Please Answer ASAP - Case study

Subject - International Business

The Persian Gulf is emerging as a major new frontier for foreign restaurant chains targeting its growing populations, recovering economies, modern infrastructure and low corporate tax rates. Dozens of restaurants from the U.S. a flight of at least 12 hours away have made first forays into the energy-rich region over the past few years, and more are set to come. While the list of global chains already present in the market is nearly exhaustive, many companies still see opportunity as consumers become more sophisticated, health-conscious and want more variety. Dennys, the ubiquitous diner chain headquartered in South Carolina, said this week that it would open 30 new restaurants in nine Middle Eastern countries in the next decade. Jamba Juice, a Californian healthy shake place, also said this week that it was making an entry into the Middle East through a franchise agreementwith Landmark Group, a Dubai-based corporation. The resident population is growing and more expats are coming into the region, said Kieran Mallon, the chief operating officer of Landmarks food and beverage division.

Moreover, there is a healthy tourist influx, which brings millions of people into the region from across the world. The scale of the infrastructure projects being planned, with retail and tourism at its core, make the region attractive. Also, it is becoming easier to set up businesses in the region as compared to the rest of the world. Landmark plans to open about 80 Jamba Juice locations in the region over the next decade, starting with the U.A.E. and then taking on Saudi Arabia, Qatar, Kuwait, Bahrain and Oman. The chain is trying in part to capitalize on growing health consciousness in a region already flooded with fast-food restaurants and plagued by some of the worlds highest diabetes rates.There is a growing awareness about leading a balanced lifestyle in the region and we see an increasing demand for healthier, nutritive food and beverage options, Mr. Mallon said. This trend makes us more confident about Jamba Juices potential in the region. Some attempts to expand in the Gulf havent gone off perfectly: Taco Bell, for example, opened a restaurant in Dubai Mall in 2008 only to close it a few years later. But recent entrants to the region healthy or not appear to have largely been successful. Distributing prohibited, recent arrivals to the Middle East include Ketchup, an old-timey Americana restaurant backed by actor Ashton Kutcher that set up in Dubais Downtown area last year, and the Dallas-based Mooyah, a burger chain that said this week that it would launch in Bahrain after opening in the U.A.E. last year. The Orlando-based Longhorn Steakhouse opened its first Middle Eastern location last September in Riyadh, while New Yorks Italian chain Serafina touched down in Dubai last October. Analyze the following questions based on the above case study

a)Explain five main advantages for Western food chains to expand in Gulf countries. Also, give possible reasons for fast food chains like Taco bell to face failure in this region.

b)Discuss why franchising strategy is the best mode of making an entry in the Middle East.