Internalization Analysis for Subway Restaurant, Essay Example

Subway is a sandwich restaurant that was established in 1965 in Milford, Connecticut and currently has more than 41,800 locations across the world. Although the business originated as a domestic company, it is currently a transnational company that it markets its products to people of many different cultures and nationalities. The company’s international headquarters is located near its first store in Milford, Connecticut, but to support its many locations overseas, it also has offices in Europe and Asia. It’s South and Central America support center is located in Miami, Florida.

Currently, Subway is owned and operated by Doctor’s Associates, Inc. (DAI) and is the second largest sandwich selling MNE. As mentioned above, the company’s main headquarters is located in Milford, Connecticut and its secondary headquarters in Europe are located in Amsterdam, Netherlands, its headquarters in Australia is located in Brisbane, its headquarters in the Middle East is in Beirut, Lebanon, its Asian headquarters are in Singapore and India, and its Latin American headquarters is in Miami, Florida. The organizational culture of this company is such that employees report to a functional manager and a project team manager in the corporate headquarters. Thus, the employee is given control over his or her project emphasizing the value that the company places on the individual ideas contributed by their employees. This is a type of matrix management, and management responsibilities carry three main components: a worker is simultaneously the manager of his or her project, responsible for a specific area of expertise, and responsible for the available information and tools for the project. These produce three sets of outputs, including decisions and actions, the measurement of data, and the resulting information. This organizational strategy is highly dependent on its rewards and compensation policy, which was put in place to drive employee success.

Subway has a strong linkage between its international subsidiaries. Most of the decisions regarding the chain’s operations are initiated at the main headquarters in Milford, Connecticut, although the company welcomes suggestions from its headquarters overseas. Ultimately, the chain of command is that of a typical transnational corporation in which the Milford, Connecticut branch has the most power, and sends information to its subsidiaries, who then transfer information to their more local restaurants and ensure that each franchise is following command. However, each branch that is located overseas is able to communicate to one another for suggestions and the transfer of ideas, which strengthens Subway’s ability to determine the wants and needs of its customers.

Subway restaurants utilize a global approach to Strategic International Human Resources Management (SIHRM). The company trains its employees at four different locations around the world. Global approaches are typically taken by companies that need to develop strategies to help compete on a global scale by taking maximal advantage of available resources and markets. Subway takes advantage of the knowledge of its managers by training its corporate employees and franchise owners in these four sites. There is one training site on each continent, which includes North America, Asia, Europe, and Australia. Training focuses on teaching mangers the vision of the subway restaurants and how to properly make subway sandwiches according to franchise requirements. Ultimately, the store strives to make every one of its sandwich shops equal so that a traveler that is accustomed to ordering one specific sandwich in their home country will be able to travel abroad and have the same restaurant experience. Ensuring that training is provided only by a specific set of trainers helps ensure that the Subway restaurant experience will be standardized.

The challenges that Subway may face as it continues the internationalization process relates to further establishing itself abroad. Although the company currently has presence in Australia, England, and the United States, it aims to increase its presence in Latin America. Currently, the headquarters for its Latin American restaurants is in Miami, Florida, which is a far distance from many Latin American countries. Therefore, Subway would benefit by establishing a Latin American headquarters in Central or South America to increase the interest of the individuals living in these areas to establish a franchise. Reducing travel time and expenses for these individuals would greatly contribute to this effort. Furthermore, the only inhabited continent that Subway has not yet established itself in is Africa. Although there are a few franchises, store owners must travel to the training center in Asia, which depending on the African country in which the Subway shop is established, could be impossibly far. Therefore, Subway should focus on establishing at least one headquarters on the African continent as well.

In conclusion, Subway is a transnational company that plans on continuing its expansion. It currently utilizes a global approach to SIHRM and its organizational strategy is of the matrix design. In many cases, it assigns individuals to become managers of their own projects and the results of these projects could possibly influence the Subway chain as a whole due to the strong links between its subsidiaries. In the future, Subway plans to continue ensuring that all of its stores promote the same customer experience and if an aspect of one Subway store changes, we can be certain that this change will be consistent across the franchise.