Chipotle is expanding its China operations to improve its financial viability as well as brand value. China’s geopolitical power and proximity to other countries like Japan, India and Korea make it a crucial market. The organization could easily expand to countries like India and Japan if it integrates with the Chinese market. KFC, McDonald’s and McDonald’s have also tapped into the Chinese market creating an enormous red sea for their business. DICO, KFC and McDonald’s control respectively 39.4%, 15.3% and 8.2% of China’s fast food industry. This exposes Chipotle’s industrial competitors (DeMicco et. al. 2018, 2018).
China, which has a $11.38 trillion GDP, is an important market. Its large GDP shows that there is significant income circulation in China and the majority can afford these items. If the company can adapt to and complement high-context Chinese culture, it may be able to sustain itself. To reach the Chinese middle classes, the company must implement a market-based pricing strategy. This will involve reviewing current rates and setting prices within the appropriate range (Willcocks 2018). Chipotle must also expand its service in major metropolitan areas such as Shanghai or Beijing. If the stores are in areas with high traffic and high income, such as shopping malls, then margins for the company will increase.
The company has three strategic options available: market-based pricing and differentiation strategies, as well as an ecommerce plan. A product’s differentiation refers to the ability to distinguish a product from other brands to provide a higher value proposition and influence consumers’ purchasing decisions. It could create bespoke products that reflect Chinese culture to distinguish its goods (Dees 2019). It is important to price items within the market’s range. The process involves analysing the prices of similar items in the marketplace and then determining whether or not to adjust the price based upon market dynamics. The virtual and digital trading of goods and services is electronic commerce (Lucas 2012). The adoption of e-commerce can help the company penetrate the Chinese market, and will increase the number digital customers. For market sustainability, an organization needs to set SMART goals and establish monitoring mechanisms like cost-benefit analyses and management by objective.
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