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How does Subway use Globalization and Glocalization and other

methods to expand its business?

Subway is one of the fastest growing

fast food companies in the world with

36,909 restaurants in 100 countries and

territories as of June 1, 2012. Subway

was established in 1965, a good 17 years

“younger” than McDonald’s. However,

Subway is currently the largest single-

brand restaurant chain globally in

terms of number of store locations,

surpassing McDonald's. What has

made this company expand and grow

so fast?

Globalization

Globalization has brought the world

closer together. As people, workers,

ideas, and brand names travel across

the oceans, business organizations

take advantage of these opportunities

to sell their products and services

globally. International borders are

not strong enough to prevent

companies and businesses from

expanding overseas today. Subway

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has embraced globalization. The same “Eat Fresh” and “Eat Healthier”

sandwiches which are offered in the U.S. are offered in all 100 countries where

Subway operates in. Subway correctly concluded that customers, wherever

they happen to be outside the U.S., enjoy the predictability of Subway’s

products – the deli meats selection, the exact six triangle slices of cheese, and

staff behind the counter asking customers ingredients choices and “custom”

making each sandwich in an assembly line arrangement. Wherever the store is

in, English is always used, either wholly or partially in menus, in print ads, and

in video commercials (e.g. Indians teenagers singing and talking in American

accented English). Subway’s simple product (and service) offering makes it

easily scalable on a global basis and is an important factor enabling the

company to expand its business overseas quickly.

Franchising

Another business model which Subway has embraced is franchising, and in

particular, international franchising. Subway’s headquarters in the U.S. in

Connecticut runs their over thirty thousand of outlets in 100 countries by using

a franchising modus operandi. For example, an entrepreneur in a distant

country, say India, who wishes to open a sandwich business can become a

franchisee of Subway, and open a Subway outlet in his city. Subway will grant

the individual their brand name, their trademarks and logos, their recipes,

their business operation processes and other “trade secrets”, while the

franchisee will run the Subway store and share the profits from the business.

This way, thousands of Subway stores can be opened and start doing business

all over the world in a relatively short period of time.

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Glocalization

Although Subway’s main product

offering (and its related service) is

“globalized” and “uniform” for all its

outlets in the world, the company does

allow and encourage franchisees in

running their businesses to “localize”

(i.e. doing the business adopting to

local cultures and values) to adjust and

to adapt to local conditions to

maximize operating efficiency and

flexibility. This is appealing to

entrepreneurs who wish to operate

with as little interference as possible

from headquarters, and explains why

Subway’s franchises are popular and

sought after by many in corners of the

world, enabling Subway to expand

their number of outlets very quickly.

For example, the Subway chain does

not have beef in its stores in India,

although beef is a main offering in Subway’s sandwiches. By comparison, a

McDonald’s franchisee probably would not have similar “freedom” to omit beef,

even in India.

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However, Subway’s relatively

less restrictive franchise

policies to allow for maximum

localization sometimes

backfires. In 2004, a franchisee

in Germany put out a one- liner

advertisement showing an

overweight Statue of Liberty

with the headline, “Why are

Americans so fat?” The ad

settled well in Germany as an

effective counter move against

rival McDonald’s “Super Size Me”

campaign but created a furor in the U.S. The U.S. Congress demanded Subway

do something to remedy the “humiliating” advertisement. In the end, Subway

forced the German franchisees to pull the advertisement and issued a public

apology in the U.S., “on behalf of Subway’s franchisees”. It turned into a public

relations disaster for everybody; the German franchisee did not believe he

needed to apologize but was forced to do so and the Americans were unhappy

they were made fun of by a U.S. owned franchise business.

Advertisement Theme which highlights Product Differentiation

Subway uses very effective

advertising campaigns to

expand its business. One of

Its main slogans “Eat Fresh”

explains clearly how every

sandwich is made from

freshly baked bread, using

fresh deli-meats

ingredients, and “custom-

made” in an assembly line

in front of the customer to their exact specifications. Subway employees are

called “Subway Sandwich Artists” – they make the sandwich “fresh” in front of

the customer and they use the “freshest” ingredients. The emphasis on “fresh”

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not only appeals to health conscious consumers but also differentiates Subway

from other fast food competition most of which do not focus on “fresh”.

Similarly, Subway’s other major slogan, “Eat Healthier”, works to differentiate

themselves from other fast food competition. Subway claims to provide the

healthiest sandwiches among fast food chains and appeals specifically to the

fast growing numbers of consumers who are concerned about their health and

about eating too much unhealthy fast food.

Opening Outlets in Non-Traditional Locations

Another unusual approach which

Subway uses to expand its business

quickly is to open outlets in non-

traditional and unusual locations

such as automobile show rooms,

high schools, zoos, appliance stores,

ferry terminals, river boats, even

churches. Subway has opened over

8000 stores in these non-traditional

locations. Subway also operates

smaller format stores to maintain a

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cost competitive advantage over other chains. A typical Subway outlet is, on

average, smaller, offers fewer seats and is not particularly comfortable for a

long stay. The focus, instead, is on the “fresh” and “healthy” meal.