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Subway Go for International Expansion

A) Expansion methods

1. Subway start with strong domestic presence (Mastered domestic franchising)

2. They willing to expand internationally , and open 1st their franchise store in Bahrain

3. Entered Canada and neighbors country that have Similar consumer behavior, minimal localization needed.(Low risk)

4. Start to expand to developed countries like UK or Singapore because of Low language barrier, established supply chains, high urbanization.

5. Entered Middle East especially UAE, Pakistan and Saudi Arabia with local preferences and Adapted menus to local tastes (halal meat, no pork, vegetarian options).

6. Partnered with regional master franchisees who understood cultural nuances

B) Why the company go for that market?

1. Canada

Good and low risk steps for starting expand international with Similar customer tastes (sandwiches, fast food culture) and Easier logistics and supply chain

2. Developed countries

Large urban population and open regulated franchise environments.

3. Asia countries (especially middle-east)

Have big potential market and high customization and Fast-growing middle-class populations.

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a) expansion method (expansive method or geographic method)

1. Expansive method: Nestlé initially produced only infant food. Nestlé continuously expanded and added new products by means of expanding its product line, integrating supply chain through acquisitions of other companies, etc. The range of products increased to include chocolate instant coffee, pet food, plant-based products, etc. 2. Geographic method: Nestlé gradually expanded its market scope from Switzerland to the United States, Europe, Asia, and America and other global markets through different methods such as establishing branches, setting up factories, exporting products, and localizing products.

b) Why the company go for that market?

1 Market Demand: In the early stage, many infants faced high mortality rates due to breastfeeding, and Nestlé's nutritious food products precisely met this demand. This drove the company to enter its market. 2 Globalization: With the advancement of globalization, Nestlé gradually realized the food demands in the global market, which meant there would be a larger market. For instance, with the increase in the global population, the demand for food and beverages is also constantly rising. 3 Building a Global Brand Image: While constantly expanding, Nestlé also hopes to build a globally renowned brand to enhance the company's brand influence and market competitiveness.

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a) expansion method (expansive method or geographic method)

Nestlé advances its business through both expansive approaches and geographic strategies according to the video. Nestlé grows its business through the expansive method by acquiring local companies and developing new products to serve worldwide consumers. Nestlé adopts the geographic method through its organizational structure of regional areas and its localized marketing approach called “glocal” strategy. Nestlé achieves efficient market expansion by following two strategies that preserve their global appeal across different markets.

b) Why the company go for that market?

Consumer Adaptability: These markets are open to trying international brands, especially when adapted to local tastes.

Strategic Growth: Expanding into new markets helps Nestlé reduce dependence on saturated markets and drive global revenue.

Operational Efficiency: Establishing local production reduces costs and improves supply chain logistics

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a) Expansion Method: Geographic (Expansive) Method

Entering new geographic markets, particularly emerging economies in Asia, Latin America, and Africa.

﻿﻿Establishing operations early to gain a first-mover advantage over competitors.

﻿﻿Adapting products to local tastes and preferences, ensuring relevance in diverse markets.

b ) why the company go for that market

1. Economic and Population Growth, leading to higher demand for consumer

2. Increased Income, As income levels rise, consumers tend to shift from staple foods to branded and value-added products

3. Nestle Can build strong brand recognition and customer loyalty before competitors.

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a) What method did they use to expand?

Nestle – Expansive Method

1. Nestle grew by buying other companies, working with partners, and building factories in different countries.

2. They expanded quickly and widely all over the world, not just step by step.

b) Why did they choose those markets?

