Global Business Plan

Global Business Plan

Week 7-Final Draft
Subway in Colombia
04/15/2012
Table of Contents
Content Page Number
Table of Contents 2
Executive Summary 3
Module 1: Identifying Global Opportunities 4
Module 2: Analyzing International Competitors 7
Module 3: Assessing the Economic/Geographic Environment 10
Module 4: Assessing the Sociocultural Environment 13
Module 5: Assessing the Political Legal Environment 15
Module 6: Selecting a Global Company Structure 18
Module 7: Financing Sources for Global Business Operations 22
Module 8: Creating a Global MIS (Management Information System) 25
Module 9: Identifying Human Resources for Global Business Activities 27
Module 10: Managing International Financial and Business Risks 29
Module 11: Product Target Market Planning for Foreign Markets 31
Module 12: Designing a Global Distribution Strategy 32
Module 13: Planning a Global Promotion Strategy 36
Module 14: Selecting an International Pricing Strategy 38
Module 15: Determining Organizational Financial Results 41
Module 16: Measuring International Business Success 42
Conclusion 43

Bibliography

EXECUTIVE SUMMARY
(Created by John Isles)
During the course of this business plan, many of the benefits of opening up a
Subway restaurant in Colombia will be illustrated. Among the first items presented
will be an analysis of startup costs. After a brief summary of the initial costs
required, these costs will be broken down into what actually goes in to opening a
restaurant with the Subway name.
Recurrent expenses and revenues, which all Subway franchisees can expect, will
also be explained. As is the case with the primary upfront costs, these frequent
incomes and outflows of money will be categorized. Supplementing this data will be
the per-store expenses and revenues from 2008, 2009, and 2010.
Subways competition will also be examined. The most prominent information on
this topic will be the required initial costs for Subway and four of its closest
international competitors. This data will include franchising fees, liquid assets, and
the minimum total investment required for Subway and these four other firms.
In addition to the general overview of Subways storefront operations, Colombias
role in the companys potential expansion will be examined. Colombias society and
geography will be touched upon, but more focus will be placed on how Colombias
infrastructure will play a dominant role in Subways foreign investments. One detail
that will be covered is how Colombias assets can potentially benefit Subway
primarily through an increased flow of agricultural productsas well as how
Subways increased Colombian presence can improve the countrys societal and
economic conditions. There will also be an analysis into how Colombias society and
government might pose problems to Subways expansion efforts and the necessary
actions needing to be taken to continue investing in this country.
Module 1: IDENTIFYING GLOBAL BUSINESS OPPORTUNITIES
(Created by John Isles)
Global Business Opportunities
Subway is one of the worlds most popular food service establishments. With 33,749
restaurants operating internationally as of the start of 2011, Subway has more
storefronts open worldwide surpassing McDonalds total of 32,737 (Business, 2011);
Subway currently operates 36,353 outlets worldwide (Subway Franchise
Information, n.d.). In addition, a 2012 study from Entrepreneur magazine named
Subway as one of the ten best American franchises to open, ranking higher on this

list than all other food service establishments at number twowell above
competitors McDonalds and Pizza Hut, which ranked sixth and ninth, respectively
(Daley, 2012, p. 85+).
Potential Markets
Subway is currently looking into expanding its current operations within Colombia.
As of April 11, 2012, Subway has 55 storefronts operating within Colombia (Explore
Our World, n.d.).

Absolute and Comparative Advantage

Colombia does not have any absolute advantages in terms of agricultural
production, since its production is easily trumped by neighboring Brazil.
In 2009, sugarcane was, by far, Colombias most commonly produced agricultural
amenity with approximately 37,900 metric tons (41,725 tons) (Agriculture
Consumption and Production, 2011, pg. 126). However, this total is nowhere close
to that of Brazils sugar production, which totaled well over 474 million metric tons
(523.24 million tons) (Poirier, 2010).
Coffee, despite being Colombias fourth-largest natively grown agricultural product
behind sugar, rice, and corn, in that orderis the countrys largest export, with
close to 480 metric tons (527 tons) being shipped out (Agriculture Consumption
and Production, 2011, pg. 126). However, Colombia has a minority of the global
coffee export market at less than 10%, which is far lower than the approximated
27% share held by Brazilcoincidentally, the country from which Colombia imports
much of its coffee (Global Coffee Outlook, 2011).
Business Opportunity Analysis
In addition to standalone food outlets, Subway sees potential in setting up
operations in other venues. In the past, Subway has opened up locations in
uncommon locations, such as a church in Buffalo, New York, and on a German river
boat that provides tours on the Rhine River (Thorn, 2011). In addition, Subway can
open up storefronts in or near venues in which there is heavy foot traffic, such as
major transportation hubs (bus and train depots). Sports venues and amusement
parks are also well worth consideration; due to more dense foot traffic, these
locations can substantially increase product turnover, often producing up to six
times as much revenue as a standard restaurant storefront (Thorn, 2011).
S.W.O.T Analysis
Subways greatest strength is its deep market penetration worldwidewhich, in
recent years, is attributable to having more stores open internationally than

McDonalds, this companys closest rival (Business, 2011). As of March 24, 2012,
Subway has close to 25,000 stores open in the United States, 2,750 stores open in
Canada, and 8,700 stores open outside North America (Subway Franchise
Information, n.d.).
Another advantage that Subway has over competitors is how it offers a high level of
customization that clients are given with their sandwiches. After ordering a basic
sandwich from Subways menu (such as the Cold Cut Trio and Veggie Delight),
customers are welcomed to their choice of several types of bread (standards like
white and wheat, as well as honey oat and jalapeo cheese breads), additional
toppings (lettuce, onions, tomatoes, bacon, avocados, et.al.), and different types of
sauces (mustard, chipotle sauce, mayonnaise, et.al.).
Subways biggest weakness is that when compared to our main competitors, service
is generally less convenient. This is attributable to the fact that all sandwiches are
made to order, and all sandwiches are built one at a time. It is also not uncommon
to see several individual customers standing in line at any given time during
business hours. In addition, Subway does not currently offer any delivery services
for sandwich orders.
By far, the biggest opportunity is that we can offer the Colombian citizens and
visitors are affordable, convenient meals. One of Subways biggest successes in
recent years has been our five-dollar foot-long program. The original idea behind
this program was started by Miami franchise owner Stuart Frankel in 2009 (Elbin,
2010, p. 7). Despite originally being a locally focused program, this promotion
eventually gained widespread attention within the United States which resulted in
$3.8 billion in additional revenues (Elbin, 2010, p. 7). This is one promotion that can
easily be integrated into operations of all of our international storefronts.
Potential threats that Subway faces will always include competition from other food
service establishmentsfranchised or not. However, we also have to be aware of
uncontrollable environmental events that may cause shortages in our food supplies.
In such an event, vegetable crops will most likely be affected, and whatever
particular crops are affected will result in lessened supplies to local stores.
Action Plan
For us to increase business in Colombia, we are going to have to look into strategic
placement of our storefronts. While we can definitely open up storefronts in
shopping centers, there are several option in which we can open for business; in
addition to the aforementioned sporting venues and amusement parks, other
possible locations may include movie theaters and hotels. Of course, if such
locations are not available then it would be wise to find places nearby in which a
new store can be installed.

In addition, we should also look into using Colombias major agricultural assets. It
was mentioned earlier that Colombia is easily outdone by Brazil in terms of total
agricultural output, which should not discount the utilization of the countrys goods.
In doing so, we can only expedite the inflow of supplies to our Colombian stores.

