C. INDUSTRY ANALYSIS
1. What is the product or service?
Outback Steakhouse product offerings include a menu characterized by specially seasoned steaks and prime rib. It also provides chicken, ribs, fish and pasta entrees.
2. What function does it serve?
Outback Steakhouse serves as a place providing excellent foods that satisfy one of the basic necessities of human, hunger; aside from that it also gives a cheerful, fun, and comfortable experience.
3. What are the channels of distribution?
Outback Steakhouse distributes their product offering by choosing their joint venture partners and franchisees.
2. The following are some forces that determine the strength of ...view middle of the document...
2 How fast is the industry growing?
Franchised restaurants generally performed better than free-standing units. In 1991, franchised restaurants experienced per store sales growth of 6.2% versus an overall restaurant industry growth rate of 3.0%.
2.3 Are products differentiated?
In a restaurant chain industry, products are reasonably differentiated, although they fall in the same category which is food. Each firm offers different specialization or innovation of recipe, in the end no product may taste the same.
2.4 Are there high exit barriers?
There is only minimal level of exit barrier in the industry of franchised businesses in restaurant chains. It is easy to exit in the industry because of the following reason:
• Salable asset – firms rarely buy asset that is used only for specific function, instead their assets are easily converted to cash and normally would not incur loss.
• Low exit costs – there is low cost in exiting the industry.
• Independent businesses – each franchise is a separate entity and does not depend on other franchise outlet therefore closing franchise outlet does not affect remaining outlets.
However, in the case of Outback Steakhouse, one of their major exit barriers is their strong relationship with their supplier. They may obtain loss on contingencies due to contracts that were not fully terminated.
3.1 Who are the major competitors?
The major competitors of Outback Steakhouse are the following:
• Applebee’s with Abe Gustin as Chairman and CEO in (1995)
• T.G.I. Friday’s with Curtis Carlson as the head of the company (1995)
3.2 What are their market shares?
3.3 In other words, is the industry consolidated or fragmented?
The industry is fragmented since there is no single firm which has large enough share of the market to be able to influence the industry’s direction.
4.1 Who are the major customers of the industry?
The major customers of Outback Steakhouse are the end users who usually preferred to eat in food chain because they are too busy preparing their meal. Busy working moms don’t have enough time to provide their children food to eat. That’s why they choose to eat in a fast food chain because they provide cooked and ready to eat food. Every one can be a customer of Outback Steakhouse regardless of age because every human is in need of food.
4.2 Are they powerful?
In this kind of business there is a high influx of competitors thus customers have the power because they are the one who purchase the products and services. They are the life giving blood for the company, every single purchase they made is important to the firm because they contribute to the revenue of a particular firm.
4.3 What gives them power?
Customers can easily switch from one seller to another and can easily vertically integrate backwards this gives them power over the product they are acquiring.
5. Are the suppliers...