1. To sell food and drinks to more people around the world.

2. Some countries had new middle-class families who could now afford Nestle products.

3. They wanted to earn money from different parts of the world, not just one place.

4. They also wanted to make their products healthier and more eco-friendly for the future.

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a) Expansion method (expansive method or geographic method)

Nestlé expanded its business using the geographic method, as the company entered new countries and regions throughout its journey. According to the video, Nestlé opened its first factory in the United States in 1901 and began producing chocolate in the country. By the 1930s, Nestlé had already established a presence in Europe, Asia and the Americas. Even after its factories in Europe were destroyed during World War II, the company managed to bounce back quickly and continued to grow. In the years following the war, Nestlé expanded its product offerings to include ice cream, pet food, and frozen foods, showing a clear effort to reach more markets geographically.

b) Why the company go for that market? Nestlé chose to enter these markets for several reasons mentioned in the video. The company’s original product is infant food has become popular because it was a lifesaver at a time when infant mortality rates were high and many babies were unable to breastfeed. Nestlé also merged with the Anglo-Swiss Condensed Milk Company, which allowed it to expand its products and enter new markets. During World War I, Nestlé’s condensed milk was used by both Allied and Central Powers, increasing its demand. The company also developed new products such as chocolate and Nescafe, which helped it reach wider audiences. Furthermore, Nestlé used strong marketing campaigns like “Good food, good life” and “Have a break, have a KitKat” to create emotional connections with consumers globally. These strategies helped support its expansion into new geographic regions.

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Q1. Expansion method (expansive method or geographic method) .

Geographic Method:

Subway expands its business by targeting specific locations and opening outlets in areas with high foot traffic like malls, gas stations, colleges, and city centers. They focus on geographic presence to ensure convenience and visibility.

They use franchising to reduce costs, its meaning local entrepreneurs run individual stores.

Q2. Why the Company go for that market?

Subway chooses the geographic method because it helps the company grow quickly, reach more customers, and keep costs low. among of the strategy are :

Adapt to Local Preferences
With a geographic strategy, Subway can adjust its menu based on local tastes and cultural preferences, which increases customer satisfaction.

Global Brand Presence
By focusing on different regions, Subway can expand its brand worldwide and stay competitive in the fast-food industry.

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a)expansion method (expansive method or geographic method)

Nestle use both method.

1. Expansive method

Nestle has a long history of developing new products and improving existing ones, which has allowed the company to expand its offerings and enter new markets. For example, Nestle's development of condensed milk and later instant coffee (Nescafe) are prime examples of product innovation driving expansion.

2. Geographic method

Nestle has strategically opened factories and established presences in key regions across the globe. This approach began with its early expansion into Europe and America and has since extended into Asia, Africa, and Latin America.

b) Why the company go for that market?

1. Market Potential: Nestle targets markets with high growth potential where it can leverage local resources and skills to manufacture and distribute its products.

2. Demand for Products: The company expands into markets where there is a demand for its diverse product portfolio, including infant formula, condensed milk, chocolate, coffee, and more recently, plant-based products.

3. Strategic Partnerships: Forming alliances with other companies, as seen in its merger with the Anglo-Swiss Condensed Milk Company, allows Nestle to pool resources and expertise, thereby facilitating market entry and penetration.

4. Supply Chain and Sourcing: By expanding into new markets, Nestle can better manage its supply chain, sourcing raw materials like cocoa and coffee more effectively and at lower costs due to proximity to the source.

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a) What method did they use to expand?

SUBWAY – Geographic Method

1.       SUBWAY grew one country at a time by opening franchise stores.

2.       They let local people run the stores, which helped them fit into each area better.

3.       They moved from place to place, slowly growing across the world.

b) Why did they choose those markets?

SUBWAY

1.       To grow their brand and be known in more countries.

2.       Because it’s cheap and easy to open a SUBWAY shop.

3.       People around the world like customizable and healthy food, so they knew it would sell.

4.       Local people could run the stores, which helped SUBWAY succeed in different cultures.

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a) Expansion method (expansive method or geographic method)

Expansive method:

1. Subway expanded by going into different countries and regions around the world. They opened their first international store in Bahrain, then expanded to Canada, Singapore, the UK, India, and others. These countries have different languages, cultures, and economies.

b) Why does the company go for that market?

1. Brand Recognition: Countries such as UK, Australia, and Canada already knew the brand.

2. Reach more customers outside the US

3. Flexibility to adapt local tastes and cultural: no beef in India, no pork in Muslim-majority countries, spicy sandwiches in Pakistan, shrimp and salmon in Europe

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Q1) Expansion Method:

SUBWAY primarily used a franchising model, which falls under the expansive method of international expansion. Instead of operating all outlets directly, SUBWAY offered franchise opportunities to local entrepreneurs around the world. This method allowed them to grow rapidly while keeping costs and risks relatively low.