Module 2: ANALYZING INTERNATIONAL COMPETITORS

(Created by John Isles)
Potential Competitors
In addition to privately owned mom-and-pop restaurants (generally sole
proprietorships or partnerships amongst individuals), Subway sees stiff competition
from other American food service franchises. Subways biggest competition is
McDonalds, but also sees competition from several other food service
establishments, which includes Burger King, Pizza Hut, and Kentucky Fried Chicken.
Competitive Advantages
One of Subways greatest advantages is its relatively low startup costs when
contrasted against other food service establishments with a global presence.
Generally speaking, many restaurantsincluding franchisees and mom and pop
operationshouse large kitchens equipped with refrigerators, freezers, stoves,
fryers, ovens, beverage dispensers, and service stations. By contrast, Subway
restaurants require fewer pieces of bulky equipment, often needing only an oven
and a refrigerator within the food preparation area depending on a storefronts
location. If it is in a malls food court or as a standalone storefront, a beverage
dispenser can often be found within the customers dining area.

INITIAL STARTUP COSTS (Burger King Corp. Financial Information, n.d.;KFC Corp.
Franchise Information, n.d.; McDonalds Franchise Information, n.d.; Pizza Hut
Franchise Information, n.d.; Subway Franchise Information, n.d.):
Franchising fee Minimum Liquid Cash Reqd Minimum Investment Reqd
Subway $15,000 $80,000 $84,800
Pizza Hut $25,000 $350,000 $295,000
McDonalds $45,000 $500,000 $1,068,850
Kentucky Fried Chicken $45,000 $750,000 $1,308,800
Burger King $50,000 $500,000 $294,000

International Strategies
At present, all of the items available at Subways Colombian storefronts are
carryovers from our North American menu (Men, n.d.). However, it is possible for
future promotions we will look into menu items that may include traditional
Colombian ingredients.
Action Plan
Because Subway currently has limited penetration within Colombia, we will be
looking into ways to encourage possible entrepreneurs to open new stores. The
options available include scheduling a live seminartwo to three per yearand an
online presentation, which will provide clients with information in regards to opening
up a Subway restaurant. In either case, we will demonstrate that joining Subway is
not only easy, but generally more affordable than many other restaurants.

Module 3: ASSESSING THE ECONOMIC-GEOGRAPHIC ENVIRONMENT

(Created by Charina Johnson)
Geographic Influences
(University of Texas, 2008).
Colombia is bordered on the northwest by Panama, on the east by Venezuela and
Brazil, and on the southwest by Peru and Ecuador. Through the western half of the
country, three Andean ranges run north and south. The eastern half is a low, junglecovered plain, drained by spurs of the Amazon and Orinoco Rivers, inhabited mostly
by isolated tropical-forest Indian tribes. The fertile plateau and valley of the eastern
range are the most densely populated parts of the country. The climate tends to be
much cooler in the highlands and tropical along coast and eastern plains. Colombia
is slightly twice the size as Texas. Colombia is ranked number 26compared to
United States being number 3as far as total area. The nation is 1,138,910 sq. km.
The nation has coastlines on both the North Pacific Ocean and Caribbean Sea (The
world factbook, 2012).
Major Products and Industries
Colombia has a great deal of natural resources. These natural resources include:
natural gas, copper, hydropower, petroleum, coal, nickel, emeralds, iron ore, and
gold. The most important industries of Colombia are manufacturing and
construction. The key industries in Colombia included: textiles, iron and steel, metal
products, shoes, food processing, tobacco, oil refining, petrochemical products,
cement, wood pulp, paper, automobile assembly, and chemicals (Maps of world,
2011).

Current Economic Conditions

The current economic condition in Colombia tends to be steady. The country had
suffered a recession due to a combination of low world oil prices, reduced export
demand, and diminished investment flow. The economy of Colombia is mainly
dependent on agriculture and coffee used to be a principal cash crop in the past.
But later, when the coffee prices declined in the international market, Colombia
successfully diversified its economy. Economic reforms were planned and
implemented in the direction of oil and coal, which helped the economy grow
(Maps of world, 2011). Currently there are 57 Subway Restaurants in Colombia. If
there were more restaurants being built, this will give the people more job
opportunities. This could have the people less focused on the bad things that are
happening and focus on the good.
There are some other current issues that the country is facing. The country is facing
air pollution because of the vehicle emissions and the water and soil is damaged
because of pesticides overuse. Security has been in an issue here; the crime rate is
very bad here. There are crimes such as robbery, drug cartels, and rebel movement.
The country is currently working on trying to reduce this crime rate.
Infrastructure
Colombia has suffered for decades from a weak and even non-existent groundwork
that made national market incorporation difficult. After the 1930s important
programs of public investment in infrastructure began, and in recent decades the
situation has somewhat improved, though infrastructure still does not meet general
needs. Colombia is moving towards greater connectivity, higher density in mass
media, and dynamism in the telecommunications sector (Colombia infrastructure, 2011). The country is in need of more roads and is in the process of
doing that. The mayor is planning on building highways for the locals so they can
easily get to different attractions. The government is in the process of building a
railway that will transport coal from central Colombia to the Caribbean harbor.
Action Plan
It will be necessary to establish a program that offers help in social barriers and
local communities. The program can include better access to education,
employment, housing, cultural preservation, environmental security, and increased
recognition of their culture.
Module 4: ASSESSING THE SOCIAL-CULTURAL ENVIRONMENT
(Created by Charina Johnson)
Demographic Trends

After World War II in the 1960s the population had grown. To other countries you
would think that it is small but really has grown. Once the early 2000s hit, the
population was around 44 million people and the primary language was Spanish.
Colombias age structure consists of 26.7% ages 0-14 years of age, 67.2% ages 1564 years of age, and 6.1% 65 years and older (The world factbook, 2012).
Colombias fast population growth has been somewhat caused by the emigration
workers looking for better opportunities. This emigration has been a matter of
concern to Colombia, both because the loss represents a high proportion of skilled
workers and because these often illegal immigrants experience human rights
problems in the countries to which they move. The rate of internal migration from
Colombias rural areas to its cities continues to be high, partly driven by the search
for better wages and living conditions and also because of guerrilla warfare and
violence related to drug trafficking (Colombia, 2012).
Cultural Analysis
There are many culture characteristics in Colombia that contribute to the
unemployment rate. Along with this, there are several ethnic groups that make up
the population. There is one major ethnic group which is the Criollos. These people
are mixed with Caucasian and Mestizo who makes up about 80% of the population.
Also, there are many more ethnic groups such as the Mestizos at 8%Caucasian at
3%, Mulattoes at 3%, Afro-Colombians at 5%, and Indians at 1%. With these
different ethnic groups there is only one language spoken which is Spanish. Knowing
that this is the only language spoken in Colombia, the people do not all speak it the
same way. People speak it different because of their socio-environment and
education.
Social Institutions
In Colombia the majority of the people are Roman Catholic. In the constitution of
1886, Roman Catholicism was made the official religion of Colombia, and the church
controlled such things as marriage and the education of indigenous peoples
(Jermyn, 1999). Surely religion plays a strong part in the Colombian culture. The
local Roman Catholic Church is the center of all activities in all of the small towns.
There are a few of non-Catholics living in Colombia which are Jews and Protestants.
Ministers are in the city to work with the people to help provide education and
health care since the government cannot.
Informal Trade Barriers
The greatest barrier to conducting business in Colombia is the violence of the drug
trades and guerrilla movements. Guerilla movement is a form of irregular warfare
and refers to conflicts in which a small group of combatants including, but not
limited to, armed civilians (or "irregulars") use military tactics, such as ambushes,
sabotage, raids, the element of surprise, and extraordinary mobility to harass a
larger and less-mobile traditional army, or strike a vulnerable target, and withdraw

