Chipotle Mexican Grill
Chipotle Mexican Grill, abbreviated as CMG, is a fast casual restaurant brand with locations in the United States, United Kingdom, and Canada. This chain's main specialties are tacos and burritos, which have standardized prices across all locations. From its inception, CMG has held a sizable market share in its primary markets: the United States, the United Kingdom, and Canada. For instance, in the year 2010, the chain was listed by New York Stock of Exchange as the best-performing companies with the net revenue of $ 178 million.
Statement of the Problem/ Current State of CMG. In the recent past, many companies have ventured into the market threatening the existence of CMG. This entrance is attributed to the free market economy that operates in various parts of the world. Free market economy allows free entry of firms in any market and free exit from companies out of any market. This type of economy creates a good environment for competition among the various companies (Bermejo, 2014, p. 53-67) and therefore this is an implication that CMG faced stiff completion from various companies that entered the market in recent past.
Also, the company has had an uphill task to manage the various outlets dispersed in multiple countries efficiently. The company has found it difficult to ensure that standards are strictly followed in all the stores, and this failure has led to lagging behind of some outlets within this chain. For instance the outbreak of norovirus witness in Kent outlets, Ohio State adversely affects the reputation of CMG.
The above problems pose threats to the performance and eventually existence of CMG. Therefore there is a need for the management to acts promptly and find solution solutions to these issues. Proper solutions will prevent the company the threats of stiff competitions and dire consequences associated with poor management.
Recommendations/Advice to CEO
Aggressive advertising campaigns. Advertisement campaigns through various media inform the consumers about a specific products or services. Informed consumers are likely to purchase more of advertised products and services as compared to those that are not advertised at all (Thompson, 2017, p. 18). The increased number of consumers will transform to higher sales and eventually higher profit margins.
In the United States consumers have little information on Mexican food, and therefore CMG should take advantage of this gap by advertising Mexican foods. This act will increase the number of buyers who stream in to eat in chain's outlets within the United States. The implication of increase consumers served by CMG is the more significant market share within the area of operation. If the CMG enjoys the larger market for instance in the United States, the principal competitors will be edge out of the market. Therefore aggressive advertising campaigns address the threats of stiff competition.
Hiring Professional Regional Managers
Managers are the decision makers in every organization. They make decisions that affect the organization's goals and objectives. The success of every organization largely depends on the achievement of these goals and objectives ("Organization: What Managers Do," 2015, p. 185-226). For instance, if the manager has no experience and skills in management he/she will make poor decisions that may cripple the performance of the organization. The opposite of this claim is true, and therefore the professionalism of the managers is an important aspect that should be considered during the hiring processes.
From the above case, CMG had the challenge to ensure the chain's standards are upheld in all the outlets. This challenge originates from the poor management that is solved through the hiring of professional regional managers. Regional managers will ensure the outlets within their span of control follow the set standards. Because of their professionalism, they will devise best approaches to implement company's measures effectively. This act will improve the performance of CMG, and in it will regain the damaged reputation.
Competitive Analysis of CMG
In this paper, the author will use the framework of Porter's five force of competition to perform the competitive analysis of CMG. This framework is used to determine whether the industry is attractive or unattractive by a company competing in a given industry (Van, Williamson, & Babson, 2013, p. 106). The author performed the competitive analysis of CMG as below.
Threat of new entrants
Food restaurants industry has attracted a lot of firms because of its profitable nature. For this reason, CMG has faced stiff competitions from companies such as Qdoba Mexican Grill, Moe's Southwest Grill among other firms in this sector. This entrance has reduced the abnormal profits enjoyed by the CMG before the entry of new firms. Therefore from the above case, the food industry in which CMG operates no longer has the potential to be profitable.
Bargaining power of suppliers
Suppliers are the inputs to any organization. They supply raw materials that are used to manufacture end products of the organization. In food restaurant industry the suppliers of ingredients used to prepare different foods are many. This scenario means if a supplier refuses to work with any firm in this industry, the firm will have an alternative supplier hence the bargaining power of suppliers are low. Low bargaining power of suppliers is an indication that the industry has a potential to be profitable.