Franchising: Partners use the SUBWAY brand, system, and products while managing the daily operations.

Low Capital Risk: SUBWAY avoided the large capital investments required for opening company-owned outlets abroad.

Speed of Expansion: The franchising model enabled quick scaling into multiple international markets.

Q2) Why the company go for that market?

SUBWAY selected international markets based on several factors:

a. Rising Health Awareness: SUBWAY’s image as a healthier fast-food alternative made it attractive in markets where consumers were becoming more health-conscious (e.g., UK, Australia, parts of Asia).

b. Growing Urban Populations: Markets with increasing urbanization and busy lifestyles (e.g., India, UAE) were ideal for fast, convenient food options.

c. Economic Potential: Emerging markets with growing middle classes (e.g., Brazil, China) offered strong demand for international brands.

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a) expansion method (expansive method or geographic method)

expansive method, because:

nestlé acquiring other companies and forming partnerships across countries

invested in building factories worldwide, allowing fast and wide expansion rather than a gradual, step by step approach

utilized its strong brand to enter international markets efficiently

b) Why the company go for that market?

because nestlé:

saw a high demand for f&b products globally

emerging markets had growing middle class populations who could now afford nestlé products

not relying on a single market, instead they diversified its income by entering various regions

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a） Subway using the franchise expansion & international expansion. Their firet international store is at Bahrain，few years later，they open in Canada. Then，they go and develop stores in the UK. Then is Brighton.

b）Why company go for the market

1. Brand recognition， UK, Australia，Japan，Canada know the brand and logo.

2. To make more customer eat their sandwich.

3.They dont sell the beef or pork in their store cause of they know some people dont eat beef and pork，so they only serve chicken，shrimp，mostly chicken. So that can also reach more people that come to eat their sandwich. Nobody will refuse it.

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a) Expansion Method

The main strategy Subway will be using to expand new markets internationally is franchising. This means allowing local people or companies (referred to as franchisees) the authority to launch and run Subway eateries utilizing the company's procedures, recipes, and policies. Since franchisees are in charge of financing and running their own locations, this strategy enables Subway to expand quickly with little direct investment.

b) Why company go for the market?

1. Urbanization & High Foot Traffic

Ideal for Subway’s quick-service model, especially in cities, malls, and transport hubs.

2. Strong Franchise Interest

Subway relies on local franchisees, so markets with eager investors are attractive.

3. Health-Conscious Trends

Subway appeals to consumers seeking healthier fast food alternatives.

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Q1. Expansion method (expansive method or geographic method)

Expansion Method

Subway expand its product by offering to suit local tastes and cultural preferences, which can help them to reach customers satisfaction from every country.

1. Menu customisation in each country such as Aussie Chicken Fillet in Australia, Chicken Tikka in Pakistan and Chicken Mayo in South Africa

2. Cultural adaptation in each country such as vegetarian options in India due to religious reasons and avoiding selling pork in middle east or any Islam countries.

Geographic Method

Subway expand its products internationally using franchising method and targeting new regions and countries, using a mix of strategic planning and learning from early experiences.

1. subway started by introducing them products with Bahrain after failed attempt in UK

2. then, they continued to expand it into Canada, Brighton, Singapore India, South Africa, Pakistan and continuing expand its products worldwide.

Q2. Why the company go for that market?

1. strong growth potential

2. cultural adaptability

3. local franchise interest

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NESTLE International expansion

a) expansion method (expansive method or geographic method)

1-Expansive method ( product diversification) : Nestle added new products like baby food, milk, chocolate, coffee, ice cream, pet food, and plant-based food.

2-Geographic method :Nestle expanded to new countries like the USA, then to Asia, Europe, and Latin America.

-Nestlé adopted a hybrid approach by expanding its product lines (expansive) while also entering new countries and regions (geographic).

b) Why the company go for that market?

