SME+Central/Story/A1Story20100518-216875. html Reference for Business 2008, online, retrieved 27 July 2010, from http://www. referenceforbusiness. com/small/Inc-Mail/International-Marketing. html