almost immediately (Wikipedia, 23 J). This violence is affecting the

manufacturing division of the city. About 15% of the population is employed in the
manufacturing business. Unless security is more strictly enforced and the
government gets a handle on this, the business will not succeed because other
companies will not be willing to trade and do business.
Action Plan
There are several Subway Restaurants in Colombia. Currently those franchises are
doing well and if more were to be built, the Colombian people could get hired and
help out the unemployment rate and help their families. According to the World
Banks Doing Business Report, it takes 20 days to start a business and nine
procedures. A foreign company does not require a local partner to start a business
in Colombia (Bajpai, 2009). Opening more restaurants can help out everyone; it
wont solve all the problems, but it will be a start. The government and all
companies should get together to work on a plan for security. The companies should
increase the security level and the government should be trying to find more
supporters.
Module 5: ASSESSING THE POLITICAL LEGAL ENVIRONMENT
(Created by Charina Johnson)
Government and Politics
Currently the federal government is divided into 3 different branches: Executive,
Legislative, and Judicial. Legislative power is controlled by Congress which is divided
by 2 houses, the Senate and the Chamber of Deputies. Judicial is controlled by the
Supreme Court. There are about 61 judicial districts. In 2002, Alvaro Uribe Velez
became President. President Velez is all about helping the economy and making
sure people are safe. The political leaders here will help us entering the market to
open up another Subway Restaurant. Another reason would be that, the Colombian
governments commitment to help investors and secondly, the rich human resource.
Colombia is also very cost-effective for investors. The government has brought in
several reforms in the tax regime and other areas of doing business. We are the first
country in Latin America that now has laws relating to investor protection. Colombia
is a very stable country, both politically and economically. We are most costcompetitive in terms of labor cost (Bajpai, 2009). President Velez told the city that
he will crack down on the guerrilla movement and drug trafficking. The current
president is already getting help from the United States but is still requesting more
help such as financial assistance and military aid. Later on that year, the president
became so desperate that he called on the Colombian civilians to join the national
military force to help. This conflict is affecting the relationship with Venezuela
because the general belief is they are the cause of this since they harbored rebel
leaders.

Formal Trade Barriers

In April 2008, there was a trade agreement made my former President Bush with
Colombia and the Unites . A trade agreement between the United States and
Colombia benefits consumers ensuring access to the products they demand without
the added costs associated with trade barriers. Additionally, a formal trade
agreement increases predictability for retailers operating in the global marketplace
and would rectify the imbalance that currently exists where many U.S. products
entering Colombia face tariffs, while Colombian products enter the U.S. duty free. It
promotes transparency in Customs procedures; dismantles services and investment
barriers in foreign markets; establishes a secure, predictable legal framework for
U.S. retailers operating overseas; and facilitates trade through capacity building and
increased regulatory transparency (Dodge, 2008).

Promoting Global Business

The support efforts by the United States and The World Bank have generated an
environment aware for promoting global business. Nevertheless, the security level
is still a concern which is preventing the production of business in the area.
Intellectual Property
Scarce government seems to present a risk to intellectual property which is a huge
issue for many companies. On the other hand, the government is receiving help
with the United States to help out on the violence that is a threat to the businesses.
Tax Implications
The tax rate here is a flat 33%. Colombia reduced the expenses related with starting
a business by no longer requiring an upfront payment of the commercial license fee.
On average, firms make nine tax payments a year, spend 193 hours a year filing,
preparing, and paying taxes, and pay total taxes amounting to 18.9% of profit
(Bank, Corporation & Press, 2012). There are plenty of opportunities for opening a
business here. The taxes are not an issue and the economy is getting better every
day. Gross domestic products have risen from $82 billion in 2001 to $467 billion in
2011.

Module 6: SELECTING A GLOBAL COMPANY STRUCTURE

(Created by Ryan Keene )
Strategic Planning

Actions managers take to attain goals of the firm (Hill, p. 382). With this goal at
hand, the strategy that makes the most sense would be the Transnational Strategy.
In the Transnational Strategy, there are numerous factors being looked at.
Economies of Scale (decrease in cost per unit as the production increases), location
economies, and the learning effects are the main ones while working in succession
with trying to diversify the offerings in each country to account for differences in
demographic, cost, taste, etc. and ultimately causing a skill-sharing venture (Hill, p.
405). The strategy of the entry mode will set the stage for Subway entering the
Columbian market. Having a strategy that places emphasis on cost savings will
ensure that the consumer pricing is appropriate and lucrative.
When looking at the strategy Subway will be using, analyzing the value that we will
be creating for the brand name Subway in addition to the profitability to the
company are key. The most raw definition is this: is the value of the product we are
creating more than the cost of production to the consumer? Subway needs to
ensure that the method of production and distribution used is creating enough cost
savings to give the consumer pricing the best overall value. There are already
competitors in the area so having a good structure based strategy will help achieve
this.

Entry Modes
As stated above, there are already competitors in South America and specifically in
Columbia. Companies like McDonalds and Burger King have ventured into the area
creating alliances with local companies so as to gain market share. Burger King is
actually a part of Brazilian-based 3G Capital. The issue faced is that there are a lot
of competitors and little time to get into the market. We are definitely not first so we
do not have the first mover advantage but we have enough of a lead if we invest
now to gain market share. Subway carries a brand culture with it that states we are
better and healthier than the other fast food chains. This can create an advantage
over the competition.
There are many types of entry modes, all of which come with advantages and
disadvantages. When looking at what type of company Subway is, this helps us
narrow down the choices. The most ideal ones would be Franchising, Joint Ventures,
and Wholly Owned Ventures (Greenfield Venture). The obvious advantage of
Franchising is that the cost is significantly reduced and is absolved by the
franchisee and we as a company set the guidelines of how the franchisee does
business; we maintain control while having lowered costs. Disadvantages are that
there could be limitations of how we allocate and invest the capital if we were to
want to further expand. Another that is more impacting is the quality control factor.
This can be significantly damaged if the franchisee does not have the focus and

drive to give the best experience and can damage our name entirely. There are
ways of managing this to help avoid undue damages.
Joint ventures are the act of creating part or wholly owned subsidiaries in the
country so that ownership is shared. This would most likely solve the above issue of
quality control and help with others. The fact that the master franchise company
(Subway) invests in a local company; we gain the market knowledge and know-how
around marketing, strategy, etc. This method also goes over well with political
decisions if they are heavily regulating market entries. Disadvantages can be severe
as well. The loss of company control to the joint venture is possible in addition to
losing some control over more subsidiaries in the future.
The best scenario for what we are looking to do will be a joint venture. Even with
the disadvantages, the advantages outweigh. The marketing niche gained, the
lowered entry costs and the proven success with other companies help calm any
questionable doubts. We can also look at limiting what is divulged and attempt to
maintain majority ownership to protect the intangible assets like management
techniques. Walling off the franchisee is an option and should be considered if the
split is less than ideal.
Organizational Structure
With the type of entry being a joint venture, we have the ability to control for the
most part. Choosing a hybrid organizational structure will allow us to maintain
control of things like Human Resources, payroll, accounting and others while giving
more control to aspects like distribution and front line management. We also want
to make sure that the structure we choose helps to add a considerable amount of
jobs for the local economy and this method is ideal. The headquarters can remain
the same where high-level decisions are made and if permitted and cost-efficient,
we can even have some departments in the area. Almost like having a Columbian
HR system that supports locally but reports to HQ for ultimate guidance. Having this
kind of flexibility allows for us to give the aspect of control to the franchisee but
allows the majority of control to stay with Subway, the parent company.