1. Foods such as milk and infant formula are in high demand.

2. Non-perishable foods such as milk and coffee were in high demand throughout the war.

3. A growing population need more food options.

4. The urban lifestyle demanded handy, ready-to-eat items such as frozen food and instant beverages.

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ROSSALINDA REEANA BINTI ROSLI RAJU (297534)

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ROSSALINDA REEANA BINTI ROSLI RAJU (297534)

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VIDEO 1 : SUBWAY STORY - INTERNATIONAL EXPANSION

Question 1 : Expansion method (expansive method or geographic method)

Subway expand their business by entering new countries or regions one by one which often starting from suggestions or existing demand.

For example it started from Puerto Rico and then Canada, UK, Singaore, India and many more.

So basically, it focused on spreading locations geographically even if the store density was low at first as it was confirmed in the video that said 'In the beginning, it was simply opening where people suggested that we open. And we wound up with low density of stores in many countries.'

Question 2 : Why the company go for that market ?

Local demand/familiarity - for example when it said in the videos 'Canadians saw Subway in the US, then wanted it in Canada.'

Brand recognition among travelers - for example Americans, Canadians, Australians and Japanese flocked to the first store in the UK.

Potential for growth and adaptation to local taste - for example added paneer tikka in India and chicken mayo in South Africa

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VIDEO 1 : SUBWAY STORY - INTERNATIONAL EXPANSION

Question 1: Expansion method (expansive method or geographic method)

Subway expanded to new markets worldwide based on geography and regional potential. They started by going to English-speaking nations (like the UK) because it felt more comfortable.

Then, they expanded geographically — region by region opening stores in places like Bahrain, Canada, Singapore, Pakistan, South Africa, and Israel.

They divided the world into regional zones and hired area directors and development agents to manage localized operations. Even the video discusses how they set up regional teams and training facilities to handle language, cultural, and legal differences.

Question 2: Why company go for that market?

Market Potential & Brand Recognition

Bahrain: A chance opportunity came via a trade show a chance to test the international waters.

Canada: Geographic closeness to the U.S., cultural similarity, and brand recognition made it a low-risk and strategic option.

Cultural Fit & Eating Habits

In Singapore, they believed that people would accept Subway if it was a high-quality product, despite having to overcome the obstacle of introducing sandwiches into a rice-culture food economy.

Economic and Business Climate

Subway then started using proprietary software to analyze by GDP, business climate and the growth in franchise and fast-food market

Legal and logistics feasibility

This enabled them to identify those countries that had the ability to support many stores.

Flexibility to Adapt

They preferred markets where they could adapt menus to accommodate local tastes (e.g., no beef in India, no pork in Muslim countries, spicy dishes in Pakistan).

Expats and International Communities

In the UK, initial customers were American, Canadian, Australian, and Japanese expats — people already familiar with the brand, facilitating market entry.

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Nur Nadia Natasya binti Adura Shahizan 291962

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Nur Nadia Natasya binti Adura Shahizan 291962

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a) Expansion method (expansive method or geographic method)

Nestle use both expansion method which are expansive method and geographic method.

Expansive Method:

Mergers & Acquisitions: The 1905 merger with Anglo-Swiss Condensed Milk Company allowed Nestle diversify into condensed milk production, leveraging Anglo-Swiss’s existing infrastructure and market presence.

Product Innovation: Nestle consistently introduced new products (infant formula, instant coffee, pet food, frozen foods) to meet evolving consumer needs enabling penetration into diverse markets.

Geographic Method:

Nestle expanded physically into new regions, opening its first U.S. factory in 1901 and later establishing operations in Europe, Asia, and the Americas. Post-World War II, it rebuilt and expanded factories globally, targeting both developed and emerging markets.

b) Why Nestle choose these market?

1. Market Size and Demand:

The U.S. and Europe offered large consumer bases for products like condensed milk (critical during WWI) and chocolate. Emerging markets in Asia and Latin America presented untapped growth potential due to rising populations and urbanization.

2. Economic and Social Conditions:

Post-war reconstruction (post-WWII) created demand for affordable, shelf-stable foods (e.g., frozen meals). In developing countries, Nestle marketed infant formula as a "modern" alternative to breastfeeding, though this drew criticism.

3. Adaptation to Trends:

Nestle entered markets aligned with health and sustainability trends such as plant-based alternatives (Garden Gourmet) in regions like Europe and North America where consumer demand for eco-friendly products is high.

