Wendys Case Study Dgdrux - Jeric P. Macaballug

PAMANTASAN NG LUNGSOD NG MAYNILA (University of the City of Manila) Intramuros, Manila GRADUATE SCHOOL OF MANAGEMENT
I. VIEWPOINT: The CEO and President of the company, Mr. Kerii B. Anderson II. TIME CONTEXT: 2007 III. PROBLEM STATEMENT In 2006, Wendys net income dropped by 58% and closed 199 restaurants during the year. High competition remains with other fast-food restaurants (McDonalds, Burger King and Yum Brands) Wendys is facing the prospect of being sold to Triarc owned by its largest institutional shareholder, Peltz. Under the pressure also of Pelz, Wendys sold Tim Hortons even though it was a profitable company in the coffee and doughnuts business and Wendys has a plan to expand by penetrating breakfast food market. With the decreased sales and number of stores, and the influence of Pelz, the CEO is faced with the options to succumb to the demands of Pelz to sell the company or continue with the comprehensive Revitalization Plan.
IV. STATEMENT OF THE OBJECTIVES To be able to increase market share and increase income by 30% within 5 years by growing franchise ownership and controlling operating costs with heightened commitment to quality products and services and expanded meal and food offerings.
V. AREAS OF CONSIDERATIONS Strengths Global brand 1st to offer 99 cent value menu Number 1 in consumer taste tests and brand awareness Healthier food selections 122 new restaurant in North America Expert Management Atmosphere Better compensation package for employees Reduced labor costs Speed of service
Weaknesses The fingertip in chili incident dropped the sales in 2005 Failed marketing strategy dropped sales in 2005 Last food chain to introduce new products and breakfast menu Death of Dave Thomas in 2002. Current strategy only focuses on US & Canada. Management changes Opportunities Increase in sales of Breakfast food and QSR industry Drop in sales and closure of competitors stores Competitors still use trans-fat oils in a unhealthy manner. Fresh burger market International market Advances in technology
Stronger exchange rates Threats Increase in prices of beef and other ingredients Food borne illness Better Management Team of competitors 24-hour operations of competitors More menu offerings from competitors National disaster causing shortage in supply More investments and international stores of competitors Lower prices of competitors
VI. ALTERNATIVE COURSES OF ACTION (ACA) ACA 1 Sell Wendys to Pelz and create new business ACA 2 Continue Revitalization Plan ACA 3 Sell only part of Wendys and implement Revitalization Plan. VII. ANALYSIS ACA 1
Advantages More fund All liabilities will be paid Opportunity for for better business
ACA 2
Advantages Business growth Better quality products and services Lower costs
ACA 3
Advantages More fund Better quality products and services Lower costs
Disadvantages
Low selling price Layoff
Disadvantages
Costly Time-consuming
Disadvantages
Influence of Pelz TimeConsuming Requires experts
Requires experts
Wider market
DECISION MATRIX CRITERIA Effectiveness Cost Efficient Timeliness TOTAL ACA 1 4 5 5 14 ACA 2 3 3 3 9 ACA 3 5 4 4 13
*Legend: (1-5; 5 being the highest) VIII. CONCLUSION With the current situation, it will be best for Wendys to sell the business to Pelz at the right price. However, to demand for a higher selling price, it will be better to implement some of the Revitalization Plan to improve first the income of individual stores and increase its market value.
IX. PLAN OF ACTION Activities Continue to focus on providing healthier food options to customers by expanding research and development function. Display on all food packaging and in all stores that Wendys use non-trans fat oils. Implement full breakfast menu and 99 cents breakfast menu in all stores. Heighten marketing activities especially on new breakfast menu Person responsible Research and Development Department Time frame Continuous Budget $2,000,000
Purchasing Department and Store Managers Store Managers
Start within 2 months
$1,000,000
Start within 3 months
$1,000,000
Marketing Department and Store Managers
Start within a $3,000,000 month
Implement longer operating hours of restaurants. Expand global operations of franchise stores by 50% in the next 3 years. Perform reorganization to capitalize on talents of the Management. Acquire a farm that maintains vegetables especially lettuce, onion and tomato. Total Cost
Store Managers Research and Development Department Human Resources Department Research and Development Department
Start within a month 3 years
$1,000,000 $2,000,000
Start within 2 $1,000,000 months Start within 3 $5,000,000 months
$17,000,000
Prepared by: JERIC P. MACABALLUG MBA-TEP

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PAMANTASAN NG LUNGSOD NG MAYNILA (University of the City of Manila) Intramuros, Manila GRADUATE SCHOOL OF MANAGEMENT

Purchasing Department and Store Managers Store Managers

Start within 2 months

Start within 3 months

Marketing Department and Store Managers

Start within a $3,000,000 month

Start within a month 3 years

Start within 2 $1,000,000 months Start within 3 $5,000,000 months

Prepared by: JERIC P. MACABALLUG MBA-TEP

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