Strategic Alliance:
A strategic alliance is absolutely going to be sought after. The idea of collaborating
to increase the global market and the global economy is at the forefront of why we
are looking into expansion. Adding something as lucrative as Subway to an
impoverished country will help increase the standards of living and the number of
jobs in the area. Being also that our entry will be a joint venture, it makes sense to
look at a strategic alliance to ensure the safety of both parties and their respected
investments whether monetary, tangible or intangible. Strategic Alliance also
solidifies why we are there, to increase the local and global economy. According to

Hill, an alliance is a way to bring together complementary skills and assets that
neither company could easily develop on its own (2011, p. 408). This is incredibly
true and incredibly valuable for the expansion and the betterment of our company.
A strategic alliance will also show our true intentions are not selfish in nature.
Action Plan
Subway will utilize a transnational strategy to plan market entry. This will ensure
cost-efficiency and the quality will come from the plethora of skilled labor and
management locally. Once entry is finalized, we will continue to use franchises and
joint ventures as we have nationally and continue the success of this trend
internationally. We will reach out to one of the major investors in South America, 3G
Capital, as our venture capitalist while also reaching out to local franchisee
candidates to try and spur small business investment in Columbia. We will utilize a
hybrid structure to the business to maintain control yet alleviate some of the burden
of distance from the US to Columbia. Having a hybrid system will allow the main
decisions and strategic imperatives to be delivered to subset departments in
Columbia to carry out the initiatives. Having a local HR and payroll department will
allow for more accurate and effortless communication instead of hearing from
multiple parties at once. The filtered and raw message will be able to be delivered
from either party and execution can be swift.
Module 7: FINANCING SOURCES FOR GLOBAL BUSINESS OPERATIONS
(Created by Ryan Keene)
Economic Environment
Columbia much like the rest of the world has suffered downturns and has shown
progress as of late. The economy has been growing in certain areas since 2010, but
inward investment has been slowed. The environment is tense. The unemployment
rate is above 15%, which is the highest since 2004 at 17% (Whitaker, 2012). With
this being said, according to the World Competitiveness Yearbook, Colombia ranks
no. 1 among the leading economies in Latin America in terms of the availability of
skilled labor, and is second in so far as qualified managers is concerned (Whitaker,
2012). This proves most advantageous to Subway as the labor will be plentiful and
cheap. The economic policies in our area of business are also very supportive for
inward investment, so entering the market will not be an issue.
Start-Up Costs
Being that we decided to go with joint ventures and franchises, the start-up costs
will be minimal. As mentioned in Module 2, the startup costs are significantly lower
than that of our competitors. With the venture capitalists and franchisees bearing
the burden, we only need to staff the local department and possibly split costs with
acquiring the location and building in that location. As referenced in later modules,

utilizing greenfield or brownfield entry tactics will affect our bottom line and is
dependent on what is available. Location is crucial when entering a market so
proper analyses of available real estate will need to take place. There are a few
costs that we, as a company, need to be prepared to take oninsurance, licensing,
permits, labor for expatriates and local liaisons, technology and advertising
materials are some that are inherent to entering any market (Morah, 2009). Below is
an itemized breakdown of what is needed for franchising a Subway restaurant:
Total Investment: $84,800 - $258,800
Franchise Fee: $15,000
Ongoing Royalty Fee: 8%
Term of Franchise Agreement: 20 years, renewable
Financial Requirements:
Net Worth: $30,000 - $90,000
Liquid Cash Available: $80,000 - $310,000
(Entrepreneur.com, 2012).
Financing Sources
Subway already has significant capital to invest so one of the methods we can use
is direct investment to the franchisee company to fund the build. This will not only
strengthen our portfolio and revenue, but this will also spur local investment in
Columbia. This should not be the sole source of investment though, being that all
entries into Columbia have to go through the Banco de la Republica, which will be
our asking party for investment and funding. Again, the idea will be to spur local
investment therefore circulating funds throughout Columbia while maintaining profit
share.
Action Plan
We will take advantage of the leniency Columbia is showing around inward
investment and market entry. The market is flooded with labor, so finding the staff
and the means will be one of the lower challenges. The initial startup costs will be
shared by Subway, our venture capitalists, and our franchisees. Funding will come
from and be sustained by numerous parties. Subway will offer capital to a degree,
but heavy funding will come from Compass and from the local Banco de la
Republica. Subway has already developed a great relationship with Compass for
investments. The company offers stable interest rates (around 11-13%), and we
have done significant investment with them thus far. Utilizing them will help locally
and internationally (IFA, 2012). This will ensure a stable market entry that will last
and prove beneficial and have the longevity desired.


Module 8: CREATING A GLOBAL MIS (MANAGEMENT INFORMATION SYSTEMS)
(Created by Ryan Keene )
Global Information Needs
Columbia is making fast movements in the technology world. Although the
prevalence is not quite there, the trends are up and to the right when one looks at
the numbers. Colombia represents the third largest IT market in South America.
The size of the IT sector (computers, software, components, and related services) in
Colombia is estimated at USD $2,468 million, representing a small proportion of the
global economy (currently less than 0.5% of GDP), but it is a sector which has been
growing well above GDP rates in recent years (GlobalTrade.net, 2011). The country
has a lot of small businesses that are venturing into the technology world. What this
says is that Subway needs to lead the market in technology utilization and spur the
growth in the GDP to elevate the economy.
The country needs to have cash registers, debit and credit card readers, and basic
computers for everyday use. This also means that there will be the need for internet
service. Using local businesses to wire the building (if a greenfield investment) will
help use local economic resources and prove cost efficient. In addition, internal
systems will be necessary to transmit and send data back and forth between the
local store and our United States headquarters. Email will be a large tool used for
communication as well.
Global Information Sources
Subway has already had much success with CCP Global for SaaS (Software as a
Service); the recommendation would be to continue this use. A lot of the onus is on
the vendors to design the software and the architecture in a way that that can
withstand a failover situation (Thibodeau, 2011). Subway Restaurants looks to
simplify things for the franchisee by not complicating them with large and
expensive IT services. CCP makes this easy with friendly, cloud-based interface for
easy access and use.
Technology for Managing Information
As stated above, cloud-based storage will be the best option for this venture. Cloud
storage is stored on a general server that is linked by a log-in and is web-based.
This means the information is easily viewed by anyone, anywhere they can access
the information. Cloud-based storage is cheaper than hard storage and does not
require as many servers to hold the information. This will simplify the process as
well and increase the ease of learning for all employees.
Action Plan

The action plan will be to link with CCP Global to inform them of the plan to operate
more in Columbia and consult a plan of action for software. Hardware can be
obtained by other means, whether through US-based or Columbian-based stores. A
lot of small businesses in Columbia are IT and hardware suppliers, so acquiring
these materials should not be an issue.

Module 9- IDENTIFYING HUMAN RESOURCES FOR GLOBAL BUSINESS ACTIVITIES

(Created by Luthfur Khan)
Staffing
Subway is expanding internationallyincluding Colombia. As a national company
expands overseas, the staffing function becomes crucial. As a business grows from
regional to national to international in size, functions like sales operations, facilities,
and production become more complex. Initially, we will send employees overseas
who will have the responsibility of selecting the best local employees for the job. As
an international business, we will follow the hybrid organizational structure that
combines elements of models. Subway Corporation has a central headquarters that
sets the strategy and forms high level policies, combined with product or
geographic divisions that determine operational methods. This brings us to training
and development.
Training & Development
Training and development functions take on greater emphasis. First, we train the
expatriates before departing to Colombia. Many individuals who take on
international assignments fail because of the adjustment that they have to make
with the new environment (GHRMOD, 2012). When staffing is complete in Colombia,
local employees must also be aware of the corporations needs. Training will
primarily be focused on developing the knowledge of Subway products, including
baking bread and keeping everything fresh. Also, our goal will be to identify
potential management talent among the local employees in order to reduce any
national or ethnic animosity, and to ensure smooth execution which can lead us to
great performance.
Performance Appraisal
Performance appraisals will help us run the business efficiently. The appraisal is
based on assigned duties and responsibilities versus the results obtained by the
employees. Our main goal is to recognize achievement, to evaluate job progress,
and then to design training for further development of skills and strengths. For local
employees, pay-for-performance structure will be designed to increase salary and
promote into higher positions (GHRMOD, 2012).
Compensation