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a) Expansion method

Expansive method

Nestlé used mergers and acquisitions as a key expansive method to grow its product offerings. As example, Nestlé merged with Anglo-Swiss Condensed Milk Company (1905) to expand its product line beyond infant food to include condensed milk—an item in high demand, especially during wartime.

Geographic method

Nestlé also used geographic expansion, entering new international markets early in its history. Nestlé opened its first U.S. factory in 1901, marking the start of expansion into North America. In 1930, Nestlé had established its presence in Europe, Asia and Latin America, leveraging local factories and adapting products to regional tastes.

b) Why the company entered those market?

Brand Reputation

Nestlé’s strong branding and marketing (“Good Food, Good Life”) allowed it to translate success from one market to another with consistent quality and adapted marketing for local audiences.

High Demand and Growing Populations

Nestlé targeted large population centers with growing middle classes and increased demand for packaged food, such as the U.S., India and China.

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a) Expansion Method: Expansive (Geographic) Method

Subway uses the expansive method, starting from its home country (USA) and gradually entering nearby and then farther international markets.

This method helps reduce risk and adapt to cultural differences step-by-step.

b) Why Subway Expands to That Market

1. Health Trend – Demand for healthier fast food options.

2. Global Love for Fast Food – Western-style dining is popular worldwide.

3. Franchise Model – Easy and low-cost expansion through franchising.

4. Urban Lifestyles – Fits busy city life with quick, portable meals.

5. Menu Adaptability – Offers localised options (e.g., halal, vegetarian).

6. Brand Differentiation – Stands out from fried fast food with “Eat Fresh” concept.

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Here’s a simple breakdown of NESTLÉ’s international expansion:

a) Expansion Method:

Geographic method.
Nestlé expanded internationally by entering different geographic regions gradually. It started in Switzerland, then spread to Europe, North America, Latin America, Asia, and Africa over time. Rather than launching all products globally at once, Nestlé tailored its offerings to specific countries and cultures.

Nestlé also used a mix of entry strategies, including:

1. Direct investment (building factories or acquiring local companies)

2. Joint ventures

3. Mergers and acquisitions

4. Exporting

b) Why did Nestlé go for that market?

Nestlé targeted international markets due to several reasons:

1. Market saturation in home country – To find new growth opportunities.

2. Population size and growth – Countries like China, India, and Brazil have large, growing populations.

3. Demand for food and beverages – Global demand for convenient, nutritious food aligned with Nestlé’s products.

4. Economic growth in emerging markets – Rising middle-class incomes in Asia, Africa, and Latin America made them attractive.

5. Local partnerships – Availability of local companies or governments open to investment made it easier to enter.

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a) Expansion Method:

Geographic Method

SUBWAY used the geographic expansion method to grow its business internationally. This means the company focused on entering new countries and regions rather than developing new product lines. Instead of just expanding within its existing market, SUBWAY moved into global markets by replicating its existing business model.

The main strategy they used for this expansion was franchising. Through franchising, local entrepreneurs opened SUBWAY stores under the brand name, allowing SUBWAY to expand quickly without directly managing every location. This method made it easier for SUBWAY to grow worldwide with lower costs and risks.

b) Why the Company Went for That Market

SUBWAY decided to enter international markets for several reasons:

1. Market saturation in the United States
The domestic market was already crowded with fast food options, so SUBWAY needed new areas for growth. International markets provided fresh opportunities where competition was not as intense.

2. Rising global interest in healthier fast food
SUBWAY offered fresh and customizable sandwiches, which appealed to health-conscious consumers around the world. This gave them an advantage in many markets where people were starting to seek better food options.

3. Franchising allowed low-risk expansion
By franchising, SUBWAY could enter new markets without spending heavily on building and managing stores. Local franchise owners brought knowledge of the market and culture, helping the brand adapt and grow quickly.

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Video 1: SUBWAY Expansion

Question 1: expansion method (expansive method or geographic method)?

Subway used a geographic (expansive) form of expansion.

