Individual Report - Fast Food Case Context Essay - 1

Individual Report - Fast Food Case Context - Essay Example 2. The Economic Environment The Chinese Foodservices industry is currently valued at $366.9 billion USD and is expected to grow to nearly $500 billion USD by 2015 (New Zealand Trade & Enterprise 2012). Full service restaurants maintain approximately 75 percent market share in China, whilst fast food concepts maintain 25 percent market share in this industry. A recent study further revealed that approximately 50 percent of all Chinese consumers prefer eating in restaurant environments over that of home-cooked products, representing a potential market of a half billion consumers geographically dispersed throughout the country (Ganster 2006). This preference for external restaurant dining is fuelled by rising consumer incomes which have increased by nine percent in urban regions and 12 percent in rural areas (Censky 2012). There are ample market opportunities in China based largely on social trends of restaurant consumption that are favourable for launching a new fast food brand with su fficient incomes to consume under a moderately-priced business model. By 2020, it is estimated that total, national seafood consumption volumes in China will be at 35.9 kg/capita, fuelled by a strong consumer demand for seafood (Redfern Associates 2010). Market expansion into China will further require access to appropriate capital and credit to ensure adequate asset procurement and structuring of operations. In 2012, the country’s fiscal leadership injected nearly 58 billion USD into the economic system to stabilise currency exchange rates and fuel new corporate borrowing in the financial sector (Safe Trading 2013). This has opened avenues for support in foreign direct investment and improved the dynamics by which financial lenders evaluate loan generation to fuel economic growth through business development. However, there is a risk as it relates to the economic environment in China. As a product of the recession begun in 2008 that impacted international economies, Chinaâ⠂¬â„¢s efforts to stabilise the exchange rate led to rapid inflation in the food sector that has raised pricing along the foods supply chain (Ho 2011). Though inflationary costs provide opportunities to increase revenues by nearly 17 percent in the foods industry by superimposing higher pricing models to offset procurement costs, rising costs in a very complicated foods supply chain pose risks in a country where consumers are notoriously price-sensitive (Vangpeng 2012). Price-sensitive buyers represent the ability of consumer target groups to impose pricing transparency and leverage pricing demands. 3. Political Considerations Fortunately for the fish and chips brand, progressive changes to a more capitalistic model of government are providing new support for both domestic and foreign business development. Influence of the World Trade Organization has opened new distribution channels with much less stringent regulations and imposition of import/export tariffs that promote better int ernational trade (Areddy 2009). For the business desiring to establish a supply chain network utilising foreign seafood product farmers and distributors, rather than domestic suppliers, the government provides ample support in legislation to remove economic barriers that can complicate cost control. At the same time, the domestic supply chain for aquatic foods products is complicated and widely dispersed, but