As a fast food company, we recognize the importance of the middle class. One U.S.
dollar equals approximately 1,800 pesos in Colombia; the average Colombian salary
is 180,000 pesos per weekapproximately US$100 (Sidney, 2012). Colombian life
style is much lower and cheaper than the United States. In order to satisfy the
employees, each member will be paid a weekly salary. Permanent employees will
have several benefits. Managers can be shareholders and will have future
opportunities to open their own stores. Annually, each member will be given a
standard incentives package based on a performance summary. We will also award
the employee of the month at the end of each month.
Action Plan
Senior management is working on locating enough resources. A timeline will also be
developed for visiting Colombia and performing the staffing administrative
functions. Human resource departments are taking an administrative lead and
working on a formalized employee selection, evaluation, and payroll process.
Company policies and a standard application will be designed using the regional
language. HR will immediately identify the qualifying candidate(s). Help will be
provided, such as relocation assistance if experience candidates require. Paystubs
will be developed locally by the store owner or general managers. If an owner has
more than five stores, he or she will be required to have a trained general manager,
who will be responsible for paystubs and creating a tools or strategy to keep
tracking the timesheet. Subway as a corporation will be ready to advise.
Module 10 MANAGING INTERNATIONAL FINANCIAL AND BUSINESS RISKS
(Created by Luthfur Khan)
Economic and Financial Risks
There are risks involved in investmentsespecially in the international market. In
this case, the value of the peso is very low against the U.S. dollar. Colombia has also
experienced some royalty and tax schemes in the past. It has a very high
unemployment and poverty rate. As a result, there are fewer outgoing people and
higher criminal activity, such as kidnapping. For example, 23 oil workers were taken
hostage by leftist rebels in 2011 (Kabir, 2008). Investors are always wondering
about these new risk factors.
Social and Cultural Risks
The history of Colombia scares most investors. The countrys long history is marred
with violence, narcotics trafficking, and the operations of the Revolutionary Armed
Forces of Colombia (Kabir, 2008). However, this trend has been decreasing since
President Alvaro Uribe came into office in 2002. He is taking action against narcotics
traffickers and has appointed Juan Manuel Santos as his Defense Minister (Sidney,
2012). We will work with Colombian authorities and adopt the government policies.

When high crime exists in the society, the economy suffers, and we have to ensure
that Subway does not become a part of it.
Political and Legal Risks
There are short-term and long-term political risks to account for. First, there is a
presidential election in June and a tight race for President Alvaro Uribe. The rebel
violence and tension with Venezuela needs to be watched this year. In the long
term, Colombia remains the worlds number one cocaine producer and illegal
armed groups are all engaged in drug trafficking, making the governments task
more complex as rebels form alliances with drug trafficking gangs (BWHA, 2012).
We will keep an eye on the new government for signs of improvement and ways to
help.
Action Plan
Risk management will be approached with several tools. All these tools and
processes of risk management are designed to reduce or eliminate the associated
risks. First, we will identify and categorize all the possible risks; this will help us
prioritize our record and respond to each type of risk. For short-term risks such as
cultural differences of Subway Corporation and Colombia, financial threats, and
violence, we will provide security if needed. For long-term risks such as fire,
hijacking, and robbery, we will carry various insurances. Having a risk management
plan is an important part of maintaining a successful and responsible company.
Every company should have one and we will design one with all the above
conditions.

Module 11 - PRODUCT AND TARGET MARKET PLANNING

(Created by Luthfur Khan)
Product Concept
The product concept is specified. Most of the products will be supplied by the
Subway Corporation. Most of the products will be pre-prepared and ready for sale.
The company will provide instructions and recipes if any products need preparation
in the restaurant.
Product Life Cycle
The mission of the Subway restaurant is to provide fresh food to our customers. In
order the keep the products fresh, we will keep the life cycle shorter. For example,
bread will be cooked daily; lettuce delivered twice a week, cheeses and meats will
have expiration dates posted depending on the preserving process. This will ensure
that the freshness Subway advertises is maintained.

Branding And Packaging

Branding and packaging is very simple for a franchise. The Subway brand will sell
the packaging product from a central location; brand names will be used on all
packaging. We will make every effort to align with the Colombian environment
protection agency and reduce the plastic and use more paper packaging.

Target Market
There is significant potential for fresh food products like Subway in Colombia.
Studies and producers feel that healthy food categories are new in Colombia and
growing fast (Colombia Country Profile, 2011). Therefore, the demand of new
portfolios of healthy products is increasing. We will take these opportunities and
target Colombias fast growing market.
Action Plan
Since Colombia has plenty potential for growth, Subway will take initiative to
expand in this market. Consumers are looking for new and healthy flavors.
According to a survey, most food service operators in Colombia buy food products
from food importers and retailers specialized in food service (Colombia Country
Profile, 2011). Subway strategy will be to post menus and run different categories of
advertisements to target the potential growing market.
Module 12 - DESIGNING A GLOBAL DISTRIBUTION STRATEGY
(Created by Chris Knapp)
Infrastructure Analysis
The main goal is treating the global market as the domestic market. In March, 2011,
Subway Company has demonstrated the strength and saturation in the American
market. According to information released by the Securities and Exchange
Commission, in February, 2011, Subway had opened 33,749 restaurants around the
world, compared to McDonald's 32,737 (Subway Chain Longer than McDonalds,
2011). The Colombian market data analysis has indicated the possibilities of
expansion in this foreign investment. The international activities expected are sales
of products, performance of services for foreign customers, and establishing
facilities for sales, logistics, and distribution, among other purposes.
By expanding in the international market, Subway is attempting to create a
successful competitive and strategic globally mixed environment for the quickservice restaurant segment. The issues of political risk, restrictions on currency
repatriation and an unreliable legal system continue to exist in the Colombian
foreign market. The U.S. is the largest supplier of food and agricultural products to

Colombia and it is the third largest market for U.S. agricultural products in Latin
America after Mexico and Venezuela (Colombia Country Profile, 2011).
Distribution Barriers
As of August, 2011, Colombian authorities issued two decrees for preferential duty
treatment in hopes to correct a lack of supply in the domestic market. Colombian
authorities frequently provide temporary or permanent tariff relief to a broad range
of imported merchandise in order to correct an apparent lack of supply in the
domestic market, incentivize domestic production and/or promote foreign and
domestic investment (Colombia Provides Duty-Free or Preferential Duty Treatment
to Range of Products, 2011).
There are many economic allies that may create barriers for the expansion of
Subway Company into Colombia. The main barriers may be caused by The Andean
Community Agreementwhich includes Ecuador, Bolivia, Peru, and Venezuelaand
possibly the CAN-MERCOSURwhich includes Brazil, Argentina, Paraguay and
Uruguay. On April 16, 1998, MERCOSUR members Argentina, Brazil, Paraguay and
Uruguay, along with Andean Community members Bolivia, Colombia, Ecuador, Peru
and Venezuela, signed a framework agreement towards the creation of a free trade
agreement between the Andean Community and MERCOSUR (Andean CommunityMERCOSUR, 2012). A relatively small yet powerful agreement is currently between
two nations, the Colombia-Chile free trade Agreement.
One agreement that may beneficial for the Subway Company may be the CPTA-US
to Colombia Trade Promotion Agreement. This will be the key building block to
advance bilateral free trade. The U.S. International Trade Commission estimates
that the elimination of tariffs and related barriers in Colombia will increase U.S. GDP
by nearly $2.5 billion and U.S. merchandise exports by $1.1 billion. This results in
jobs here in America (The U.S.Colombia Trade Promotion Agreement, 2011). The
goal is to create super-factories that cover metropolitan areas of Colombia in order
to distribute all cold items properly.
The focus is to concentrate on local produce and to involve the produce growing
communities. Over the last two and a half years the United States has exported
nearly US$4 billion of food and agricultural products to Colombia, but those exports
have faced close to US$185 million in Colombia tariffs during that period(Colombia
Country Profile, 2011).
International Intermediaries
Border controls may create difficulties when dealing with the amount of time
delivery vehicles will take to arrive to the distribution facilities, as well as adding to
transportation costs. Barriers for foreign employees may create some friction and
may require the hiring of national employees. The Subway Company must ensure