They started overseas expansion without any strategy. They just going wherever people showed interest (e.g. Bahrain, Canada, UK, Singapore). The video explained how they ended up with "low density of stores in many countries worldwide" and had to fly teams "from location to location," demonstrating a pattern of geographic dispersion. They segmented the world into regions and subregions and recruited regional directors, again, demonstrating geographic orientation. This strategy is based on expansion into different locations across the globe (geography-based), as opposed to product lines or customer segmentation.

Question 2:  Why the company go for that market?

Subway entered new markets for a variety of reasons:

1.      To reach more customers: Franchising abroad meant that millions more potential customers could be accessed."

2.      Opportunities referred to by individuals: someone mentioned that they would like to have a store in Bahrain and just agreed.

3.      Market potential: According to the video, Subway used software to search GDP, business climate, fast food development, to find out if a country was worth visiting.

4.      Cultural and economic diversity: They expanded into wealthy and poor countries example like Cayman Islands and Bolivia, showing openness to market choices.

5.      Brand recognition: In Britain, for instance, people (mainly Americans, Canadians, Australians) spotted the Subway logo and flocked to the store.

So, overall, they opened markets based on linguistic convenience, demand cues, economic opportunities, and franchise growth possibilities.

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Video 2: NESTLE International expansion

Question 1: expansion method (expansive method or geographic method)?

Nestlé utilized both geographic expansion method and expansive method.

Geographic Method: Nestlé diversified its business by expanding to new continents and countries. For example, it opened its first American factory in 1901 and had operations in Europe, Asia, and the Americas in the 1930s. This means that they focused on expanding to other areas.

Expansion Method: Nestlé also diversified its product line with a start, first with infant formula, then milk, milk chocolate, coffee (Nescafé), frozen food, animal feed, ice cream, and lastly, vegetable products. It demonstrates diversification of the product line in the food industry. Hence, both approaches were clearly adopted by Nestlé  markets to expand into and lines to diversify into.

Question 2:  Why the company go for that market?

Nestlé diversified to international markets because of the following reasons:

1.      High demand: There was high demand for instant coffee and condensed milk during wars as well as afterward, especially where it was tough to keep fresh food.

2.      Growth opportunities: Growing population worldwide and urbanization created greater opportunities for processed and packaged food.

3.      Access to markets and consumers: International expansion allowed Nestlé to source raw materials (such as palm oil, cocoa, and coffee) and sell goods to new customers in millions.

4.      Innovation potential: Diversification into new markets allowed Nestlé to test and innovate in terms of new products, marketing, and technologies like plant-based food and AI-based operations.

5.      Brand growth: The company wanted to build a strong international brand that would engage customers emotionally through advertising and social media.

Fundamentally, Nestlé diversified into three new markets to fuel sales, acquire resources, meet consumer demands, and build its international brand.

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(A) Expansion method (expansive method or geographic method)

To expand its business, Subway uses the expansive technique, sometimes referred to as geographic expansion. This tactic entails expanding the company's operations outside of its initial geographic location. In order to grow its market share and earnings, Subway does this by reaching out to new markets and consumer bases. With the signing of more than 20 master franchise agreements in recent years, Subway has committed to opening more than 10,000 new restaurants in the future.

(B) Why the company go for that market?

Expanding into new geographic regions allows a company to access previously untapped customer segments, creating more opportunities for increased sales and market growth. This increased market presence helps diversify revenue sources across several geographies in addition to generating larger revenue streams. The business also obtains a competitive edge over competitors who are restricted to a particular region by setting up operations in several.

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a) Expansion method (expansive method or geographic method)

Subway expansion to expand their business globally by using geographical method. They offer the product that suit with the local preferences based on the country they enter to ensure that the customer will satisfies with their product. Hence, they used a franchising as a method for rapid grow in global by the brand recognition to expand quickly with a low cost.

b) Why the company go for that market?

Cultural Adaptation: Subway's menu can be tailored to suit regional tastes and cultural norms because it is so adaptable. This flexibility makes it easier for the brand to connect with a wide range of foreign consumers.

Customer Demand: Subway focusses on areas where there is a rising desire for fast food options that are healthier. The brand appeals to contemporary dietary preferences by taking advantage of the trend towards fresh, customisable meals.