Industry rivalry
In this industry, the companies try to outdo each other in the market. Most of them have invested in innovation as an approach to gain a competitive advantage, for instance, Qdoba Mexican Grill has increased ingredients in their menus to woo more consumers. It aims to edge other firms and dominate in the market. The above illustration is an indication that food restaurant industry has a high rivalry and hence it has not potential to be profitable.
Bargaining power of buyers
Food restaurant industry serves consumers from a different walk of life ranging from families to people of different religious beliefs. The large pool of consumers served by this industry is an implication that the bargaining power of consumers is low hence this sector has a potential to be profitable.
Threat of substitute products
Food restaurant industry has many substitutes products, for instance, tacos and pizzas are close substitutes. Threats of substitutes happen in that if a price of one product fall its demand will be higher than that of its substitute. In this case, one of the major specializations is tacos and therefore if the price of pizzas falls, it cripples its performance due to low sales. Hence from the above illustration, food restaurant industry has high threats of substitute products, and thus its potential to be profitable is low.
Innovative and technology trends introduced by competitors of CMG
Tablet Restaurant Management
This technology is a tablet app that gives on time feedback on the table, gives suggestions of menus as type ingredients and processes used in cooking, and finally send the orders to the kitchen.
LED Alert Systems
This technology is used in the kitchen where there are a lot of noises. It serves to alerts workers to perform specific tasks such as when the pans are dried, and the dishes are dirty.
The feasibility and expected market impact of the technology. These technologies have been used by various restaurants in different parts, and its effectiveness to meet consumers' needs have been proven. The technique used is simple and require basic skills to operate it. Also, the costs of installing these technologies are affordable for instance Tablet Restaurant Management costs $ 9, 995 while LED Alert Systems costs $ 20, 000. Therefore from the above illustration, it is clear that these technologies are feasible.
The impact of these technologies is the creation of a competitive environment. Restaurants will shift to digital technologies in delivering their services to consumers. Because of the reliability and effectiveness of these to serve consumers, most restaurants will attempt to adopt them. The motive behind this adoption is to have a competitive advantage over the other companies thus in this way companies operate as they compete each other.
Assessment of CMG Regarding its Recent Development
Resources
CMG has a wide pool of resources ranging from tangible assets to intangibles assets that worth millions of dollars. Some examples of physical resources include buildings, machinery, and lands. On the other hand, intangible resources include software used in budgeting control and shares invested in other business. Therefore the net worth of CMG is reliable to move the company to next level of performance.
Capacity
The average numbers sales received by CMG have been increasing on a yearly basis. This increment has made the company enjoys the higher profit margin. Also, with the large pool of resources the company can increase the number of sales on a yearly basis and thus an upward performance trend. From the above illustration, it is true to say that the company can expand its operations and dominate larger market share than its competitors.
My opinion as to whether the organization structure of CMG supports or impedes its ability to innovate and be a successful company. The organization structure of CMG is division structure. There outlets or branches in various part of the world are offering different products under the name of CMG. Stores in one region are under the supervision of a regional manager who is answerable to the General Manager at the company's headquarters.
To my opinion, this type of organization structure impedes the ability of the company to innovate and be successful. Employees working different branches do not interact to share ideas and knowledge on how to prepare particular food or perform other operations. The sharing of information is the heartbeat of innovations (Enkel, Dingler, & Mangels, 2017, p. 131-145) and therefore if it is inhibited, as in the case of division organization structure, the innovation will not be there thus the success of the company will not be achieved.
References
Bermejo, R. (2014). Free Market and Sustainability. Handbook for a Sustainable Economy, 53-67. doi:10.1007/978-94-017-8981-3_4
Enkel, E., Dingler, A., & Mangels, C. (2017). Open Innovation: Enhancing Theory and Practice by Integrating the Role of Innovation Communication. Strategy and Communication for Innovation, 131-145. doi:10.1007/978-3-319-49542-2_9
Organization: What Managers Do. (2015). One Strategy, 185-226. doi:10.1002/9781119199786.ch7
Thompson, K. D. (2017). Advertisement. University of Illinois Press. doi:10.5406/illinois/9780252038259.003.0006
Van, D. C., Williamson, S. A., & Babson, H. C. (2013). Business policy and strategy: The art of competition. Boca Raton, FL: Auerbach Publications.