the proper steps are taken prior to establishing zoning, health, safety, sanitation
and building government regulations.
The Subway Company will ensure the chain of distributors, wholesale and retailers
understand the importance of acquiring fresh local products. Most food service
operators in Colombia buy food products from food importers and retailers
specialized in food service. Fruits and vegetables are mostly bought from
wholesalers. Dairy products are obtained directly from dairy plants and distributors
(Colombia Country Profile, 2011). It is crucial to maintain a tight line of sight when
dealing with direct importers, imports agents, direct exporters, export agents and
clearing and forwarding agents, due to the heavy influence of drug trafficking in the
Colombian markets.
Distribution Channel
Colombias agriculture has had many benefits due to their different climate zones
which allows for several harvest per year. However, currently the price of Colombian
produce is not doing so well in the international markets. In the 1980s, Many
domestically consumed crops did not perform as well as export crops, however,
largely because they were produced on small plots using traditional farming
techniques and were cultivated without the benefit of modern agricultural inputs
(Colombia-Crops, n.d.). There is a lack of safety in difficult driving locations as well
as security in remote regions that make it difficult for small farmers to get their
produce to large cities. Another negative factor that affects the Colombian agrarian
culture is the cost of transportation of products as small farmers fail to transport are
often exploited by the middle men.
Although there are currently only seven Subway quick service restaurants in
Colombia, the Subway Company has adequate resources to pursue business
expansion in the Colombian market. It is important to continue providing cold items
to local facilities by means of contracting local trucking companies to meet timely
and accurate delivery. Subway controls the quality of their main product by making
the bread themselves daily. Subway typically contracts many companies as
suppliers in order to keep bargaining power low.
Action Plan
The main strategic plan is to establish new distribution facilities through greenfield
investments. A secondary strategic plan is to purchase similar buildings already
established by prior food service vendors through brownfield investments. The
logistics involved through owning trucks is to deliver fresh cold items within a 300mile radius to stores. It is crucial to ensure the approval of credential and vocational
qualifications of all employees prior to establishment. Another requirement will be a
firm grasp of having numerous local suppliers for each ingredient in order to lower
the risk of suppliers increasing the prices.

Subway must maintain fresh menu items such as salad options, healthier meats,
and healthier bread options.
Module 13 - PLANNING A GLOBAL PROMOTION STRATEGY
(Created by Chris Knapp)
Promotional Goals
The focus of utilizing the Subway Companys competitive advantage: Healthy fast
food that tastes great. Ensuring the company image coincides with the advertising
campaign of Subs with 6 grams of Fat or Less.
Promoting an increased availability of lower calorie menu items will be the focus for
these local segments. Based on demographics, there has been an increase in
health-conscious food items. Properly marketing lower calorie, delicious, and
affordable food items to a new market will require the blend of local language and
accessibility.
Business Environment
We will introduce expatriate managers and training programs to demonstrate to
attention to detail to customers and suppliers. Ensuring the proper management
style and team is crucial. Subway must certify the management team has a
foundation in marketing, finance, and management.
Subway must take initiatives in local menu items in the local segments. In order to
meet customer demands, Subway must maintain focus on healthy menu items.
Media Plan
Subway has a main marketing strategy of affordable, fresh and healthy food
options. Hiring professional well fit athletes to endorse their product, Subway has
created a positive perception of the brand. Another focus will be to improve local
internet advertising campaign in the local language(s). Re-establishing focus on
current menu items and their calorie standings will help the brand maintain its
image. However, it is important to understand and blend local languages and tastes
in the menu items.

Promotional Strategy
The teams selling and marketing power will meet the demands of this expanding
market segment. The potential demand for B2B and B2C clients may be fulfilled by
our services. Thousands of customers have proven that the menu items Subway
Company offers are diverse and it satisfies their tastes. Our high-quality service to
customers and suppliers shows proof that our expert staffing meets their needs.

Maintaining focus on long-term customer satisfaction by promoting healthy

breakfast options and continuing to promote their main revenue lunch menu items
is necessary to survive.
Action Plan
Subways action plan seeks to generate a significant increase in company sales and
profits from the delivery to the strategic analysis and reporting services.
Module 14 - SELECTING AN INTERNATIONAL PRICING STRATEGY
(Created by Chris Knapp)
The Economic Environment
Colombia is known worldwide as being heavily influenced by production of large
amounts of cocaine, as well as gangs that ensure their drugs get exported by any
means necessary. Our goal is to ensure that harsh inspections of imports are at the
forefront of every crate that arrives for the use of the Subway Company. Industrial
sector analysis indicate the importance of focusing on few main menu items and
point of sales systems, as well as adequately advertised affordable menu items.
Now that Colombia has emerged from years of instability and drug- and guerrillarelated violence, some industry experts say it is benefiting from investment that
might otherwise have gone to Venezuela or Mexico (Good times for franchising,
2011).
The Colombian local markets are expanding from the old way of doing business and
are making an effort toward the global economy. This concept brings a large amount
of development and growth to the region. Due to this reason the needs of the
customer is expanding.
Cost Analysis
Subway has been very successful at advertising campaign for the $5 foot-long
sandwiches. Although not every sandwich is set at that price, they will eventually
expanded to other sandwich items. This campaign may prove to be successful in the
local Colombian segments. Approximately half of Colombias citizens live below the
poverty line, suffering from income disparities and inadequate social services (CIA,
The World Factbook, 2010). The Subway Company is expected to meet their
expected growth projections in higher populated regions, mainly due to the demand
of fast healthy food and relatively low cost menu items. Inventory prices must be
relatively low in order to provide these affordable prices internationally. This is done
by buying in bulk and ensuring an advertising campaign that attracts a sufficient
customer base to persuade suppliers of adequate sales.
.

Demand Analysis
The Subway Companys focus is to make a strong advertisement campaign for other
menu products to cover the decrease in sales for the promotional prices. Ensuring
the advertising campaign will not create a bait-and-switch negative image that will
be irreversible for the Company. The goal is to produce 100% customer satisfaction,
which is expected to enhance customer referrals as well as top monetary profit.
Continuous innovation is the within the product life cycle. One form of keeping
product demand high was through introducing new, healthy, and affordable
sandwich deals while phasing out the old sandwich options that were at the decline
stage of their life cycle.
Competitor Analysis
The goal is to maintain a business-to-business relationship for local ingredients that
prevents suppliers from hiking up prices and competitors from lowering prices to
match menu items. Local segment competitors are active and have shown a strong
customer base regardless of the size of the facilities. Subway currently has seven
locations in Bogota. Subways main competitors in Bogota are McDonalds (with nine
locations), Burger King (four locations), and Quiznos Sub (two locations).
Action Plan
The Subway Company insists on forming new relationships with the agriculture
producers, distribution personnel, and the customers of the Colombian local market.

