Wendy's Expansion in Argentina

THE FUTURE OF WENDY'S EXPANSION IN ARGENTINA (CIRCA 1998): A CASE ANALYSIS

Wendy's, an American fast-food chain, extended its international expansion program to Argentina in 1995. Near the close of 1997, Wendy's had only 11 outlets operating in Argentina. In spite of the fact that the title of the case analyzes in this paper is Wendy's Franchising in Argentina, none of the 11 restaurants Wendy's operated in Argentina in 1997 were franchise operations. Rather, all were company owned and operated restaurants that Wendy's acquired from its joint venture partner in the country � Argentinean fast-food chain Pumper Nic.

Near the close of 1997, Wendy's presence in Argentina in terms of the number of restaurants operating, as well as in terms of the company's relative position in the Argentinean market with respect to McDonald's (the American-based world leader in hamburger restaurants), was unsatisfactory from Wendy's perspective. The big policy issue confronting Wendy's in late-1997/early-1998 in relation to Argentina was whether the company should continue its expansion in the country and, if so, how the expansion should occur.

Relevant Issues (Big Issues Surrounding the Question)

A number of relevant issues were associated with the policy question concerning the continuation of Wendy's expansion in Argentina. One important issue concerns Argentina's risk profile [e.g., the level of exposure that a foreign company faces when operating i

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teria that apply to both the (a) the decision to continue expansion or not to continue expansion and (b) the franchise/company-owned and operated strategy decision should the company continue its expansion in Argentina are as follows: Provides minimum stores to achieve economies of scale Provides optimum level of stores for Wendy's in Argentina Funding requirements are within the company's capacity to provide or develop Expansion will provide an acceptable level of ROI for Wendy's Expansion will provide the company with an acceptable market position in relation to McDonald's in Argentina Alternative Solution Approaches (Options) There are multiple options available to Wendy's to deal with the major policy question. The more important of these options are as follows: The first option is to scrap the company's Argentinean expansion operation and sell the 11 restaurants owned and operated by the company in Argentina The second option is to continue the Argentinean expansion by opening 62 new company-owned and operated restaurants in Argentina The third option is to continue the Argentinean expansion by opening 33 new company-owned and operated restaurants in Argentina The fourth option is to continue the Argentinean expan

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