Module 15 DETERMINING ORGANIZATIONAL FINANCIAL RESULTS

(Created by Abbie Ludwig)
Revenue Sources
Operating Costs
Start-Up Costs
Initial start up costs in Colombian Peso and US dollars
Profitability
MODULE 16- MEASURING INTERNATIONAL BUSINESS SUCCESS
(Created by Abbie Ludwig)
Financial Gain

As a franchise opportunity, Subway has great potential in Colombia. In 2010, GDP

grew by 4.3%, with the second strongest driver being retail, restaurants, and hotels.
These business areas are popular for franchising, which grew by an estimated 7.2%
in 2011. (DeSilvis & Antia, 2012).
Economic Benefits
With an emerging, powerful economy, Colombia has been recognized by
international agencies as one of the best-managed economies in the region
(DeSilvis & Antia, 2012). Colombia is a developing market for consumer-oriented
products. Imports are growing and have opened Colombian consumers to
international foods and recipes. (Food Export Association of the Midwest USA, 2011)

Social Benefits
Building a Subway franchise in Colombia not only benefits employees that will be
hired, but introduces consumers to a nutritional menu for a meal on a budget.
Subway has programs that reflect their social responsibility, including a healthy
menu, practicing and using products that improve energy efficiency, and enforcing
policies that meet and exceed health and safety standards. Their overall
commitment is to make their restaurants and operations as environmentally and
socially responsible as possible. (Subway, a registered trademark of Doctor's
Associates, Inc., 2012)
Social Costs
The social impact of a Subway franchise can turn Colombians away from traditional
cuisines and meals away from home. The Western culture has embraced fast food
because it saves time. In the United States, an overwhelming amount of households
have full-time working adults, which has made takeout food extremely convenient.
There are studies that have observed correlations between the rise of fast food
consumption to obesity; other observations include overconsumption, due to the
convenience and portions served. There is a possibility this could happen in
Colombia. (Brindal, 2010)
CONCLUSION
(Created by Abbie Ludwig )
Data analysis in the quick-service restaurant segment in Bogota, Colombia, has
concluded that the size of the selected market, geographical segments, goods
purchased, and customer trends are increasing. Subway already has a presence in
Colombia and is looking to expand its operations. Our plan suggests strategic
placement of storefronts, such as sporting venues, transportation hubs, and even

movie theaters, which will increase profits by six times above the standalone
storefronts.
Subways main competitors are other American fast food franchisesnumber one
being McDonalds. Our competitive advantage is the relatively low startup costs
compared to the competition. Our plan suggests using seminars or presentations to
encourage entrepreneurs to open new franchises by informing them of minimal
startup costs and affordability by comparison.
Socially and politically, Colombia is great for franchising; Subway is profiting.
Unemployment would be alleviated by new storefronts that improve the economy.
Because the Colombian government does not require foreign companies to have
local partners, opening a Subway franchise is not only inexpensive, but also easy to
set up.
Maintaining profitability would require use of a hybrid organizational structure.
Having local human resources management and payroll accounting will shorten the
distance between the U.S. and Colombia, as well as increase efficiency.
Colombias leniency of foreign investment and market entry will ensure the stability
and longevity we are seeking. Compass and the local Banco de la Republica will
provide sustainable funding. Compass offers stable interest rates; Subway has an
established relationship with Compass.
The economy of Colombia is powerful and recognized as one of the best-managed
economies worldwide. Financially, franchising in Colombia is a growing investment
that rose by 7.3% in 2011. Commitment to the environment and improving
communities is a Subway standard for all their franchised stores. All these factors
together will become a recipe for success for Subway and its franchisees in
Colombia. In conclusion, Subway will continue to invest in Columbia and will
continue to assist as a company in the success of a growing economy.

Eje Business Plan

A Business Plan
By SOCA Company:
EJE
2in1HEELS

Business Sector
Fashion is a general term for popular style, and has
become one of the most important things in
everybodys daily life nowadays. Fashion is basically
divided in three huge sectors; good clothes, catchy
accessories, and beautiful footwear. It surely has
become something undeniably needed in
everybodys life. Concerning in beautiful footwear
sector, most people will think directly to high heels,
which is known as every womans weapon in
shaping sexy look with effort. High heels were firstly
invented by Leonardo Da Vinci in the 13th century,
and were used by both men and women. They
became very popular, even called as norm for ladies
of the duke, by the time they were used in the
wedding of Catherine de Medici and Duke of
Orleans. (www.wikipedia.com)
The fashion industry is a product of the modern
age. Prior to the mid-19th century, most was
custom made. It was handmade for individuals,
either as home production or on order from
dressmakers and tailors. By the beginning of the
20th centurywith the rise of new technologies

such as the sewing machine, the rise of global

capitalism and the development of the factory
system of production, and the proliferation of retail
outlets such as department stores.
1
Nowadays, there are various types and creation of
high heels produced by greatest shoes designer
from all over the world, as the proof of their
never-fading existence in the world of fashion.
Based on the survey for 100 British women, 80%
of them prefer high heels to flats, with knowing the
fact and have experienced it themselves; high
heels do cause excruciating pain. Moreover, 90%
of them do think that shoes can be an outfit in
themselves. This habit of women creates the
fashion industry itself.
However, even with its painful effect, heels remain
in the very first position in every womans heart. It
became obvious when we talked about todays
circumstance, high heels are proven to have
consistently gained market share. Since the year
2000, high heels sales is approximately around
USD 3.5 million in US. It has been said to have a

consistent longterm growth due to its necessity.

Population grows, and so does their spending
power.
Fashion is the most dominant subsector in
Indonesias creative industry as well. Supported by
the fact that middle class population in Indonesia
is also growing significantly high, fashion in every
part of the world surely will always be a lasting
potential
market
to
be
entered.
(www.economist.com)

Executive Summary
E JE Shoes is a brand of SOCA Company. The
word EJE itself is taken from Spanish and stands
for hinge. Renown for its dual usage; heels and flat,
EJE sure is a solution to most womens problem.
Using a two hinges technology attached to its
stiletto, EJE is a definite breakthrough to fashion
world.
In addition, EJE shoes are all made from
ecofriendly material; rice husk. Instead of
throwing the rice husk away, we tend to make a use
of it and give additional income to Indonesian rice
farmers for real. Using a wood press technique,
those wastes are pressed into a solid material in
term of creating a strong yet classy look to its
stiletto. All of EJE production is 100% Indonesian
art workers made and will only be produced 10
pairs of each design. EJE is the real answer for
every career woman desire and effort to looked
perfect every time with no pain, nor affording nor
taking more additional shoes.
Together with SOCA Co., we believe that EJE is a
business that will last. Fashion and creative

industry is something that will always grow wider

and greater. Equipped with dual hinge technology,
cultural ethnic design, and made from ecofriendly
material by the hand of Indonesian craftsmen,
Indonesian fashion market might be the most
suitable market to be entered. To be added, in
talking about our social sector, SOCA planned to
reach Small Medium Enterpriseswhich will act as
outsourcingto take part of this business.
"To be a fashion company that provides satisfying
one-stop service fashion products to the
customers by giving beauty in comfortableness
and continuously creates innovation as the
2
development of fashion trends increase by holding
unto Indonesian cultural value and environmentally
friendly" is SOCA vision, and to stick with it, we will
provide up-to date fashion as its quick development,
give the most satisfying customer service by
including giving added value services. Moreover,
producing high-quality fashion product yet giving
beauty and comfortableness in the same moment for
every fashion products. We will hold unto Indonesian

values by using Indonesian special fabric (batik,

songket, etc.). We also planned to use our
environmentally friendly raw material and equipment
continuously.
Being the first company that produces 2in1 shoes in
Indonesia is surely be an additional strength to
SOCA. Moreover, as we do concern to social and
environmental issues, we plan to join huge
companies CSR program as its additional value, it is
obvious that our product, EJE, will bring advantages
and profits to mutual sides. Yet in contrast, as a newly
developed company, SOCA might find various
difficulties in fashion sector. The availability of eco
friendly raw materials we used to our product might
damage our production flow as well. Plagiarism,
international famous brand (Charles Keith, Nine
West, etc.) will threaten our existence. To be added,
most Indonesian tends to take evasive action to local
production.
To preserve threats and decrease weaknesses
mentioned above, it is obvious that a solid
organization structure is needed. SOCA consists of
4 divisions: finance, marketing, HR, and production.

Those 4 will be divided into sub-divisions.

Organization structure diagram is to be enclosed in
our appendix.

Product Description
This is a basic illustration of how those dual
hinges in EJE shoes work. Firstly, the number (1)
hinge is to be twisted rotary, and therefore hinge
number (2) is able to be flipped. Our paper bag is
made of pressed rice husks as well, to reduce
environment issue.

Macro Analysis1
Indonesia, renown as a broad nation, has withstood
the global financial crisis relatively smoothly because
of its heavy reliance on domestic consumption. The
country is in the middle of a consumer boom, which
is fuelling growth in South-East Asias giant. With a
population of 238 millions, Indonesia has the
potential to become one of the worlds biggest
economies (ecomnomist.com).
Last year Indonesia had one of the best-performing
economies in the G20 club, growing by 6%. Even as
the rating agencies busily revise rich countries
creditworthiness downwards, Indonesias has been
going the other way. At the moment, consumption
reports for almost half of GDP growth. Nomura, a
Japanese bank, reckons Indonesia is creating a
middle class. Indonesia is defined as one with
disposable household income of over $3,000 per
year. The number of middle class members is
predicted to have reached nearly 150 million by
2014, representing one of the worlds most
tempting markets.
Nevertheless, Indonesia has a deep concern to its

local creative industry as it contributes 6.3% of

National GDP for running creative industries. It is
able to absorb about 3.7 million workers equal
4.7% of total new employment in the year 2007.
National growth creative industries for the year
2012 were perched about 7%. Meanwhile,
fashion remains the dominant subsector of the
creative industry in Indonesia in terms of
contribution to GDP at 63.3% in 2010.
Market Analysis
1.Market Description
Fashion Industry has proved a significant change
annually. Fashion itself comprises three major
components; clothing, footwear and accessories. It
has been said that fashion has tremendous impacts
especially for women. A survey indicated, 47%
women spend their money buying a pair of shoes
once
a
month.
(www.wolipop.detik.com).
Unexpectedly, most of them fell for that
uncomfortable footwear, high heels. Moreover, as

the member of B class women have increased

significantly, their will in purchasing heels will
increase as well. High heels changes womans
appearance and raises self-confidence promptly. It
makes their legs look beautiful, sexy, elegant and
lavish. However, this kind of shoes causes a huge
women health risk.
2.Market Background
4
As survey proved, although high heels are
categorized as uncomfortable shoes, many
women have their preferences to high heels,
because of its sexy and beautiful appearances it
gives. In many occasions, to cope with this
preference, women always bring substitute flat
shoes or sandals under the table. Based on this
need, SOCA has resolved to give a tremendous
innovation for Indonesia's fashion industry,
especially in women's footwear. EJE Shoes can
be used as high heels, as well as flat shoes. EJE
Shoes is 2-in-1 shoes. This attribute is
doubtlessly suitable for any occasion. Substitute
shoes will no longer needed yet accidents while

driving can be avoided. EJE Shoes is not only

simplifying womens life but also eco-friendly. The
heels are made from husks, which are not harmful
for our environment.
This article is based on http://www.economist.com/node/18989153,
http://www.gbgindonesia.com/en/services/article/2011/indonesia_s_creative_industries.php.
1
3

4. Target Market
3. Market Trend
Woman footwear trends for this year are:
Peep toe pumps
Transparent shoes
Ankle strap heels
(www.cosmopolitan.co.id)
Bright colors and sparkly silver
dominate this season timelessly.
E JE Shoes is targeted to B class women who
work in Jakarta and its surrounding areas. The
women are between 25-55 years old. Assuming
that B class women are those whose income is
more or equal to 15 million rupiah, their profession
requires them to wear high heels frequently. We
believe that these easeful shoes are surely a
fulfillment to their need. Not only the B class
women, but also others who also need the
technology put in EJE products. In other words,
EJE Shoes is suitable for those who need
comfortableness and beauty in a time.
(www.kependudukancapil.go.id).
5.Marketing Readiness

6.Strategic Chance
EJE eases its customer by not changing the
objective of the high heels itself. Moreover, SOCA
Company tries tirelessly to provide comfortable
shoes for women. Despitefully, this company
concerns to environmental and social life. Some
forestations and car-free-day programs have been
implemented in Indonesia, particularly in major city
like Jakarta and Bandung. Batik and songket
known as Indonesian cultures have successfully
stolen national and international attention. Based
on those reasons, we absolutely convince EJE
Shoes accepted by domestic and international
market.
We are going to establish corporation with bank
for our capital. Besides, discounts will be given
to customer having the banks credit card or
some sort of it. Our business will be banks
CSR and this corporation will give them several
advantages. The wastes material utilization, rice
husk, coupled with Indonesia artistic value,
batik
and

songket,
and
sophisticated
technology enable EJE Shoes to generate huge
profits. Soon, EJE Shoes will be distributed in
own store or boutique.

5
Production Analysis
Engineered
Product (Hinge)
Half-done
Product
Product
Designing
Final
Inspection
Product
Cutting
Product
Coloring
Product
Finishing
and
Packaging
Quality
Check 1
Product
Adhesive
Quality

Check 2
Engineering
Product
Installment
Product
Sewing
In our shoes production, we develop several methods such as product designing, cutting,
coloring; until
double quality checks to measure that our product is produced with superior quality. In other
hand, our
product are using top quality materials to assure safety in proceeding our dual function; heels and
flats, into a
pair of shoes. For the production system, most methods are handmade done by our craftsmen.
Crafts men are
equipped with good ability and concentrated in one step from production chain. Therefore, we
can produce
our shoes more efficiently and less defect. In the packaging step, we boxed our product and using
paper bag
as the carriage. After packaging step is finished, final inspection is to be run in order to assure
that our product
meet the qualification to be sold in our showroom.
Raw Material
- Husk
- Polymer
- Aluminum
- Synthetic leather
- Genuine leather

- Canvas
- Wool
- Etc.
Production Tools
- Sewing machine
- Press machine
- Coloring brush/spray
- Etc.
Utility
- Water
- Steam
- Electricity
- Lighting system
- Etc.
Facility
- Workshop
- Showroom
- Computer

6
Business Risk
Running business is like a spinning wheel, sometimes in the highest position and sometimes in
the
lowest position. There are some risks involved in running this business, there are:
1. Availability of raw materials
Knowing that rice husks are only
available during harvest time, sure
their availability is being our main
concern. Lacking of raw material in
the non-harvest time will cause the
instability production price and
damage the variable cost.
3. Plagiarism
Asian market is popular by its plagiarism.
Every launched product that creates huge
trends will attract other companies to produce
the similar product. This comes as the impact
of the loose Indonesian policies and
regulations. Patents in Indonesia are not as
strict as it is in America. (detik.com)
5. Consumer's will to buy
As the market trend is changing

frequently, consumers tend to get

bored easily and looking for new
products
2. Price and availability of basic need
(BBM, electricity, etc.)
The unpredictable BBM price will impact
distribution cost and even material cost.
Rolling black out for our electricity will
trouble our daily production system.
4. Labor
Demonstration has always been the main
labor issue in Jakarta. Due to the
demonstration happened in January, March
and May that caused massive traffic jam and
highway blockage recently, it has a huge
possibility in damaging our distribution flow;
raw material and products distribution. It may
cause less effectiveness of the company's
work and profit-loss as well.
6. The quick-shifting Asian market
Business Strategy2
a. Product Development Strategy
Using rice husks, genuine leather, traditional

fabrics (batik & songket)

Joining big companies CSR program to add
capital.
The first 2in1 shoes using dual hinges technology.
Limited new edition, 100 items for each design.
New designs will be released in every 3 months.
Side-pads inside each shoe to add
comfortableness.
7
b. Penetration Strategy
Place: EJE store at South Jakarta
Price: high price (above 1 millions rupiah)
c. Marketing Strategy
Magazines (Bazaar, Elle, Indonesian Tatler,
Vogue, High End)
Social media (Facebook, Twitter, website)
Events (JFW, IFW, JFF, JFFF)
Exclusive catalogue.
Sponsoring Popular Fashion Blogger
(Anastasia Siantar, Michelle Kusnadi)